RealTime IT News

CA Sues ex-CEO For Millions, And His House

Ex-CA CEO Sanjay Kumar is facing 12 years in federal prison for masterminding an accounting scheme that netted some $2.2 billion, cost CA shareholders $400 million and devastated the enterprise software company's credibility.

CA  is striking back.

The software maker has filed a lawsuit against Kumar and is looking to recoup the $14.9 million it spent defending him in court for the "35-day month" scheme the executive participated in when he was running the company.

The Supreme Court in New York State responded by agreeing to let CA lay claim to Kumar's house and other assets as security so that Kumar could repay the debt if he loses the lawsuit.

According to a court order granting CA the right to attach Kumar's properties, the ex-executive's assets include: a single-family home in New York state, a 57-foot Azimu yacht, two Ferraris, a Land Rover and a Volvo car.

To round out the $14.9 million, the court attached $9 million Kumar was owed by his predecessor and CA founder Charles Wang. This sum was a payment for a stake that Kumar owned in the New York Islanders hockey team.

CA filed suit because it was concerned that the court fines and financial restitution Kumar owes plaintiffs will make it hard to secure what the ex-executive owes the company.

Fearing that Kumar will "continue to frustrate [CA's] ability to enforce any judgment in this action," CA said it will also seek additional restitution.

"We are working with the government to receive restitution to compensate the company for damage resulting from the fraud and subsequent cover-up," CA spokesman Daniel Kaferle told internetnews.com in an e-mail statement.

Kumar was sentenced to 12 years in prison and fined $8 million fine two weeks ago for illegally manipulating the software company's financial results.

The ex-executive pleaded guilty to eight counts of security fraud, obstruction of justice and making false statements in April.

Kumar and former CA sales head Stephen Richards, who this week was sentenced to seven years in federal prison, are headed to jail for their roles in the so-called "35-day month" scheme.

The reason the scheme got the "35-day month" title is because certain software contracts went on the balance sheets as though they were inked during a specific quarter, when in fact the funds from the deals were not coming through until the next quarter.

It was a way of showing that payment was made before they actually threw off cash. Now, CA is asking Kumar to pay up for what it cost.