Litigation Release No. 19912 / November 15, 2006

Accounting and Auditing Enforcement Release No. 2515 / November 15, 2006

SEC v. Stephen Richards, (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 Head of World-Wide Sales for Computer Associates, Stephen Richards, Sentenced to 7 Years in Prison for Accounting Fraud and Committing Perjury During Commission Subpoenaed Testimony

The Commission announced that in a criminal case prosecuted by the United States Attorney's Office for the Eastern District of New York, Stephen Richards, a former Head of World-Wide Sales and Senior Vice President of Computer Associates International, Inc., was yesterday sentenced to a prison term of 7 years by Judge I. Leo Glasser of the United States District Court for the Eastern District of New York. Judge Glasser will determine Richards' restitution obligation at a later hearing. Richards, 41, pled guilty to eight felonies, including securities fraud, obstruction of justice, and perjury, on April 24, 2006, two weeks before a scheduled trial. Richards 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, with Richards' participation, over $2 billion in revenue were manipulated to prop up the price of the stock. Richards also admitted to committing perjury during subpoenaed testimony before the Commission staff to conceal the fraud scheme. Richards' co-defendant, Sanjay Kumar, Computer Associates' former Chairman and CEO, also pled guilty to eight felonies on April 24, 2006, and was sentenced by Judge Glasser on November 2, 2006, to serve 12 years and pay an $8 million fine. Five other of Richards' 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 Richards, 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. 19898, 19730, 18954, 18891, 18665, and 18552.