Kumar Richards Plead Guilty In Fraud Case

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Kumar, Richards Plead Guilty In Fraud Case

By: David Utter
2006-04-25

Sanjay Kumar, former CEO of Computer Associates, and his former head of sales Stephen Richards both switched their not guilty pleas to guilty ahead of a May 8th trial.

Kumar, Richards Plead Guilty In Fraud Case

Kumar, Richards Plead Guilty In Fraud Case

A $2.2 billion accounting fraud scheme placed the former head of CA (CA) in the crosshairs of a federal investigation. Although both Kumar and Richards had fought the charges after a September 2004 indictment, they abruptly shifted to guilty pleas.

"I know my conduct was wrong ... I apologize for my actions," Kumar told the court at a two-hour hearing in New York, Reuters reported. The charges in the nine-count indictment against them range from conspiracy to commit securities fraud, conspiracy to obstruct justice, to obstruction of justice. Sentencing has been set for September 12th, and both men are free on $5 million bond as the court considers possible sentences of 5 to 20 years per charge.

"The guilty pleas today of Computers Associates' former CEO and its former head of world-wide sales are the culmination of the government's successful investigation into a culture of corruption and fraud at Computer Associates, Roslynn Mauskopf, U.S. Attorney for the Eastern District of New York, said in a statement.

CA has experienced a difficult fourth quarter, and issued lowered guidance for the results it plans to report on May 30th. "Our results for the quarter were not in line with our expectations," said John Swainson, CA's president and CEO.

They anticipate total revenues of $940 million to $950 million instead of the previously forecast $975 million to $1 billion, and earnings of 14 to 16 cents per share rather than 23 cents.

In other security software news, Symantec (SYMC) is still reeling from the news that it faces a $1 billion tax bill stemming from its purchase of backup software maker Veritas.

Their stock dipped to 15.81 earlier this week before rallying. Trading at press time has moved it down 29 cents to 16.05.

Much of the rest of the sector has been running generally down on the exchanges today. Websense (WBSN) is down 50 cents to 24.64 despite today's announcement of two new security appliances in conjunction with privately held Resilience Corporation.

McAfee (MFE) reports earnings on April 27th, and like other companies today has seen a drop, moving down 47 cents to 24.03. It announced a plan to enable its SecurityAlliance partners to consult on McAfee solutions, as the company looks for ways to increase its connections with customers and drive more revenue.

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Tags: CA, Symantec, WebSense, McAfee

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About the Author:
David Utter is a staff writer for InternetFinancialNews and WebProNews covering technology and business.


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