Computer Associates 2007 Annual Report Download - page 121

Company in August 2006. Beyond the control issues identified in the Independent Examiner’s June 15, 2006 report, the USAO
advised the Federal Court that the Company had, as of the date of the above-referenced letter, substantially complied with the
terms of the DPA. The USAO also informed the Federal Court that if the control issues described above were resolved by
May 1, 2007, and the Company were otherwise in compliance with the DPA, the USAO would seek the Federal Court’s
dismissal with prejudice of the charges that had been filed against the Company in connection with the DPA.
On May 15, 2007, the USAO submitted a motion to the Federal Court seeking dismissal of the charges. The USAO motion
papers cited the May 1, 2007 final report of the Independent Examiner and stated that the Company complied with the DPA.
On May 21, 2007, the Federal Court issued an order dismissing the charges; as a result of the dismissal and as provided in the
terms of the DPA, the DPA thereupon expired and thus concluded.
On September 22, 2004, Mr.Woghin, the Company’s former General Counsel, pled guilty to a two-count information charging
him with conspiracy to commit securities fraud and obstruction of justice. The SEC also filed a complaint in the Federal Court
against Mr. Woghin alleging that he violated Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange
Act, and Rules 10b-5 and 13b2-1 thereunder. The complaint further alleged that under Section 20(e) of the Exchange Act,
Mr. Woghin aided and abetted the Company’s violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the
Exchange Act and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder. Mr. Woghin consented to a partial judgment imposing
a permanent injunction enjoining him from committing violations in the future and permanently baring him from serving as an
officer or director of a public company. The SEC’s claims for disgorgement and civil penalties against Mr. Woghin are pending.
On January 16, 2007, Mr. Woghin was sentenced to a term of imprisonment for two years and supervised release for a period
of three years. By Order dated February 6, 2007, the Federal Court reduced Mr.Woghin’s term of imprisonment to one year and
one day, with the balance of the initial two-year term to be served in home confinement. The Federal Court has deferred any
decisions on restitution until a date to be determined.
Additionally, on September 22, 2004, the SEC filed complaints in the Federal Court against Sanjay Kumar and Stephen
Richards alleging that they violated Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act, and
Rules 10b-5 and 13b2-1 thereunder. The complaints further alleged that under Section 20(e) of the Exchange Act,
Messrs. Kumar and Richards aided and abetted the Company’s violations of Sections 10(b), 13(a), 13(b)(2)(A), and
13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder. The complaints sought to enjoin
Messrs. Kumar and Richards from further violations of the Securities Act and the Exchange Act and for disgorgement of gains
they received as a result of these violations. On June 14, 2006, Messrs. Kumar and Richards consented to partial judgments
imposing permanent injunctions enjoining them from committing violations of the federal securities laws in the future and
permanently barring them from serving as officers or directors of public companies. The SEC’s claims against Messrs. Kumar
and Richards for disgorgement and civil penalties are pending.
On September 23, 2004, the USAO filed, in the Federal Court, a ten-count indictment charging Messrs. Kumar and Richards
with conspiracy to commit securities fraud and wire fraud, committing securities fraud, filing false SEC filings, conspiracy to
obstruct justice and obstruction of justice. Additionally, Mr. Kumar was charged with one count of making false statements to
an agent of the Federal Bureau of Investigation and Mr. Richards was charged with one count of perjury in connection with
sworn testimony before the SEC.
On or about June 29, 2005, the USAO filed a superseding indictment against Messrs. Kumar and Richards, dropping one count
and adding several allegations to certain of the nine remaining counts. On April 24, 2006, Messrs. Kumar and Richards pled
guilty to all counts in the superseding indictment filed by the USAO. On November 2, 2006, Mr. Kumar was sentenced to a
term of imprisonment for twelve years. On or about April 13, 2007, the Federal Court executed a Stipulation and Order
directing that Mr. Kumar pay restitution in the amount of $798.6 million, of which $50 million is due to be paid within 90 days
of the date of the Order or by July 31, 2007, whichever is later. On November 14, 2006, Mr. Richards was sentenced to a term
of imprisonment for seven years and three years of supervised release. The Federal Court has deferred any decisions on
Mr. Richards’ restitution until a hearing at a date to be set by the Federal Court.
On April 21, 2006, Thomas M. Bennett, the Company’s former Senior Vice President, Business Development, was arrested
pursuant to an arrest warrant issued by the Federal Court. The arrest warrant charged Mr. Bennett with three counts of
conspiracy to commit obstruction of justice in violation of Title 18, United States Code, Sections 1510(a) and 1505, and
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