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CA's Ex-CEO Indicted on Fraud
An anonymous reader writes "CNN is carrying a story about how Sanjay Kumar, ex-CEO of Computer Associates, was indicted on fraud charges. Prosecutors said the long-running accounting fraud scheme featured what came to be known by Computer Associates employees as a "35-day month" because company books were routinely kept open until revenues exceeded projected goals. "The defendants cooked the books by simply keeping them open beyond the end of a fiscal quarter for however long it took to meet the analysts earning estimates," said Deputy Attorney General James Comey. Comey said by the time the "house of cards" collapsed, about $2.2 Billion in revenue was booked prematurely. Good thing CA settled it's case with the DOJ."
September 23, 2004
Dear Mr. Kumar,
I'm interested in new some accountants who will would be real "stand up guys" for the company and hear you're looking for work. Please call me at 801-932-5800.
Darl McBride
de-Uglied version of this story: here
Trolling is a art,
Another Enron/Worldcom like problem... shoot all the CEOs and the IT industry will prosper.
I'm the root of all that's evil, yeah, but you can call me cookie.
Seriously, can't the tech industry rise above this Enron-ish nonsense? Whatever happened to the old days of being ethical and honest with regard to your responsibilities to the consumer. You would think that an industry with roots in the old hacker movement that this would not be as big of an issue as in the world of business as a whole. With the problems with accounting at SCO, Adobe, Redhat, Microsoft, and now this, we should take a long hard look at what's going on now.
Where's my movie deal?
your right.
...is a special place in hell for people like that. I would encourage them to start now by running for office.
What could you do with a 35-day month? That's at least four extra days off each month... every other weekend could be a long one. That's quite nice. Or you could work the extra days I suppose.
still, what do you expect from accountants? The only industry where the word "creative" is a bad thing.
I am a leaf on the wind
Wow, I've been looking for a way to stretch my paycheck, and this looks like a great way to do it. I'll just tell the credit card companies and my mortgage company that I'm now operating on a 35-day month.
Thanks, CA!
Just then the floating disembodied head of Colonel Sanders started yelling Everything You Know Is Wrong!-Weird Al
did Sanjay spend a lot of time in Texas? It appears to be a simple case of Texas-style Accounting.
A late bubble bursting? A lot of innocent people are going to suffer for this: lost jobs, lost opportunity, lost credibility.
There is a show in the US called Cops, and it is about police chases. They should make Cops with CEO's getting beat up and tortured by cops. That will be funny. A clip of this episode can be seen in Michael Moore's movie Bowling for Columbine. Anyway interestingly enough I am happy that some CEO's are showing up in the media. Wait till they start being someone's bitch in prision. I love my barbaris society. :)
Save the environment, please plant a bush in Texas.
I more and more like China's answer to corrupt CEOs. They shoot them.
I prefer the "u" in honour as it seems to be missing these days.
This better not have a negative impact
on eTrust Antivirus.
It's a lot more dependable and a lot less bloated than both Norton Antivirus and McAffee.
Sanjay Kumar, while he is a Greedy Bastard, could have been worse. If he had not agreed to "cooperate" and be charged personally, the Corporation itself could have faced charges, causing CA even more problems than it is already facing.
Stupid? Yes.
Stooopid? Probably not.
If I had a real
What hasn't really made it into the press is that about $3 billion of the $12 Billion in shareholder losses at Enron were in India. Did this have anything to do with the fact that the lion's share of Enron's US IT staff were H-1b workers from India? Certainly the H-1b program gave Enron's management more rope with which to hang themselves-for example Enron had entire team software projects with no legal purpose!
(A Spectrum Article talked about that one).
If this guy gets prison time, he will still be better off than those who lost their jobs because of this actions.
Especialy if any of those who lost their jobs end up homeless.
He will have a roof over his head and three decent meals per day.
I do wonder, though, if the so called country club prisons are just that, or is that an exagguration? I knew of someone who had served in the one in Conneticutt and he said it was no country club.
Cleara
He can fly out of prison with those GIANT EARS of his :-P
"Dancing is the vertical expression of a horizontal desire" --Robert Frost
Do they shoot the CEO's lawyers too?
-- This sig is out of stock --
Judge: Mr. Kumar, you have just been indicted for defrauding shareholders out of millions of dollars. What do you have to say about this? Kumar: Um...sorry your honor. I can't remember anything about that--I was high.
your right
Are you sure it wasn't his left?
Once again the leftist government interferes with the freemarket, certianly resulting in deleterious effects for mankind as a whole.
If the company wants to file their revenue that way, they have a right to. If consumers don't like the way they file their numbers they can do business with someone who files numbers in a way they want. When Computer Associates finds that no one is deadling with them because of their method of book-keeping, they'll want to change their ways so that they can compete and make money. This is how the freemarket works. The government doesn't need to interfere. This is the same as forcing companies to pay minimum wage: forcing them to file minimum numbers. It's anti-competetive; and, I don't want to frighten people, but it's borderlining on communism even.
It's sad that Slashdot, read by so many well-educated readers, will let a spelling error like this one get through.
...
"It's" = It is
"Its" = possessive
"CA settled its case."
How many times do we have to see this particular error on the web before people decide to memorize the correct usage?
Twinkie maker bankrupt!!!
lock down the system get the bad guys!
AdsJunction.com Ad Network
in that apartment for rent on Park Street.
"CA settled it's case with the DOJ."
It should be its, not it's.
Since we had a recent article from the CGL at the Univeristy of Waterloo, here's the explanation from one of the faculty there.
Yes, I'm pedantic.
/<en
I say we submit the guy to the Unicenter Administration Interface.
... all of sudden nobody cares about that one amendment that has to do with cruel and unusual punishment. You don't even know which amendment I'm talking about do you?
Sure, sure
"Hi, I broke the law!"
"To Unicenter you go!"
"This is bullshit, that one guy got the chair, this isn't fair!"
Why exactly is it a good thing that they settled with DOJ? Kumar and the rest of the high echelon of CA should be in jail.
But now I understand what makes capitalism work:
The corporation truly is a psychopath. When there is no such thing as "enough" you get this kind of shit.
It's amazing all the new schemes they come up with, but they forgot to add a very small footnote in the books to state they were using a calander system from another planet. "Hey lets use Neptunes calander, thats gives us 60000 days in a year to play with to meet analysts expectations!" Before Enron, economists were making noises about the revenuse reports from the Fortune 500 companies, bascially they didn't add up with the rest of the data out there. Alot were told to go look at there figures more closely becaus ethey just had to be wrong. And look what came out afterwards, heh.
CA is full of crooks. Look at some of the shady and sh*tty products they release -- Arcserve, Ingres, etc. All are horrible products. CA Unicenter? ROTFL.
Then these money-grubbing bastards make their web support sites pay-only? Outrageous. Now I find out that CA's former CEO was a crook? Talk about stating the obvious.
Screw CA. *spit*
I found a post on someone's livejournal page about the time that they had spent as a technical writer working for a company that was assisting CA's training department.
s /5 80872.html
http://www.livejournal.com/users/sclerotic_ring
"Not only were we all informed that the company was in great shape, but we were told that the co-CEOs were "good friends of George W. Bush's, so he's going to get us lots of government contracts." Two days later, CA went through its first serious layoff in years, and the entire training department was laid off a week after that." (There's more on the site)
fair.org counterpunch.com truthout.com indymedia.org salon.com
eff.org guerrilla.net debian.org gentoo.org
From I've seen... China generally is very lax towards American copyright - so somehow I doubt that would be a problem.
His name is Robert Rozeboom and he also manages the mails you send when Slashdot ban your subnetwork...
So your country's CEO was indicted on fraud?
When you put a guy from a country where business ethics are significantly different from what we're used to in the US in charge of a large corporation.
He doesn't know any better.
In large-company financial reporting, there are some areas in which some interpretation is permitted/required; bookings/billings/backlogs and depreciation are two such areas often (ab)used by CFOs and controllers to "fine-tune" closing numbers so that earnings are just above or in line with analysts expectations. If a company is going to such extremes as closing books late (here) or inventing bogus companies (such as with Enron) to generate the requisite numbers, however, then something must *really* be wrong at the company and that seems like "crossing that line" to me. There oughta be some penalties somewhere so everybody knows that this behavior is not right or even profitable. Hopefully, the existing CA shareholders won't get hurt too much from this and perhaps shareholders will inspire a new management to move in different directions; the cynical side in me says that those shareholders are often too ill-informed to understand or change management's behavior.
it was all just a bunch of nerds doing their thing. Then the suits smelled (smelt?) money and it went downhill from there. I mean, fuck, do you think any genuine engineering nerd would even think of patenting software? Hell no, that's just silly.
Not that we can get rid of those suits. The whole things too big now, you can't shake 'em off. They're the rulling class, and they always get their cut, of everything.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
Tell your friend on SSI to apply for section 8 housing in various towns/cities (and public housing a.k.a. subsidized housing).
Then only 30% of your income goes to housing and utilities. (And you can afford to buy a computer once in a while!)
By the way, homelessness is FAR better than jail/prison. Homelessness is not roof-less-ness, as there are homeless shelters, free food/meals everywhere (contact Salvation Army), and you can walk into a hospital every day of the week if necessary (while if in prison, you can be IN PAIN AND BLEEDING and not be allowed to get medical care for DAYS).
NEVER try to go to jail thinking it will help. Not in America it won't.
Signed: on SSI, and never been arrested or jailed ever.
if you 'kill' a corporation if the people responsible still get off free? I don't see a problem here. Limited liability up until fraud is committed (and proved in court), then lay it on these bastards. If I had a 5 million dollar bonus for the cost of 5 months in a min security prison plus all or most of my ill gotten gains, do you reall thing I'd care if you 'killed' my former employeer? It's not like I'm a paragon of virtue to begin with ya know.
Not that any of this matters. I've said it before, and I'll say it again: These people are our rulers. They're never going to do anything that severly inconviences themselves. Sure, they'll through the occasional weakling to the dogs of public opinion and 'justice', but mostly they'll go untouched. Reading a little about Countess Bathory, what scares the shit out of me about the story isn't that she bruatally murdered 500+ young girls, but that noone gave a shit until she started killing nobles. Have we, as a species, really advanced to the point where we're beyond this sort of thing?
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
I guess the sepuku/harakiri culture ended when emperor Hirohito did not kill himself after World War II...
Too lazy to create a sig...
Although morally you should be able to sue MS for malpractice, legally you would be on thin ice.
Man, there are many here without even a shred of humour. Say it aint so.
The "35 day month" used to actually be a fairly common practice in software around 10 years ago. It's purely due to accounting fictions -- monthly and quarterly sales goals and wall street guidance. Short term gain over long term wealth capacity.
.com days.
Many companies squeeze vendors for discounts and delay purchase until end of month. Of course, purchasing processes and systems are bound to mess up, so the P.O. never really gets through until the 1st to 5th of the next month...
This also was rampant back in the
CA still operates in the old model of sales, whereas most enterprise software vendors are much smarter about this sort of stuff.
disclaimer: just my personal opinions, might be b.s., ymmv
-Stu
If malpractice was a real threat to a software vendor the code would be super tested and regulated. We wouldn't have as much innovation. Now, there are many new 'features' that I wouldn't cry if we had lost, but the net effect would be to slow things down. The internet surely would not have hit critical mass as soon as it did. If regulation went into effect in 1985 we'd probably still be using Netscape 1...although the blink tag would likely be outlawed :)
Blar.
parent's author is sane. however, why was the post modded interesting instead of funny.
answers any1?
... if the can get away with cases like this. Cook the books by 2.2 billion and pay compensation to shareholders to the tune os 225 million. Still a huge chunk of change left over.
And I'd guess that they get a few years at a free country club, ehm.. minimum security facility with weekends off, etc.
They still end up way ahead.
But everybody's doing it, so it must be OK!!!
More interesting is the fact that the Dabhol power plant was wildly uneconomical. The local people would have had to pay several times the rates as those FROM EXISTING LOCAL POWER SOURCES.
It gets even more interesting that the power plant would have been economically feasible with a source of cheap natural gas!
It gets most interesting of all when you join all the dots and realize that, AHA!, ALL IT WOULD TAKE IS A PIPELINE THROUGH AFGHANISTAN!!!
But there are countries that operate now pretty much the way you long for, perfect examples for laisser-faire economists.
Some examples are Iraq, Afghanistan and Russia!
"A word to the wise may be sufficient, but the truly dense need an object lesson!"
Imagine, the US government, which has been cooking its own books for years, most notably with the recent so-called yet totally fictitious "surplus," is prosecuting corporations for "cooking the books."
You'd think this would only happen in Bizarro world. Now, instead, it's only in America.
5) All intellectual property rights are not to be sold but dissolved and sent to the public domain world wide.
Firefox &
Whoa!!! Hold on there - can you go back and explain again why the government should toss myself and my coworkers onto the street for upper managements ethical/financial sins?
A corporation is more than a virtual person - its made up of thousands of people. Why should they be punished? Its bad enough the company is laying off 10% of its employees in a few weeks because of our ex-CEO's mistakes.
It ain ' t so.
Ya know, if it does end up having a negative effect on eTrust antivirus, then switch to avast!
It's just as good in terms of ability to stop viruses as the big two (Norton and McAfee) but is much smaller and efficient. Not to mention that they give non-commercial users a free license.
Check it out.
Despite what EULAs say, most software is sold, not licensed.
Does anyone else remember the period in 2002-2003 when Sanjay Kumar's face was on the cover of just about every IT and business magazine out there for being some sort of great saint showing the world how IT can be saved? And just look at where he is now. The world's techies still knew that CA was a crap company selling crap products, but to anyone following the mainstream media, CA was a godsend to customers, potential customers, and shareholders.
This is more proof that the tech industry is still generally full of shit (Not that plenty of others aren't) and that not only can they not be trusted, but the media cannot be trusted to do some decent research and present a clear picture of what these companies are really up to.
It's fitting that Kumar was indicted on the first day of Autumn. He was always set up to be the Fall guy.
Unindicted Charles Wang collected a 500 megabuck bonus out of the scam. Charles is an interesting person. If you dumped him into a tank of sharks and came back an hour later, you'd see a fat Charles swimming lazily in a sharkless tank.
They simply changed the process for the timing of recognizing revenue from subscriptions. This was done on advice from their new auditors. The previous method of recognizing revenue was NOT illegal, nor even immoral.
The auditor simply made the recommendation to help Redhat perform better, legally.
Been there, Done that, Sold the t-shirt to the next idiot in line
I find it so odd that when bad news happens stocks go up. Job cuts at a company? Stock goes up. Executives indicted? Stock goes up. Company does better than it ever has before, earining more money than it ever has, even for less expenses, but does not meet someone's expectations in New York? Stock goes down. I understand the reasons why this happens economically, but ethically I loathe this action/reaction pattern. Since it's becoming obvious that regular IT folks cannot win in this rat race situation, maybe it's time to step over to the dark side and profit from doom... who knows...
--Chag
If you know the company has a problem don't believe any cheerful information from an executive until you see it yourself.
Second rule, if they drop names your in REAL trouble.
Third rule, if its a politician, it was the last one the executive saw a news story about.
PS: Honestly I would not want to be a businessman with the current Administration. They don't seem to pull too many punches and while they take a while to get someone into court they usually win. (it would have been interesting to see a start to finish anti-MS lawsuit under this Administration but that is a dead horse right now)
* Winners compare their achievements to their goals, losers compare theirs to that of others.
It is well know in China that the real people who commit the crimes are rarely if ever punished as long as they maintain good party standing.
It is the low level functionaries that have to look over their shoulder.
As a further note, how in the hell did you get modded insightful? Are the mods just as ignorant as you? China kills upwards of 5000 people a year by the estimates of some human rights groups. If that is not a depressing thought I do not know what is!
* Winners compare their achievements to their goals, losers compare theirs to that of others.
First while the idea sounds intriguing it suffers one major problem. The employees get screwed.
Stocks are a RISK. That does include risk of fraud. It is up to the individual investor to understand where his investments are whether he controls them directly or not.
What I find disgusting is that we value people's money more than people's lives. Most white color criminals are getting more time than rapist or murderers. What kind of society exists for long that does this?
I fully expect white collar criminals to do time and forfeit ALL properties that can be attributed to their employment while they committed their crimes. This includes selling back preexisting assets if the spent the illegally gained ones.
As for the corporation, no liquidation. The shareholders are more likely to lose out under a CDP. As mentioned beforehand so will the employees. Indirect employees will also get hurt under you scheme as supporting companies will suddenly be without business.
So while it sounds neat its a boneheaded idea.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
...the net effect would be to slow things down.
Are you sure? Look at the list of regulations that computer hardware must meet (FCC regulations, etc.), then look at what's available on store shelves. The main difference is that any person with a compiler can make software, but it requires the capital investment of a manufacturing plant to make hardware. To this end, I think software, even Microsoft, is largely still a hobbyist industry. It certainly feels like it.
-- "Makes Little Debbie look like a pile of puke!" - Moe Szyslak
Here's what I don't understand.
They added the revenue to a previous quarter if it came in within a few days of that quarter.
They got the revenue, even if it arrived in the next quarter.
Seems to me that this money did arrive, just a bit late. So they have one bad quarter where they only book revenue received minus revenue already booked, and continue forward from there.
They did get the money, didn't they? Even if it arrive a month later or so.
That would seem a small problem -- until they made it a big problem by lying about it (Hello Martha Stewart).
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
Charles Wang (pronounced Wong according to him...don't ask.)
is the originator of all the CA nonsense. The DOJ is totally (at least in public) ignoring him.
They used this scheme to get a 1 BILLION dollar bonus for him and Sanjay, no word on that either.
And people wonder why I quit this company?
They lied to the government, investors, employees, customers, and themselves... and if you called them
on it you were fired.
Hearless bastard that I am, I split when they asked me to start lieing to my clients... I've got no business sense, I guess.
---- The world is a network, just some people are still using 300 baud dialup. ---
I don't understand why these companies can "settle" the case arbitrarily. This seems like BS to me. If they did something illegal, there should be no "settling". There should be a trial and punishment, criminal punishment.
I am beginning to believe these cases are not unlike the old Ford Pinto problems of the past, where the corporation has factored into their scam, how much it would cost to "settle" and end up profiting even after they get caught.
I worked for 4 years for Computer Ass., although often CA was referred to as an acronym for Creative Accounting.
Anyway 1 1/2 year ago all the employees had to go through a 2-3 hours web training about "Business conduct and ethics". It has really been a pity that the management of CA never had the time to go through these training themselves. It's not just the top management. But these improper business practices were like a virus through middle management as well.
Of course these training are effective so that in case the shit hits the fan, the top management can find regular employees to blame. Fire them. And clean the ship, while leaving them untouched.
Obviously I'm violating their handbook as well, even while I don't work for them anymore. Therefore I posted this message anonymous.
Go watch the documentary 'the corporation'. There are some interesting parts about corporations as an entity and posing more and more threads to it's social, economical and ecological environment.
I would love to see severe penalties on misbehaving corporations, if only as a deterrant to others from doing similar things.
However, the corporate death penalty will have a lot of fallout: the employees, the vast majority of which are not involved in the wrong doing. This collective punishment is not the solution.
Even in societies, when someone commits a crime and has to go in prison for life, or executed, his family suffers, his wife and kids lost a father and a provider of income if nothing else. The effect here is limited though, only a bunch of people are affected.
For corporations today, this could affect tens of thousands of earners, and by extension, their dependants. Too big an effect I think.
2bits.com, Inc: Drupal, WordPress, and LAMP performance tuning.
Look at the list of regulations that computer hardware must meet (FCC regulations, etc.), then look at what's available on store shelves. The main difference is that any person with a compiler can make software, but it requires the capital investment of a manufacturing plant to make hardware. To this end, I think software, even Microsoft, is largely still a hobbyist industry.
What's even more interesting here is that hardware is dirt cheap compared to current software prices. You can buy a whole (low-end) computer these days for $300, sans monitor (another $100 for a cheapie). But just the OS to run on it is $200 or so. All that cheap hardware still has to meet various federal regulations to be allowed to be sold in the US, but MS has no regulations to meet, and can just sell any crap they want without any kind of oversight. Something's wrong here...
So let's see... I love ice hockey. My favorite team is the New York Islanders. There probably won't be a hockey season this year because of the lockout. That was bad enough. Now this.
What does that have to do with this story? Simple. Sanjay Kumar is co-ownewr of the New York Islanders. The other co-owner (Charles Wang) used to be CEO at CA, but resigned a year before these alleged crimes were committed. Kumar will probably have to sell his share of the team, but who wants it? The NHL is in the midst of a league-widr player lockout, and the value of a franchise in the NHL is very much in doubt these days.
I don't believe there were any "defined contribution" pensions that people paid into and could expect to be supported on for the rest of their lives.
So, some people that bet the company would never collapse lost their investment. Mostly, because they took the highest risk selection in the 401K portfolio. I'm not sure I have all that much sympathy for those folks. The days of the "defined contribution" pension plan where you pay in and take from it forever is over. The days of not taking any responsibility for your retirement investments are pretty much over. Too bad, but there isn't much that can be done about it.
Of course, we can just force the government to supply a pension to everyone so that when they retire they are 100% funded by the government. Of course, this would have to be at least as good as the job they left to retire, or no one would want to retire.
This is all a bit sad. Sanjay is actually carrying the blame here for a lot of things that occured on the watch of his predecessor Charles Wang.
Charles was CEO during a lot of the time here, but was very disciplined about not usine emails etc. Charles jumped ship once things started to look bad, and Sanjay, who may not be lilly-white, looks like he's going to carry all the blame.
Sanjay may not have been financially perfect, but he none-the-less cleaned things up and did a great deal of good for Computer Associates. He turned it from a 'vendor of last resort' to being a half reasonable company to deal with, and introduced the beginnings of an ethical culture.
I have a personal interest in Sanjay, as he was responsible for the first open source project in CA (my java ldap browser: http://www.jxplorer.org/ / http://sourceforge.net/projects/jxplorer) and put in train the events that led to CA embracing linux and open sourcing their Ingres database. He went to a lot of effort to change the internal culture of CA (which used to be just plain feral), and in general things improved greatly under his reign... it was very sad to see him go, and I hope he survives the court action.
Wer mit Ungeheuern kämpft, mag zusehn, dass er nicht dabei zum Ungeheuer wird.
When the hype is running full steam, you have no hope of getting a dissenting voice in edgewise.
... and the law has been throughly corrupted.
When the hype is lower, you can successfully post a dissenting opinion on Slashdot.
But you will never find dissent impacting company operations. That's the job of the law
[You have a stable society when some nut guns down a schoolyard and the law doesn't change.]