Former Computer Associates CEO Indicted

Updated from 3:11 p.m. EDT

Computer Associates(CA Quote) will repay shareholders $225 million and face 18 months of government monitoring as part of an accounting fraud settlement that led to the indictment of the company's former chief executive.

"With these agreements, CA has taken a critical step in closing this deeply troubling chapter in its history," said CA Chairman Lewis Ranieri in a prepared statement. "On behalf of the company and all its employees, we tender our sincere apologies to our shareholders and customers."

Former Chief Executive Sanjay Kumar was indicted on federal securities fraud and obstruction charges, as well as conspiracy to interfere with the accounting probe, and the same charges were levied against Stephen Richards, the company's former head of worldwide sales.

"The defendants are accused of perpetrating a massive accounting fraud that cost public investors hundreds of millions of dollars when it collapsed. Then they allegedly tried to cover up their crimes by lying," said Deputy Attorney General Comey, who chairs the president's Corporate Fraud Task Force. "If proven true, such conduct cannot be tolerated, and the Corporate Fraud Task Force's track record shows that it will be met with severe penalties."

Computer Associates' former general counsel, Steven Woghin, pleaded guilty on Wednesday to criminal charges stemming from the two-year investigation. Other former CA executives have already pled guilty to charges of criminal fraud and obstruction of justice.

"Your honor, I am ashamed to be standing here today," Woghin said in federal court. "It is entirely inconsistent with my behavior through a 30-year legal career."

Former Computer Associates executives have admitted that they backdated more than $2 billion in sales in 2000 and 2001 to inflate revenue for certain quarters. The company has restated financial reports for those years.

Kumar was demoted earlier this year and then left the company.

The monitoring, known as "deferred prosecution," gives the government the option to lodge criminal charges against the company should it violate terms of the agreement, which mandates cooperation in the ongoing criminal investigations and adherence to ethical accounting and business practices.

If after 18 months of monitoring by a court-appointed official it is determined that CA has complied with the agreement, the U.S. Attorney's Office will seek dismissal of the charges and the agreement will expire.