Kiwi high-flyer admits role in huge US scam

Stephen Richards

A New Zealander at the top of the information technology industry has admitted charges relating to a $3.5 billion scam in the United States.

Stephen Richards, 41, pleaded guilty to securities fraud, perjury and obstruction of justice charges related to his role in the US$2.2 billion accounting scheme at the computer software company Computer Associates International Inc (CA Inc).

Richards appeared before Judge Leo Glasser in a US District Court in New York on Monday and was warned he could be deported.

He was the former head of sales at the company.

Richards ran CA's New Zealand operation in the 1990s before climbing through the company ranks via its Australian operations.

Sanjay Kumar, the former chief executive of CA Inc, also pleaded guilty to the same charges.

Kumar, who left CA in June 2004, improperly booked software licence revenue from 1999 to 2000 in order to meet Wall Street analysts' quarterly earnings expectations and then lied to investigators about it, court papers said.

In one instance, prosecutors charged that Kumar paid off a customer who threatened to tell the Government about a bogus software deal.

The payoff of US$3.7 million was made while Kumar knew an investigation was pending against the company.

Roslynn Mauskopf, US Attorney for the Eastern District of New York, said: "The guilty pleas of Computers Associates' former CEO and its former head of worldwide sales are the culmination of the Government's successful investigation into a culture of corruption and fraud at Computer Associates."

Raised in Upper Hutt, Richards moved to Australia to complete an accounting degree.

After a short stint at an accounting firm he joined Computer Associates' Sydney call centre.

He worked his way through the ranks and in March 1994 was appointed Computer Associates' New Zealand company director.

Two years later he returned to Australia to manage operations there before moving to New York in 1998.

In the US Richards eventually became responsible for all sales. He oversaw 3500 staff.

Richards and Kumar, who initially pleaded not guilty in September 2004, had been scheduled to go on trial on May 8.

Prosecutors would not comment on why the men changed their plea, but noted that another former CA executive, Tommy Bennett, was arrested and charged last Friday for his role in the scheme.

Kumar, 44, told the court that he knew his conduct was wrong and he apologised for his actions.

He and Richards left the courtroom without commenting on their pleas.

Richards has surrendered his passport and is due to be sentenced in September.

He was released on US$5 million bail and the judge warned him that he could be deported to New Zealand.

- STAFF REPORTER, AGENCIES