Update: Former CA executives plead guilty

Three former executives of Computer Associates International Inc. pleaded guilty on Thursday to criminal charges associated with improper accounting at the Islandia, New York, software company.

The former employees, including the company’s former chief financial officer, pleaded guilty before Judge I. Leo Glasser of the U.S. District Court for the Eastern District of New York, said Executive Assistant U.S. Attorney William Muller.

The U.S. Justice Department and Securities and Exchange Commission (SEC) had filed charges earlier Thursday against Ira Zar, the company’s former chief financial officer, as well as former Vice President of Finance David Rivard and former Vice President of Finance David Kaplan.

The SEC, the Federal Bureau of Investigation and other agencies are investigating improper accounting at CA during its 2000 fiscal year. The SEC accuses CA of recognizing revenue from contracts before they were finalized. On Thursday it alleged that Zar and Rivard signed at least one backdated contract and that Kaplan oversaw the preparation of CA’s improper financial statements.

The former executives pleaded guilty to conspiracy to obstruct justice and conspiracy to commit securities fraud, according to a CA statement. All three left the company last year, CA said.

CA’s audit committee is nearing the end of its own investigation into the accounting improprieties, the company said. According to the CA statement, lawyers for the company and for its audit committee have reported to government investigators that the three men falsely denied the existence of the “35-day month” accounting practice while being questioned by them. The accounting trick involved prematurely recognizing revenue for a given quarter on the basis of license deals that were actually signed in a later quarter.

Also Thursday, CA announced it has fired Steven Woghin, its former general counsel, effective immediately.