CA's Ex-CEO gets 12-year Sentence, $8mn Fine for Fraud

Sanjay Kumar, former Chairman & CEO of Computer Associates International (CA), was sentenced to 12 years in prison on Thursday in a $2.2 billion accounting fraud scandal at one of the world's largest computer software companies.

At the hearing in Brooklyn federal court, the US federal judge, I. Leo Glasser on Thursday also fined Kumar $8 million for his active role in a massive accounting scheme that cost its shareholders more than $400 million.

The 44-year-old Kumar, who was also the owner of the professional ice hockey team, New York Islanders, pleaded guilty to charges including conspiracy, securities fraud and obstruction of justice in April just two weeks before his trial was due to start.

"I know that I was wrong and there was no excuse for my conduct," Kumar told the judge at his sentencing at court. "I do apologize for my mistakes and ask for forgiveness from all involved."

Describing Kumar’s illegal act as "the most brazen and comprehensive in the modern era of corporate crime", an Assistant U.S. Govt. Attorney Eric Komitee had appealed to judge Glasser for a stricter punishment.

The government said that as part of his accounting scheme, dubbed as "the 35-day month", Kumar indecently booked software license revenue from 1999 to 2000 in order to fulfill Wall Street analysts' profit expectations and then lied to investigators about it. The Govt. indictment also said that Kumar and other executives instructed salespeople to complete deals after the quarter had closed.

Under federal sentencing guidelines, Kumar could have faced life in prison but Judge Glasser said that would be an unreasonable punishment for a financial fraud.

His lawyers also made a lengthy appeal for leniency, quoting Kumar's charitable works for children in Long Island, New York, and victims of the 2004 tsunami in his native Sri Lanka. "This is not a case where the fraud affected the fundamental health of the company," said defence attorney Robert Fiske. "CA is still a thriving company."
"I've tried my best to work hard, help others in need and be a good family man," Kumar told the judge.

The accounting scandal at CA was a massive scheme involving several key executives, who gave their consents to a plan to prematurely book more than $2 billion in sales in order to give a boost to feeble quarters. CA's chief financial officer, head of global sales, general counsel and three other executives had already admitted their role in the accounting scandal.

Based on Long Island, CA Inc, the world's fifth-largest software provider which employs 15,000 people worldwide agreed to pay $225 million in shareholder restitution and continues to cooperate with the government as part of a deferred prosecution agreement.

At his sentencing, Kumar, who is due to surrender on February 27, requested that he serve out his term at a federal prison facility in Fairton, New Jersey.

Apart from his prison sentence, he was given three years of supervised release for each of eight counts to which he pleaded guilty.