Ex-CA sales exec gets 7-year jail term

The former head of worldwide sales at Computer Associates has been sentenced to seven years in jail after pleading guilty to financial fraud charges in April.

U.S. District Court Judge I. Leo Glasser sentenced Stephen Richards, 41, Tuesday at federal court in Brooklyn, New York, to 84 months in prison followed by three years’ supervised release.

The former CA executive got off comparatively lightly. Richards could have faced 100 years in prison, according to a spokesman for the U.S. Attorney’s Office for the Eastern District of New York.

Richards and Sanjay Kumar, the former chief executive officer of Computer Associates, both pleaded guilty to securities fraud charges including falsely reporting hundreds of millions of dollars in revenue before licensing agreements were finalized to beef up quarterly financial results.

Earlier this month, Glasser sentenced Kumar to 12 years in prison and a US$8 million fine. Richards is due to report to prison Feb. 27, 2007 and is free on bail until that time.

Still to be determined in relation to both Richards and Kumar is the matter of restitution to victims of the fraud, according to the spokesman at the U.S. Attorney’s Office. Glasser is expected to decide the restitution amount around Feb. 27, the spokesman added.

The spokesman declined to comment on whether the U.S. Attorney’s Office has concluded its investigations into Computer Associates, which changed its name to CA Inc. last year.

CA has tried to shake off its troubled past. The company reached a deferred prosecution agreement with the U.S. government in September 2004, requiring CA to pay $225 million to a restitution fund to compensate victims of the fraud, those who bought or transacted Computer Associates stock from Jan. 20, 1998 through Feb. 25, 2002.

In September, CA announced an agreement with the U.S. Attorney’s Office for the Eastern District of New York and the U.S. Securities and Exchange Commission to extend the term of Lee Richards as an independent examiner overseeing CA’s financial reporting until May 1, 2007.

CA has paid into the restitution fund and its distribution is being finalized, CA Chairman Lewis Ranieri said in September.

“Yesterday’s sentencing is another step in putting the past of Computer Associates further behind the new CA,” CA spokeswoman Jennifer Hallahan wrote in an e-mail request for comment. CA is a “dramatically different organization” than it was over two years ago when Richards left the company, she added.

CA has made “significant progress” in putting in place an infrastructure designed to promote “integrity, compliance and good governance,” Hallahan wrote. “CA is also actively working to obtain any ‘ill-gotten gains’ from former executives,” she added.

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