|
Some CA shareholders ordered to return payments
BY
MARK HARRINGTON | mark.harrington@newsday.com
December 20, 2007
The pain for some CA Inc. shareholders
doesn't seem to end.
After waiting two years for their share from the company's $225-million
restitution fund tied to the $2.2-billion accounting scandal, tens of
thousands of shareholders were notified by letters dated Monday that a
calculation error meant they'd have to send a portion of their payments
back. In addition, 2,000 shareholders entitled to payments mistakenly
received none at all.
In all, 88,444 shareholders were overpaid, according to letters filed last
week with the U.S. District Court in Brooklyn, which issued an order that is
being sent to shareholders this week saying return of the overpayments is
"mandatory." Shareholders are asked to send overpayments back by Jan. 4.
The $59.2-million error was the result of a
mistake by an outside firm working for the court-appointed fund
administrator, Kenneth Feinberg. The company, Gilardi & Co. of Larkspur,
Calif., has issued a stop-payment on all uncashed checks as part of a series
of court-approved "emergency" measures, but most shareholders are receiving
letters ordering them to return roughly 20 percent of their distribution
check.
For a CA shareholder with 900 shares, for instance, the restitution check
amounted to around $1,000 and the amount that must be returned is $200.
As might be expected, shareholders are outraged. "These guys had two years
to tally up claims and distribute the money and somehow they were off by 20
percent?" said one shareholder, Ben Woods of San Francisco, in an e-mail.
"Were they using CA software or were they working with CA
35-days-in-the-month accounting?"
He was referring to CA's former practice of improperly holding open quarters
to inflate sales results, a tactic that resulted in fraud, conspiracy and
obstruction charges against eight former executives. Former chief executive
Sanjay Kumar is serving a 12-year prison term.
In the case of the miscalculation, CA is distancing itself from the error. A
spokesman said the company has "no involvement with the administrator of the
fund and therefore we have no comment."
Peter Crudo, chief operating officer at Gilardi, said the problem was "human
error."
Payment calculations mistakenly failed to include 2,000 eligible
shareholders, he said, resulting in the overpayments. Crudo said it's the
first time it's ever happened in the firm's history, and noted Gilardi must
pay the costs to fix it.
In a letter to Judge I. Leo Glasser last week, Feinberg said he had notified
federal prosecutors about the error, and instructed Gilardi "to initiate a
series of emergency steps to minimize the damage."
In a second letter to Glasser, Feinberg said an initial review of the
overpayment indicates that recovery from the 3,000 largest recipients will
fix most of the problem, including the return of $50 million.
Copyright © 2007,
Newsday Inc.
|
