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Former CA Sales Chief Gets Seven Years in Jail
The former head of CA's worldwide sales, Stephen Richards, was sentenced to seven years in prison
Nov. 19, 2006 07:00 PM
The former head of CA's worldwide sales, Stephen Richards, was sentenced to seven years in prison Tuesday for his role in the company's $2.2 billion stock fraud scheme.
Earlier this month his former boss, ex-CA CEO Sanjay Kumar, drew 12 years. Both men are currently out on bail and are due to report to jail at the end of February.
They both pleaded guilty to charges of securities fraud, obstruction, perjury and conspiracy in April, two weeks before they were supposed to stand trial, an oddity that has never been explained given Kumar's previous protestations of innocence.
The judge said he decided to go easier on Richards, 41, because Richards came late to the party and wasn't an architect of what CA called "35-day months," meaning it backdated sales contract to gussy up its quarterly results. Like Kumar, he could have gotten a virtual life sentence.
As it is, he won't be seeing much of his family while he's in prison. His wife and children, who range in age from six months to seven years, have moved to Australia. Unlike Kumar, no fine was assessed. Richards flat out couldn't afford it anyway.
At the sentencing, Judge Leo Glasser noted that Richards didn't benefit much financially from the shenanigans.
As a resident alien, Richards, a New Zealander, will be deported after he does his time. And as a resident alien it can't be done in a minimum-security facility, according to Reuters.
Meanwhile, TheStreet.com picked up on an obscure SEC filing indicating that one of CA's largest stockholders, Relational Investors, liquidated its entire 5.6% position in the company over the summer.
Although CA brought in a whole new management team since Kumar and his boys were swept out, it has not recovered - in fact, its returns are worse - it's screwed up its commissions royally, it's got backdating issues, financial reports have been delayed, it's restated so many times its worn out its erasers, cash flow turned negative, the new management has evaporated, the stock has tanked - and now it has become the object of consolidation speculation. Last week the Wall Street Journal mused that it might be prime for one of those private equity buyouts for its usually billion-dollars-a-year cash flow.
CA avoided indictment in the scandal by cutting a deferred prosecution deal with the government and paying $225 million in stockholder restitution. Further restitution is still being sought.
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