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For copies of the records addressed in the article below, submitted to the United States District Court for the Eastern District of New York in relation to Barroway v. Computer Associates International, Inc., et al, 98-cv-4839, 02-cv-1226; Federman et al v. Artzt et al, 03-cv-4199; Computer Associates International, Inc., Derivative Litigation, 04-cv-2697; and Sam Wyly & Ranger Governance, Ltd. v. CA, Inc. & Sterling Software, Inc., 05-cv-4430, see

For previous reports concerning payments by Charles Wang's Smile Train to Alphonse D'Amato's Park Strategies, as addressed in pages 17-19 of the Kumar Declaration and its referenced Exhibit G tax records (above), see

For a copy of the minutes of the 2003 board meeting referenced in the Kumar Declaration's statements on pages 22-24 about Mr. D'Amato's control of the company's response to government prosecutors, see

 

Newsday, September 3, 2008 article

 

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Former CA chief accuses D'Amato, Ranieri of cover-up

 

BY MARK HARRINGTON | mark.harrington@newsday.com

10:28 PM EDT, September 2, 2008

Former CA Inc. chief Sanjay Kumar alleges his former mentor Charles Wang "personally directed" improper accounting at the company going back to 1987, and that several long-time board members "took steps to protect Wang and conceal the facts."

In a 27-page affidavit filed in court Tuesday by Texas billionaire Sam Wyly, Kumar depicts a cover-up within a cover-up, alleging board members Lewis Ranieri and Alfonse D'Amato "had knowledge of" the accounting misdeeds for which he went to prison -- going back "at least" to 2003. Yet the accusations, which he said he communicated to a special board committee through "many" interviews, never made it into a report the board publicly filed in 2006, documenting the scandal.

Fresh allegations

Kumar's affidavit provides specific instances in which he alleges Wang pushed him to close contracts after a quarter closed to meet earnings figures expected by Wall Street, in violation of accounting rules.

 

Kumar, who pleaded guilty in 2006 to charges of conspiracy, securities fraud, obstruction of justice and lying to FBI agents, alleges it was at "Wang's direction" that he took a July 8, 1999, flight to Paris to close a $32 million deal with GIE Informatique -- $19 million of which was improperly recognized nine days after the quarter's close.

Andrew Frank, a spokesman for Wang, yesterday referred to Wang's 2006 statements denying any involvement in accounting misdeeds at CA, and said he was "appalled" by the allegations. "I intend to vigorously defend my good name and fight any and all efforts to place the crimes of Kumar and his management team at my feet," Wang said then.

A spokesman for D'Amato and Ranieri, who resigned as board chairman in 2007, called the allegations "false." "Mr. Kumar has pled guilty to lying to the company's board, its lawyers and its investors," said the spokesman. "It is regrettable that, from jail, Mr. Kumar continues to be a stranger to the truth."

CA in 2004 acknowledged former executives conspired in a multiyear, $2.2-billion accounting scandal for which the company reached a deferred prosecution agreement and paid more than $225 million in restitution. A spokesman yesterday said the board conducted a "thorough" probe of the allegations, including interviews with Kumar. "In a matter of this complexity, one cannot draw conclusions from the uncorroborated recollections of a single individual," the company said.

Kumar alleges Wang "insisted that CA 'stonewall" the government probe of CA, arguing it would eventually "go away."

Implicating others

The filing also implicates CA co-founder Russell Artzt, alleging he "actively participated in concealing CA's improper accounting practices" from investigators and fellow board members. Kumar's affidavit alleges Artzt, who was never implicated in the wrongdoing, helped the sales team finalize deals after a quarter had closed. He also allegedly urged Kumar to keep silent on Wang's alleged involvement. Artzt "told me to remain silent because he thought that D'Amato would 'get this fixed,'" Kumar's affidavit says.

In a statement yesterday, an attorney for Artzt said her client "categorically denies" knowledge of, or participation in concealing the accounting misdeeds at CA. "Mr. Kumar's statements are completely false," said attorney Christine McInerney, noting that Artzt, who still works for CA, was cleared by a committee of the CA board.

A spokesman for the U.S. attorney's office in Brooklyn, which oversaw the government's accounting fraud probe that resulted in Kumar pleading guilty, declined to comment.

The affidavit was filed as part of a lawsuit against former and current CA executives and directors by Wyly, a CA shareholder, hoping to recoup hundreds of millions in lost CA investments. William A. Brewer III, lead counsel for Wyly, said it "confirms a conspiracy and subsequent cover-up of epic proportions."

Kumar alleges Ranieri specifically directed him to keep details of the accounting improprieties from fellow CA director Walter Schuetze, saying former SEC chief accountant Schuetze would "have a heart attack" if he knew the extent of the misdeeds.

Since going to prison on a 12-year sentence last year, Kumar has been interviewed by government and private lawyers, said Lawrence McMichael, a Philadephia-based lawyer for Kumar. He said Kumar "will talk to anybody who wants to talk to him and will tell them the truth." Kumar's appeal of his prison sentence will be heard later this month. A spokesman for the U.S. attorney's office in Brooklyn, which oversaw the probe, declined to comment.

Michael Cornacchia, a former prosecutor on the case now in private practice in Manhattan, said investigators are apt to look with suspicion on Kumar's claims unless there is "independent supportive or corroborating evidence." If new evidence of obstruction were found, it could extend any statute of limitations on those crimes, he said, though the statute on accounting fraud has likely expired.

Checking the books

In addition to Ranieri and D'Amato, Kumar's affidavit alleges former CA board members Willem de Vogel and Artzt "knew of our practice of booking revenue for a few days past quarter end." Kumar alleges de Vogel, a member of the CA board's audit committee until 2002, knew of the improper accounting, saying he "would call up CA executives three to five days after the quarter's end to inquire 'How are we doing?' or, 'How do the numbers look?'"

Lawrence Kamin, a lawyer for de Vogel, said his client "categorically denies" the claims, noting de Vogel was to serve as a witness against Kumar at trial. "He's one of the good guys," Kamin said of his client.

Kumar said he discussed the late-booking practice with Ranieri "during the government investigation," which began in February 2002. In April 2003, he alleges, he told Ranieri a former CA joint venture partner was trying to blackmail the company about the improper accounting. He alleges Ranieri told him to "put the past behind me," which he understood to mean "fix the problem at all costs."

Kumar alleges D'Amato was "aware of Wang's participation" in the accounting improprieties but "told me on more than one occasion that it was best not to discuss Wang's involvement."

Kumar charges that D'Amato helped steer CA's internal investigation to a lawyer he knew well, despite Schuetze's urging Kumar to interview a number of firms. That attorney was Robert Giuffra, a Sullivan & Cromwell lawyer who had worked with and for D'Amato and his brother Armand, going back to the 1980s. "D'Amato made it clear that I should recommend Giuffra," Kumar said, adding that Giuffra's role was allegedly to conduct CA's defense against the federal probe "to minimize" its "depth and any damage that might be done to D'Amato, Ranieri and Wang."

Giuffra declined comment.

Kumar said he and Wang had a major falling out after Kumar introduced a new business model in 2000, alleging Wang "was regretting giving up the CEO title." So Wang fired him over breakfast in November 2001, he alleges, though CA's board reaffirmed Kumar's post at a subsequent meeting.


 

 

Copyright 2008, Newsday Inc.

 

 

 

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