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Prosecutors Issue New Subpoena Related To Bookkeeping At CA

Nov 21, 2002 | The Wall Street Journal

Federal prosecutors investigating the bookkeeping practices of software maker Computer Associates International Inc. have issued another subpoena looking for evidence of accounting manipulation.

Investigators subpoenaed recently Allstate Insurance Co., a major buyer of Computer Associates' corporate-computer software products, asking about terms of a software contract between the two firms, according to a spokesman for the insurer. Michael Travino, of Allstate, said: "We are cooperating with the U.S. Attorney's Office. We've been informed that Allstate is not a subject of the investigation."

For about a year now, investigators from the Justice Department and Securities and Exchange Commission have been looking at what the company has referred to in regulatory filings as its "historical revenue-recognition policies and practices." According to lawyers involved in the case, one area of focus for the investigation surrounds the period close to a controversial stock grant that was awarded to senior Computer Associates executives in mid-1998.

Assistant U.S. Attorney David Pitofsky, the lead prosecutor from the Justice Department's Brooklyn branch, declined to comment. Alex Vasilescu, the lead SEC investigator, wasn't immediately available but it is the agency's practice not to comment on investigations.

Earlier this year, the SEC issued subpoenas to Computer Associates' former accountants and a number of other "third parties." The U.S. Attorney's recent action on the Allstate deal doesn't necessarily mean that investigators have convened a grand jury.

Indeed, the company issued a statement Thursday to that effect: "Computer Associates has not been advised by either the SEC or the U. S. Attorney's Office of any recent change in the status of the inquiry into the company's accounting practices. CA has maintained an ongoing dialog with the agencies and is cooperating fully with the investigation. No Computer Associates executive has been subpoenaed to appear and we have received no subpoena ordering that we produce documents to a grand jury."

Computer Associates pledged to continue to cooperate with the investigation.

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