Aug. 12 (Bloomberg) -- Former CA Inc. Chief Executive Officer Sanjay Kumar, convicted of leading a $2.2 billion fraud at the company, lost an appeal to have his 12-year prison sentence reduced.
The U.S. appeals court in Manhattan today affirmed the sentence of Kumar, 48, who pleaded guilty in 2006 to charges of conspiracy, fraud and obstruction of justice. Kumar is serving his sentence at a federal prison in New Jersey.
The court also affirmed the conviction of CA’s former top sales executive, Stephen Richards, and ordered him resentenced. Richards was sentenced to seven years for his role in the fraud.
Kumar and several deputies pleaded guilty to inflating revenue by backdating sales contracts. CA, based in Islandia, New York, was known as Computer Associates International Inc. when Kumar ran the company.
In addition to the prison sentence, Kumar was fined $8 million and ordered to pay $798.6 million in restitution. He sold his 58-foot yacht, two Ferraris and investment accounts under an agreement with prosecutors to pay the first $50 million.
Richards, who is serving his sentence in California, was ordered to pay $29 million in restitution.
A three-judge panel of the appeals court today unanimously rejected Richards’s claims that he was improperly charged with obstruction of justice and that his plea was the result of “undue coercion from the government.”
$400 Million Losses
The court also rejected arguments that U.S. District Judge I. Leo Glasser in Brooklyn incorrectly calculated the financial losses from the fraud as greater than $400 million.
Two members of the panel rejected arguments by Kumar and Richards that their sentences were improper because Glasser used sentencing guidelines in effect in 2005, rather than more lenient guidelines that applied when they committed the crimes. One judge disagreed, arguing in a dissent that the sentences violate a constitutional ban on laws that increase the punishment for crimes after they’ve been committed.
The court reversed Richards’s sentence, ruling that Glasser failed to give him credit for pleading guilty and accepting responsibility for his crimes. Kumar wasn’t entitled to a similar credit because he obstructed justice and pleaded guilty only on the eve of trial, the court said.
Prosecutors said Kumar erased his computer hard-drive after being told to preserve evidence for a federal investigation. He also authorized the payment of $3.7 million to silence a potential witness, the government claimed.
No date has been set for Richards’s resentencing.
The case is U.S. v. Kumar, 06-CR-5482, 2nd U.S. Circuit Court of Appeals (Manhattan).
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