Sports cars, yacht part of CA's suit against Kumar |
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By Linda Tucci, Senor News Writer
22 Nov 2006 | SearchCIO.com |
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CA Inc. has sued its convicted former chairman and CEO, Sanjay Kumar, for $14.9 million the company says it paid for his legal defense. Kumar pleaded guilty in April to perpetrating a $2.2 billion securities fraud and cover-up at the business software maker and was sentenced to 12 years in prison.
CA, formerly known as Computer Associates and headquartered in Islandia, N.Y., filed suit against Kumar earlier this month in New York State Supreme Court for Nassau County, claiming that as a result of Kumar's guilty plea to all counts against him, he is no longer entitled to indemnification by CA.
Many accoutrements Kumar apparently enjoyed, from Italian sports cars and a yacht to a house on Long Island's posh North Shore, will serve as security should Kumar lose the suit, according to a court order issued Nov. 15.
CA's suit is the latest turn in a company scandal that began with a United States Department of Justice and Securities and Exchange Commission (SEC) investigation into certain CA accounting practices in 2002. As the suit reminds the court: "The investigation revealed that prior to and during CA's fiscal year 2000, Kumar and other officers and executives in CA engaged in a systematic, companywide practice of falsely and fraudulently recording and reporting within a given fiscal quarter revenue associated with certain license agreements even though these agreements had not in fact been finalized and signed during that quarter. This practice, sometimes referred to within CA as the '35-day month,' or the 'three-day window,' violated Generally Accepted Accounting Principles and resulted in the filing of materially false financial statements."
According to the suit, the company believes Kumar "has taken and will continue to take steps to frustrate its ability" to recoup its legal fees, hence the motion to lay claim to Kumar's assets. The suit points out that Kumar transferred millions of dollars to family members soon after learning of the Department of Justice and SEC investigation and as recently as 2006. The assets include: $20 million transferred to his wife after news of the investigation came out in the press and $5 million to his teenage daughters in a real estate trust.
The assets under claim include: a 57-foot Azimut pleasure boat, a 1999 Ferrari 550 Maranello car, a 2001 Ferrari 550 Maranello, a 2004 Land Rover, a 2004 Volvo XC90, and bank accounts at JP Morgan Chase Bank. The order also attached $9 million the company says Kumar is owed from Charles Wang, the founder of CA, for Kumar's interest in the New York Islanders hockey club, as well as the Kumar house in Upper Brookville, N.Y. (One history says this village, founded in 1932, was so rich during its first 20 years that even the butlers had their own country club.)
Let us know what you think about the story; email: Linda Tucci, Senior News Writer
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