Computer Associates Finance Execs Enter Guilty Pleas

Updated from 1:04 p.m. EDT

The former CFO and two other former finance executives of Computer Associates(CA Quote) pleaded guilty Thursday to criminal securities fraud in Brooklyn federal court. The trio also faces a civil suit filed Thursday by the Securities and Exchange Commission charging them with committing accounting fraud.

Ira Zar, former CFO of Computer Associates, pleaded guilty to three criminal counts -- obstruction of justice, securities fraud conspiracy and substantive securities fraud -- and faces up to 20 years in jail, according to U.S. attorney's office spokesman Robert Nardoza. David Rivard and David Kaplan, former vice presidents of finance at CA, pleaded guilty to obstruction of justice and securities fraud conspiracy and face a maximum sentence of 10 years in jail, Nardoza said.

The judge set a July 22 sentencing hearing.

"The guilty pleas today of Computer Associates' former CFO and two former senior executives in Computer Associates' finance department further demonstrate the corrupt culture in Computer Associates' management," Roslynn Mauskopf, U.S. Attorney for the Eastern District of New York, said in a prepared statement. "The pleas represent a major advance in our continuing effort to bring justice to those at Computer Associates who are responsible for committing securities fraud and obstructing the government's investigations."

All three men are cooperating with an ongoing investigation by the U.S. attorney's office, suggesting additional charges against other executives may follow. So far, CEO Sanjay Kumar, who was COO during the period in question, and former Chairman and CEO Charles Wang have not been charged, but at least one analyst has suggested Kumar should step down.

Computer Associates spokesman Bob Gordon said the company had no comment on the pleas.

Meanwhile, the SEC's suit filed Thursday alleges the former executives committed accounting fraud. The suit claims that the trio participated in a scheme in which they prematurely recognized revenue from software deals that had not yet closed, according to a release.

Without admitting or denying the SEC's allegations, Zar, Rivard and Kaplan have consented to an injunction with the SEC permanently banning them from serving as an officer or director of a publicly held company. But the SEC is still seeking a judgment requiring the trio to disgorge their "ill-gotten gains" and imposing civil money penalties.

Zar and Rivard were fired last year after an internal investigation -- sparked by external probes by the SEC and U.S. attorney's office -- found that the company booked revenue earlier than it should have. Kaplan left to "pursue other opportunities" in December.