CA sues to recover Kumar's legal fees

CA sues to recover Kumar's legal fees

CA seeks to recover US$14.9 million in legal defense fees from former CEO Sanjay Kumar

CA has filed a lawsuit to recover US$14.9 million in legal defense fees paid for Sanjay Kumar, its former chief executive officer, who was sentenced Nov. 2 to 12 years in prison on securities fraud-related charges.

Judge Stephen A. Bucaria of the Nassau County Supreme Court in New York, on Wednesday approved an attachment order covering several pieces of Kumar's property to pay for the claim should CA win its lawsuit. The attachment order covers a house in Upper Brookville, New York, a 1999 57-foot Azimu boat, two Ferrari cars, a Land Rover, a Volvo, banks accounts, and US$9 million that CA says company founder Charles Wang owes Kumar.

"It is our position that as a result of his criminal conviction, Mr. Kumar is not entitled to indemnification for legal costs," said Dan Kaferle, senior vice president for CA worldwide public relations.

CA, formerly Computer Associates International, is also working with U.S. government investigators to recover "ill-gotten gains," Kaferle said.

Jack Cooney, Kumar's lawyer, didn't immediately return a phone call seeking comment on the CA lawsuit.

Kumar was sentenced to the prison term and an US$8 million fine on obstruction of justice and securities fraud charges.

Kumar and Stephen Richards, the company's former worldwide sales head, both pleaded guilty after they were accused of fraudulent accounting practices, including falsely reporting hundreds of millions of dollars in revenue for licensing agreements during fiscal quarters in which the deals had not yet been finalized.

In early 2000, CA signed a US$44.5 million license deal with a nearly insolvent customer in which it had an ownership stake, according to court records. It then back-dated the contract so it could be recorded in the prior quarter. In the next quarter, CA reversed the revenue in its internal records but did not publicly restate its results.

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