Sanjay Kumar, the disgraced former CEO of CA (CA:NYSE)
is expected to plead guilty in federal court on Monday to charges of
securities fraud, according to published reports.
CA was deeply shaken by an accounting scandal that in 2004 (when the company was called Computer Associates) led to the resignation and subsequent indictment of Kumar and other top executives who prematurely booked more than $2 billion in sales to bolster weak quarters between the last quarter of 1998 and the second quarter of 2001. Since then, the company has replaced nearly all of its top managers, put much stronger controls in place, and entered into a deferred prosecution agreement with the federal government. Even so, there is still some feeling that the house cleaning has not gone far enough. "This truth-telling is a very positive step for CA shareholders and for all investors who want to learn how those responsible for their interests have conducted themselves. This should eliminate whatever concerns the current board may have had about releasing information about their own conduct," said Gary Lutin, an investment banker who has been running an online forum for CA shareholders. According to Newsday, a paper based not far from CA's Islandia, N.Y., headquarters, Kumar was expected to plead to all charges in return for not receiving the maximum possible sentence. But Kumar will have to serve as much as 10 years in prison, sources told the newspaper. Kumar co-owns the New York Islanders along with Charles Wang, the founder and former chairman of Computer Associates. Wang retired as chairman of Computer Associates in 2002, when Kumar took over. |
