Computer Associates is suing its former CEO Sanjay Kumar for the $14.9 million it spent on legal fees for his defence against fraud charges.
Earlier this month, Kumar was sentenced to 12 years in prison for a number of accounting scams that he oversaw, and now the company wants its money back.
It aims to recover US$14.9 million in legal defense fees paid for Sanjay Kumar, its former chief executive officer, who was sentenced Nov. 2 to 12 years in prison on securities fraud-related charges.
A judge in New York has been asked to approve an order that would see Kumar's property - including a house in New York, a 57-foot Azimu boat, two Ferraris, a Land Rover, and a Volvo, as well as banks accounts - handed over to CA.
"It is our position that as a result of his criminal conviction, Mr. Kumar is not entitled to indemnification for legal costs," said Dan Kaferle, senior vice president for CA worldwide public relations. CA is also working with U.S. government investigators to recover "ill-gotten gains", Kaferle said.
Jack Cooney, Kumar's lawyer, didn't immediately return a phone call seeking comment. Kumar was sentenced to the prison term and an $8 million fine on obstruction of justice and securities fraud charges.
Kumar and Stephen Richards, the company's former worldwide sales head, both pleaded guilty after they were accused of fraudulent accounting practices, including falsely reporting hundreds of millions of dollars in revenue for licensing agreements during fiscal quarters in which the deals had not yet been finalized.
In early 2000, CA signed a $44.5 million licence deal with a nearly insolvent customer in which it had an ownership stake, according to court records. It then back-dated the contract so it could be recorded in the prior quarter. In the next quarter, CA reversed the revenue in its internal records but did not publicly restate its results.
Original reporting by IDG News Service
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