Ex-CEO Kumar Pleads Guilty To Fraud

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The former CEO of Computer Associates International, Sanjay Kumar, pleaded guilty yesterday to obstruction of justice and securities fraud charges in a massive accounting scandal at the Long Island-based software company.


According to a 2004 indictment, Kumar was so involved with adding revenue to a financial quarter even after it closed that he flew to Paris in July 1999 to finalize a deal and personally signed a contract that had been backdated.


The indictment also charged that executives instructed salespeople to complete deals after the quarter had closed and “cleaned up” contracts by removing time stamps from faxes.


“Your honor, my conduct was wrong. I take responsibility for participating in this practice and I apologize for my actions,” Kumar told the judge, referring to the accounting fraud.


The company’s former head of worldwide sales, Stephen Richards, pleaded guilty to the same charges in federal court in Brooklyn.


Both remain free on $5 million bond while awaiting their September 12 sentencing. The law allows a maximum sentence of 20 years in prison for the offenses, but the term could be substantially less under federal sentencing guidelines.


Kumar is also a co-owner of the New York Islanders hockey team. Computer Associates, which makes software and storage systems for large corporations, agreed in 2004 to pay $225 million to shareholders in a settlement letting it defer criminal prosecution. Computer Associates restated its financial results from 2000 and 2001 to reflect $2.2 billion in revenue that was improperly booked.


During the company’s fiscal year 2000, Computer Associates “prematurely recognized” more than $1.4 billion in revenue from at least 116 contracts that had not yet been signed, the Securities and Exchange Commission said.


The Islandia, N.Y.-based company has said it had billions of dollars in annual revenue in the late 1990s. Reported revenues plunged after the company changed its accounting practices in the face of increased outside scrutiny.


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