Welcome!

Log Management Authors: Dana Gardner, Pat Romanski, Elizabeth White, David H Deans, Carmen Gonzalez

Related Topics: Java IoT, Microservices Expo

Java IoT: Article

Former CEO Sanjay Kumar Fingers CA Founder Charles Wang

CA Board Members Also Knew About the Massive Accounting Fraud & Cover-Up, Claims Kumar

From his cell in a federal prison in New Jersey, former CA CEO Sanjay Kumar has pointed an accusing finger at CA founder Charles Wang and said that Wang was the real author of the $2.2 billion accounting fraud that sent Kumar to jail for 12 years and nearly destroyed the company.

Kumar has said such things before but this time he also claims CA co-founder Russell Artzt, now its vice-chairman, was an active participant in CA's notorious "35-day months" and that one current and two former CA board members, including former US Senator Alfonse D'Amato, former Salomon Brothers vice-chairman Lewis Ranieri and former Audit Committee member Willem de Vogel, knew all about CA's practice of keeping its books open for five days or more past the end of the quarter so it could recognize some of the next quarter's software license revenues early and meet Wall Street's expectations.

He says they conspired to stonewall the government's investigation into the fraud and protect Wang.

Everybody denies the allegations. Newsday, CA's local paper, which broke the story, says Kumar's appeal of his prison sentence is supposed to be heard this month.

Kumar's accusations come a year into his stretch in a 27-page affidavit filed with a federal court in New York on August 27 on behalf of CA stockholder Sam Wily, who has been fruitlessly trying to get the court to reopen a shareholder class-action suit settled in 2003.

When CA bought Wily's company, Sterling Software, in 2000 it paid for it in conflated stock. A quarter later, when CA pre-announced, its stock price tanked. Wily has been seeking readdress ever since, twice kicking off a proxy fight to unseat CA's board.

His lawyers are now hoping Kumar's so-called new evidence will persuade the judge to reopen the case.

Kumar, however, claims that he told this story to CA's internal investigators in 2006 and 2007 but that his version of the events never made it into the Special Litigation Committee's report that was made public, which is kind of odd considering it accused Wang of fraudulent accounting and urged legal action.

"Fraud pervaded the entire CA organization at every level, and was embedded in CA's culture, as instilled by Mr. Wang, almost from the company's inception," it said.

It also described CA under Wang as a "one-headed dragon" and said "no significant decisions were made without his participation and approval."

CA thought at the time that it could make a $500 million claim against Wang, who was never charged by the government reported because of a five-year statue of limitations. It has reportedly also asked the court to reopen the stockholders' suit.

Anyway, Kumar says that when he went to work for CA in 1987 its 35-day month was "firmly entrenched" and "considered to be the way CA did business." He claims Wang "personally directed the implementation of this practice in my presence."

More to the point, Kumar claims that Wang, then still CA's CEO, personally directed him to bring in and backdate contracts for quarters Kumar is serving time for, including sending Kumar to Paris to close a deal with AXA.

Kumar also claims that "Wang insisted that CA stonewall the government, explaining that, if CA did so, the investigation would eventually ‘go away.'"

Kumar says D'Amato was "aware of Wang's participation in those practices...and told me on more than one occasion that it was best not to discuss Wang's involvement," warning him "Don't piss on the past," which Kumar calls "D'Amato's standard phrase for instructing me not to implicate Wang."

Kumar claims Raineri, then a member of the board's Audit Committee and eventually Kumar's replacement as chairman of CA, "instructed me not to divulge the full extent of the 35-day month practice to [Walter] Schuetze, the chair of the Audit Committee" because "Schuetze would have a heart attack" and "would ‘turn on us' if he found out."

Raineri reportedly told Kumar that CA had to "play hard ball" with the government and reportedly told CA's former head of worldwide sales Stephen Richards in Kumar's presence that if he took the Fifth or told the SEC the truth that he would be fired, but "as long as he was in the company, Ranieri would protect him."

Richards lied and is now serving a seven-year sentence for obstruction of justice and perjury.

D'Amato, given his connections, was allegedly supposed to fix CA's problems with the government and arrange a settlement.

Kumar says D'Amato brought in his buddy, Sullivan & Cromwell lawyer Robert Giuffra, to run an internal investigation when the government insisted on such a probe and that "Giuffra undertook conducting CA's defense against the government investigation to minimize the investigation's depth and any damage that might be done to D'Amato, Ranieri and Wang."

According to Kumar, from 1999 through 2003 Wang paid D'Amato's consulting firm $390,000 through The Smile Train, the Wang-established charity, to make up for the consulting fees from CA that D'Amato lost when he joined the CA board.

Kumar says he found out about the payments through an "anonymous source" and offers IRS filings demonstrating payments from Smile Train to Park Strategies LLP, D'Amato's company.

D'Amato is still on the CA board; everybody else except Artzt is gone.

Artzt supposedly told Kumar "that he questioned whether I should implicate Wang when asked by the government about CA's accounting practices. By the end of the conversation, however, Artzt thought it was best not to disclose the 35-day month practice or Wang's involvement. Artzt told me to remain silent because he thought that D'Amato would ‘get this fixed.'"

Kumar says Artzt, who like Wang was never charged, "played an instrumental role in persuading a number of CA customers to sign license agreements after the close of the quarter in which the revenue associated with the agreement would be recognized." He claims Artzt knew the contracts would be backdated.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


IoT & Smart Cities Stories
Digital Transformation and Disruption, Amazon Style - What You Can Learn. Chris Kocher is a co-founder of Grey Heron, a management and strategic marketing consulting firm. He has 25+ years in both strategic and hands-on operating experience helping executives and investors build revenues and shareholder value. He has consulted with over 130 companies on innovating with new business models, product strategies and monetization. Chris has held management positions at HP and Symantec in addition to ...
Dynatrace is an application performance management software company with products for the information technology departments and digital business owners of medium and large businesses. Building the Future of Monitoring with Artificial Intelligence. Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more busine...
The challenges of aggregating data from consumer-oriented devices, such as wearable technologies and smart thermostats, are fairly well-understood. However, there are a new set of challenges for IoT devices that generate megabytes or gigabytes of data per second. Certainly, the infrastructure will have to change, as those volumes of data will likely overwhelm the available bandwidth for aggregating the data into a central repository. Ochandarena discusses a whole new way to think about your next...
CloudEXPO | DevOpsSUMMIT | DXWorldEXPO are the world's most influential, independent events where Cloud Computing was coined and where technology buyers and vendors meet to experience and discuss the big picture of Digital Transformation and all of the strategies, tactics, and tools they need to realize their goals. Sponsors of DXWorldEXPO | CloudEXPO benefit from unmatched branding, profile building and lead generation opportunities.
All in Mobile is a place where we continually maximize their impact by fostering understanding, empathy, insights, creativity and joy. They believe that a truly useful and desirable mobile app doesn't need the brightest idea or the most advanced technology. A great product begins with understanding people. It's easy to think that customers will love your app, but can you justify it? They make sure your final app is something that users truly want and need. The only way to do this is by ...
DXWorldEXPO LLC announced today that Big Data Federation to Exhibit at the 22nd International CloudEXPO, colocated with DevOpsSUMMIT and DXWorldEXPO, November 12-13, 2018 in New York City. Big Data Federation, Inc. develops and applies artificial intelligence to predict financial and economic events that matter. The company uncovers patterns and precise drivers of performance and outcomes with the aid of machine-learning algorithms, big data, and fundamental analysis. Their products are deployed...
Cell networks have the advantage of long-range communications, reaching an estimated 90% of the world. But cell networks such as 2G, 3G and LTE consume lots of power and were designed for connecting people. They are not optimized for low- or battery-powered devices or for IoT applications with infrequently transmitted data. Cell IoT modules that support narrow-band IoT and 4G cell networks will enable cell connectivity, device management, and app enablement for low-power wide-area network IoT. B...
The hierarchical architecture that distributes "compute" within the network specially at the edge can enable new services by harnessing emerging technologies. But Edge-Compute comes at increased cost that needs to be managed and potentially augmented by creative architecture solutions as there will always a catching-up with the capacity demands. Processing power in smartphones has enhanced YoY and there is increasingly spare compute capacity that can be potentially pooled. Uber has successfully ...
SYS-CON Events announced today that CrowdReviews.com has been named “Media Sponsor” of SYS-CON's 22nd International Cloud Expo, which will take place on June 5–7, 2018, at the Javits Center in New York City, NY. CrowdReviews.com is a transparent online platform for determining which products and services are the best based on the opinion of the crowd. The crowd consists of Internet users that have experienced products and services first-hand and have an interest in letting other potential buye...
When talking IoT we often focus on the devices, the sensors, the hardware itself. The new smart appliances, the new smart or self-driving cars (which are amalgamations of many ‘things'). When we are looking at the world of IoT, we should take a step back, look at the big picture. What value are these devices providing. IoT is not about the devices, its about the data consumed and generated. The devices are tools, mechanisms, conduits. This paper discusses the considerations when dealing with the...