Judge orders CA-Wang case closed

A federal district court judge has closed the door on one of the final lawsuits stemming from the former Computer Associates massive accounting fraud scandal, in a decision that also frees founder Charles Wang from a potential $500 million claim by his former company.

In a ruling dated Friday, senior U.S. District Judge Thomas Platt Jr. ordered the case closed after more than seven years of arguments and appeals and said the Islandia-based company, renamed CA Technologies, and its board were partly to blame for the deficiencies in its case.

One major reason was their approval of a "global settlement" relieving current and former directors and executives of legal liability resulting from government and board investigations into CA's fraud. Ultimately, the decision to settle even as evidence was mounting about the fraud provided legal immunity for Wang and Peter Schwartz, the company's former chief financial officer, who was also a defendant in the dismissed case.

"What happened in this case is that CA's board, eager to settle CA's civil liability to save itself from the expenses and distractions of a trial, as well as the potential for exposure to billions of dollars in damages, granted the releases as part of a global settlement," Platt wrote.

But later, he concluded, "It is clear that CA had a large part in the predicament from which it now seeks relief."

For one, he called it "simply not credible" that CA's board approved legal immunity for Wang and Schwartz from civil suits "with absolutely no inkling" the two "were involved in the 35-day-month practice" at the heart of the scandal. Under the practice, officials improperly held open financial periods to pile on backdated revenue to meet Wall Street's revenue and earnings expectations.

Conversely, Platt wrote, "If CA's claim of a complete lack of knowledge is true, then its ignorance amounts to negligence."

For those reasons, Platt said, "CA is unable to demonstrate that it acted without fault or negligence."

"I am pleased that the court has put an end to this sad chapter in CA's history," Wang, who owns the Islanders, said in a statement Monday. "There was no basis for these claims against me."

CA declined to comment.

The company paid more than $225 million in restitution after reaching a settlement with government prosecutors.Sanjay Kumar, CA's former chief executive, pleaded guilty in April 2006 to conspiracy, securities fraud and obstruction of justice stemming from the accounting misdeeds. He was sentenced to 12 years in prison ordered to pay almost $800 million in restitution to investors.