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Computer Associates Founder Charles Wang Government's Next Target

Computer Associates Founder Charles Wang Government's Next Target

Related Links:
  • "Not Guilty," Both Kumar and Richards Tell Judge
  • Ex-CA CEO Sanjay Kumar's Looking at Doing 100 Years

    One thing about the "get-out-jail" deal that Computer Associates signed with the government the other day - the government's investigation ain't over yet.

    Now it's out for restitution and has bound the company in an unbreakable promise to help it shake any ill-gotten gains out of present and former CA officers or employees, whether or not they were parties to any fraud, but specially if they were.

    The feds aren't limiting the hunt. The agreement CA signed suggests that though the government's investigation has been restricted up until now by the five-year statute of limitations on securities fraud, the government is pushing the clock back further in seeking disgorgement.

    Sources say that the government is eyeing 1998, the year that CA's top three executives Charles Wang, Russell Artz and Sanjay Kumar divvied up a $1.1 billion bonus that the government will contend was based on jiggered financial results.

    The indictment against Kumar that the government unsealed the other day specifically charges CA with committing fraud from January 1, 1998 through September 20, 2000, a bit of "backdating" on the government's part that reportedly surprised the company's current management who thought it would stop at 2000.

    Neither Wang nor Artz, co-founders of the company, have been implicated in the securities fraud yet although they could be at risk with the government, which privately admits Wang is being investigated, pushing the clock back. Wang was CEO of the company in 1998 when Kumar, his successor, was president and COO. Kumar didn't become CEO until August of 2000. Artz is executive VP of CA responsible for its eTrust security line.

    CA's agreement anticipates the government pursuing "criminal prosecution" and "civil trial or other legal proceedings." It also anticipates that CA itself might get the money that people disgorge. Then again, it also anticipates that CA could wind up a defendant in the proceedings.

    With Kumar backed into a corner and facing serious jail time, his only bargaining chip will be to rat out Wang and claim that backdating contracts was a practice he inherited from him, sources close to the situation say.

    By the way, after Kumar was kicked out of the company in June, he complained to us that his share of that huge bonus, which represented all of CA's profits for the preceding three years, wound up being worth only $25 million because of lockup restrictions, the subsequent drop in CA's stock and the $70 million he had to return because of a stockholder suit.

    Related Links:
  • "Not Guilty," Both Kumar and Richards Tell Judge
  • Ex-CA CEO Sanjay Kumar's Looking at Doing 100 Years
  • 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

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