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CA Inc.'s Shareholders Say Ex-Chief Should Pay Software Maker

By Patricia Hurtado and Ron Day

Jan. 17 (Bloomberg) -- CA Inc. shareholders asked a judge to turn over money from the sale of their former chief executive officer's two Ferraris, Long Island mansion and other assets to the company following his sentencing for a $2.2 billion fraud.

Careal Holding AG and Private Capital Management LP, CA's two largest shareholders, have written to U.S. District Court Judge I. Leo Glasser requesting he force ex-CEO Sanjay Kumar to pay restitution. Kumar was sentenced in November to 12 years in prison after pleading guilty to accounting fraud.

The request follows a similar demand from CA that Kumar and Stephen Richards, the company's former chief of sales, repay the Islandia, New York-based company, the second-largest maker of software for mainframe computers. Other shareholders have filed suit asking that the restitution be paid to investors instead.

``Mr. Kumar is responsible for inflicting hundreds of millions of dollars of harm on CA, maybe even billions,'' Careal Chairman Martin Haefner wrote in a letter to the court filed late yesterday. Paying CA directly is ``the best and most appropriate way to provide restitution to uncompensated shareholders.''

In November, CA won a state court order attaching Kumar's home, cars, boat and bank accounts as part of a suit to recover $14.9 million that the software company spent defending him against fraud charges.

According to court documents, Kumar's holdings include his home in Upper Brookville, New York, two Ferrari 550 Maranellos, a 57-foot yacht and $9 million that CA founder Charles Wang is reportedly paying for Kumar's interest in the New York Islanders hockey team.

`Ill-Gotten Gains'

``CA is actively working to recoup any ill-gotten gains,'' CA spokeswoman Jennifer Hallahan said. ``Our commitment has not wavered on this issue: We want the money returned.''

Assistant Brooklyn U.S. Attorney Eric Komitee, who is prosecuting the case, also asked Glasser to prohibit Kumar, 44, from transferring assets from the sale of any of this property to CA before the judge can order any funds be forfeited.

Glasser hasn't ruled on Komitee's request and scheduled a hearing on the restitution issue for later today.

Kumar's lawyer Jack Cooney has argued against Glasser imposing such an order. There's no risk that Kumar will transfer the assets before Glasser rules, Cooney said.

Kumar's lawyer for the restitution matter, Lawrence McMichael, wasn't immediately available for comment. Komitee also wasn't immediately available for comment.

The case is U.S. v. Kumar, 04-CR-846, U.S. District Court, Eastern District of New York (Brooklyn).

To contact the reporter on this story: Patricia Hurtado in Federal Court in Brooklyn at ; Ron Day in New York at

Last Updated: January 17, 2007 16:03 EST




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