A Federal judge has approved a deal that orders convicted tech executive Sanjay Kumar to repay almost $800 million to a fund set up to repay victims of financial improprieties at Computer Associates International during Kumar's rule as CEO.
Judge Leo Glasser of the U.S. District Court for the Eastern District of New York approved a restitution agreement with Kumar and his estate on Friday that sets the amount of restitution at $1.02 billion. The agreement makes Kumar responsible for $800 million of that, the total amount less $225 million that Computer Associates paid into the Feinberg Fund, which reimburses present and former CA stockholders for financial losses caused by the malfeasance at the company, according to a copy of the restitution order.
Under the agreement, Kumar and his estate will pay $40 million into the fund by the end of the month, another $10 million by the end of July, 2007, and a final $2 million payment by the end of 2008.
The payments will consume most of the family's assets, including trust funds set up for Kumar's children, but will come nowhere near satisfying the full amount of restitution. Accordingly, Kumar will also be required to pay 20 percent of his earnings after he is released from prison, according to the restitution order.
Kumar was sentenced to a 12-year prison sentence and fined $8 million in November, following a high profile trial for securities fraud. He pled guilty in April, 2006, after a long government investigation of illegal accounting practices at CA that were designed to artificially boost the company's sales numbers. The investigation uncovered evidence that Kumar and others engaged in numerous acts of accounting fraud and obstruction of justice,including erasing vital e-mail containing potentially damaging evidence from his laptop.
In addition to restitution payments, Kumar will have to contend with a lawsuit from his former company seeking to recover $14.9 million in legal defense fees it paid for him. The company decided, following Kumar's conviction, that he was not entitled to legal indemnification.
The ruling on restitution clears the way for Kumar to begin his 12-year sentence. He has been free on bail since he was sentenced in November.
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