Sanjay Kumar, the former CEO of software maker CA, will report to federal prison Tuesday to begin serving a 12-year term for accounting fraud, his attorney confirmed.
While Kumar readies himself for prison, CA is awaiting federal court permission to sue former CA co-founder Charles Wang for damages related to accounting fraud started at CA in the late 1980s that lingered through 2004, a spokesman said Friday. A Special Litigation Committee at CA in April advised suing Wang, saying CA was embedded with a culture of fraud instilled by Wang, and that CA should seek court permission to move forward.
Wang, who apprenticed Kumar, retired from CA in 2002, has denied wrongdoing and has rejected the committee's recommendation.
Kumar, 45, was ordered by a federal judge in April to pay at least $52 million in restitution to investors by the end of 2008, part of a $1 billion restitution fund. CA paid $225 million of that total, leaving $798 million in restitution to Kumar.
Kumar's attorney, Lawrence McMichael of Dilworth Paxon in Philadelphia, said in an e-mail that Kumar would report Tuesday "as per our agreement with the government."
McMichael said the location of Kumar's imprisonment was confidential, but a June order by U.S. District Court Judge I. Leo Glasser sent Kumar to a minimum security federal prison camp in Fairton, N.J.
Federal Bureau of Prisons records do not indicate where Kumar will report. Fairton is described on the Bureau of Prisons Web site as a rural facility for men, with both a medium security facility and an "adjacent satellite prison camp housing minimum security offenders."
Fairton is in south central New Jersey, about 50 miles southeast of Philadelphia.
Glasser wrote in the June order that "there is no need for Mr. Kumar to be designated to a facility with greater than a minimum security designation," and waived a bureau of prisons policy that requires any sentence of more than 10 years to be served in a more secure prison.
McMichael had argued in a June memo to the judge that the prison security level waiver followed precedent with a judge's waiver for another high-profile white-collar convict, Bernard Ebbers, the WorldCom CEO convicted to 25 years in federal prison in 2005 for securities fraud and conspiracy.
A 25-year term would have required Ebbers to report to a medium-security facility, but his judicial waiver designated him to a low-security facility. Ebbers, 65, is now imprisoned at the federal institution in Oakdale, La., in the central part of the state, according to the prison bureau.
Following the federal crackdown on corporate fraud with the collapse of Enron in 2001, Ebbers received one of the longest terms of convicted top executives, while Kumar's is on the low end. Jeffrey Skilling, former Enron CEO, got more than 24 years; John Rigas, founder of Adelphia Communications got 15 years and Dennis Kozlowski, former CEO of Tyco International Ltd. got up to 25 years.
Kumar was accused with other CA executives of backdating contracts to inflate revenue at the Islandia, N.Y.-based enterprise software maker. He apologized to the court at his sentencing last November after pleading guilty in April to conspiracy to improve CA sales in 1999 and 2000 and also of interfering with a federal investigation into the matter.
Kumar is not speaking to the press, his attorney said. "I apologize to the court for my mistakes and conduct," Kumar told the judge in November.
This story, "Former CA chief reports to prison next week" was originally published by Computerworld.