Litigation Release No. 19898 / November 3, 2006

Accounting and Auditing Enforcement Release No. 2509 / November 3, 2006

SEC v. Sanjay Kumar, 04 Cr. No. 846 (E.D.N.Y.)(I.L.G.); SEC v. Sanjay Kumar and Stephen Richards, 04 Civ. 4101 (E.D.N.Y.)(I.L.G.)

Former CEO and Chairman of Computer Associates, Sanjay Kumar, Sentenced to 12 Years in Prison for Accounting Fraud and Obstructing Commission Investigation

The Commission announced that in a criminal case prosecuted by the United States Attorney's Office for the Eastern District of New York, Sanjay Kumar, a former CEO and Chairman of Computer Associates International, Inc., was yesterday sentenced to a prison term of 12 years by Judge I. Leo Glasser of the United States District Court for the Eastern District of New York. Judge Glasser also directed Kumar to pay an $8 million dollar fine. Judge Glasser will determine Kumar's restitution obligation at a later hearing. Kumar, 44, pled guilty to eight felonies, including securities fraud, obstruction of justice, and perjury, on April 24, 2006, two weeks before a scheduled trial. Kumar admitted fraudulently inflating the quarterly revenue and earnings of Computer Associates by keeping open the company's books past quarter-ends in order to give the appearance that the company had met or exceeded quarterly revenue projections, when, in fact, Computer Associates' performance had fallen short of those goals.

The indictment charged that in 1999 and 2000, under Kumar's oversight and direction, over $2 billion in revenue were manipulated to prop up the price of the stock. Kumar also admitted obstructing the government's investigation by providing false explanations for the fraudulent accounting practices to the company's lawyers, with the intent that those lawyers would repeat those false explanations to the government, and by lying himself to federal investigators to conceal the fraud scheme. Kumar's co-defendant, Stephen Richards, Computer Associates' former Head of World-Wide Sales, also pled guilty to eight felonies on April 24, 2006, and will be sentenced by Judge Glasser on November 14, 2006. Five other of Kumar's co-conspirators previously entered guilty pleas, agreed to cooperate with the prosecution and are awaiting sentencing: David Kaplan, David Rivard, Lloyd Silverstein, Steven Woghin and Ira Zar.

The Commission previously filed civil injunctive actions against Kumar, the above-named former Computer Associates executives and Computer Associates itself. In the Commission's actions, Judge Glasser previously imposed injunctions and other equitable relief, on consent, against all of these defendants. The Commission's claims for disgorgement and civil penalties remain pending against Kumar, Rivard, Silverstein, Woghin and Zar.

The Commission acknowledges the assistance of the United States Attorney's Office for the Eastern District of New York and the Federal Bureau of Investigation in this matter.

See prior Lit. Rel. Nos. 19730, 18954, 18891, 18665, and 18552.