Next up in the Computer Associates investigation: Charles Wang.
Wang, the former CA chairman who once made indicted chief Sanjay Kumar his mini-Me, is reportedly still part of the ongoing investigation of accounting shenanigans at the Long Island software giant.
Wang, who has not been charged, was chairman and CEO until August 2000 – when, the government says, Computer Associates was systematically cooking the books by adding extra days to every month and backdating contracts to inflate revenues.
The Securities and Exchange Commission said in its complaint that during the years Wang was in charge – between Jan. 1, 1998 and September 30, 2000 – Computer Associates “engaged in a widespread practice that allowed for the premature recognition of revenue from software licensing agreements.”
The SEC said the firm inflated its revenues by $3.3 billion through at least 363 false contracts.
Federal prosecutors Wednesday indicted three CA officials, including former CEO Kumar, who replaced Wang as CEO when Wang was pushed out in a previous scandal.
The execs were charged with obstruction of justice, securities fraud and making false statements.
The Islandia, L.I.-based software maker coughed up $225 million in restitution to shareholders while the Department of Justice deferred its prosecution of the company for 18 months so it can try to clean up its accounting act.
Yesterday Kumar and former head of sales Stephen Richards pleaded not guilty in Brooklyn Federal Court. They were released on bail of $5 million each and both men posted their homes as security.
At his arraignment, Kumar, 42, said, “Not guilty your honor,” when asked how he would plead.
Meanwhile, prosecutors are looking at the massive compensation of past and current executives responsible for looting the company.
In its settlement with the government, announced Wednesday, Computer Associates agreed to provide “active assistance to government investigators” to get back compensation from present and former CA officers and employees who were part of the fraud.
In 1998, angry shareholders sued the company, saying it inflated its revenues to trigger a giant bonus payout of more than $1 billion that went to Kumar, Wang and a former director.
While the execs returned a portion of the $1 billion to settle that suit, the DOJ and SEC appear bent on getting back all the money.
“We are pursuing all avenues to collect restitution for investors,” said Eric Corngold, chief of business and securities fraud for the U.S. Attorney’s Office in the Eastern District of New York.
Wang’s lawyer couldn’t be reached for comment.