CA Sales Head to Pay $29.7M in Restitution
CA Inc.'s former head of worldwide sales, Stephen Richards, was formally ordered in federal court Tuesday to pay US$29.7 million in restitution to stockholders for his part in a major fraud scheme at the software company.
Richards, who is already serving a seven-year prison sentence for his part in the fraud, will pay $29.5 million of the total once out of prison, at the rate of 15 percent of his gross annual income at that time, according to the agreement reached in U.S. District Court in Brooklyn, a spokesman for the U.S. Attorney's office said.
Of the $250,000 that Stephens posted for bail while awaiting sentencing, $200,000 will go toward the restitution fund, while $50,000 will be returned to his wife Jane in Australia, according to court documents.
Richards had agreed to pay the restitution in papers filed on June 12. His restitution amount was based on an estimate of his involvement in the $990 million loss to stockholders, and a reflection of Richards' assets, according to the records. In all, Richards' part was about 3 percent of the loss of $990 million.
Former CA chief executive Sanjay Kumar, who faces 12 years in prison, is responsible for $798 million of the restitution, and must repay $52 million by December 2008. Kumar is due to report to prison on Aug. 14, the spokesman said today. After his release, he is required to repay the remainder of his debt at 20 percent of his annual income.
CA was also charged with securities fraud and obstruction of justice in the same matter as Richards and Kumar for falsely recording software licensing revenues prematurely to boost financial results and then covering it up. All charges were dropped against CA in May, although CA has agreed to pay $225 million into the restitution fund.