Former Computer Associates Ceo Sanjay Kumar Sentenced to 12 Years of Imprisonment for Securities Fraud and Obstruction of Justice Scheme
Defendant Manipulated Over $2 Billion in Revenue to Prop Up Stock Price
SANJAY KUMAR, former Chief Executive Officer of Computer Associates International, Inc. ("Computer Associates"), now doing business as CA, Inc., was sentenced to 12 years' imprisonment and a $8 million fine for his conviction on eight counts of securities fraud, obstruction of justice, and false statements. The sentence was imposed today by United States District Judge I. Leo Glasser at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York. The amount of restitution to be paid to victims will be determined by the Court within 90 days of today's sentencing.
At his guilty plea proceeding on April 24, 2006, KUMAR admitted fraudulently inflating the quarterly revenue and earnings of Computer Associates by keeping the company's books open past quarter-ends in order to give the appearance that the company had met or exceeded quarterly revenue projections, when the company's performance had actually fallen short of those goals. Through this fraudulent scheme, KUMAR caused the company to recognize prematurely over $2 billion in revenue between 1999 and 2000, which resulted in losses to the company's shareholders in excess of $400 million. KUMAR has also admitted obstructing the government's investigation by lying to federal investigators, and by directing Computer Associates' employees to provide false explanations for the fraudulent accounting practices to the government. At the sentencing today, Judge Glasser found that KUMAR tampered with a laptop computer to conceal its contents from the government and Computer Associates' Audit Committee.
Previously, Computer Associates' Chief Financial Officer, Head of World-Wide Sales, General Counsel, and three additional top financial officers admitted their guilt and accepted responsibility for their crimes. In addition, the company has paid $225 million to a shareholder restitution fund and continues to cooperate with the government pursuant to a deferred prosecution agreement.
"The integrity of U.S. financial markets depends on corporate executives accurately reporting their companies' performance to the investing public," stated United States Attorney Roslynn R. Mauskopf. "In violation of the shareholders' trust and the federal securities laws, the defendant persistently misrepresented the company's financial position and orchestrated a pervasive cover-up scheme. The sentence imposed today sends the message that accounting fraud is a serious crime and that obstructing justice will inevitably make things worse, not better, for defendants under investigation." Ms. Mauskopf thanked the Securities and Exchange Commission for its assistance in this case.
Mark J. Mershon, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office, stated, "Today, justice looked Mr. Kumar in the face and held him accountable for presiding over one of the largest accounting fraud schemes on record. His deliberate misstatements of over 2 billion dollars of Computer Associates' revenue caused an elevation of the company's stock price, but when the scheme collapsed, no one fell harder than the investors who made good faith purchases of the company's stock. The FBI remains committed to attacking the criminal greed that leads to such blatant abuses of corporate power."
The government's case was prosecuted by Assistant United States Attorneys Eric Komitee and Jason Jones, and Special Assistant U.S. Attorney William Estes.
The Department of Justice believes that it is important to keep victims/witnesses of federal crime informed of court proceedings and what services may be available to assist you.