Another chapter in software maker CA's efforts to bounce back from scandal begins Tuesday when former CEO Sanjay Kumar begins a 12-year prison term for accounting fraud.
A federal judge in May dismissed all pending charges against the company relating to the accounting scandal that resulted in an overhaul of the CA boardroom, Kumar's sentencing and a pending civil lawsuit by the company against former executive and co-founder Charles Wang.
Kumar's attorney, Lawrence McMichael of Dilworth Paxon LLP in Philadelphia, confirmed that his client was due to report to prison Tuesday. McMichael told ChannelWeb that the appeal process is "just getting started," with Kumar's appeals brief due this week. The government has a month to reply, he said.
"I think you're probably looking at a year or so for the appeal process, depending on what the government does. Next summer, we should have a better idea of what we'll be doing going forward," McMichael said.
Kumar, 45, is expected to serve out his sentence at a minimum security federal prison camp in Fairton, N.J., according to media reports. McMichael would not comment on how much of his sentence Kumar would be likely to serve, but an attorney not connected to the case said that based on other, similar cases, it would be close to the full 12 years.
"The federal sentencing guidelines are pretty strict. The government factors that into what charges they choose to bring, since there are usually a lot of different counts. With the mandatory minimums he's looking at a little under 11 years. They'll knock 10 percent off for good behavior," said Burke Hansen, a criminal defense attorney in San Francisco who has worked on federal cases.
Kumar must also pay $798 million in restitution to CA investors. A federal judge in April ordered that he pay at least $52 million of that sum by the end of 2008. CA has paid $225 million of the restitution fund, which will total more than $1 billion.
ASCII Group chairman and CEO Alan Weinberger said Kumar's situation reflected the loose ethics and bad advice prevalent throughout U.S. corporate culture before high-profile scandals like Enron and tougher legislation like Sarbanes-Oxley came along.
Weinberger, who heads a consortium of 1,500 VARs headquartered in Bethesda, Md., considers Kumar a friend.
"I met him, I knew him. It's too bad," said Weinberger.
"We work a lot with CA and this [scandal] is completely behind them. This is part of an era that saw many similar things take place. A lot of it had as much to do with bad legal advice as bad management. And hopefully in the future, the lawyers will give more careful answers when the question is whether something is legal or not.
"No one acts alone. Sanjay got singled out. What can you say? It's unfortunate."
Meanwhile, CA will Webcast its 2007 Annual Meeting of Stockholders at 10am ET on Wednesday, Aug. 22.