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Former CA executive gets seven years in jail

Pleads guilty to financial fraud

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.

US District Court Judge I Leo Glasser sentenced Stephen Richards, 41, to 84 months in prison followed by three years' supervised release.

It could be said that the former CA executive got off comparatively lightly. According to a spokesman for the US Attorney's Office for the Eastern District of New York, Richards could have faced 100 years in prison.

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

Earlier this month, Glasser sentenced Kumar to 12 years in prison and a $8m (about £4.2m) fine.

Richards is due to report to prison on 27 February 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 US Attorney's Office. Glasser is expected to decide the restitution amount around 27 February, the spokesman added.

The spokesman declined to comment on whether the office has concluded its investigations into Computer Associates, which changed its name to CA last year.

CA has tried to shake off its troubled past. The company reached a deferred prosecution agreement with the US government in September 2004, requiring CA to pay $225m (£119m) to a restitution fund to compensate victims of the fraud, those who bought or transacted Computer Associates stock from 20 January 1998 to 25 February 2002.

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

CA has paid into the restitution fund and its distribution is being finalised, 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," company spokeswoman Jennifer Hallahan wrote in an email. CA is a "dramatically different organisation" from the one 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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