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Attorneys representing two former executives of Computer Associates, the Long Island, N.Y., company caught up in a massive accounting scandal, argued last week that federal prosecutors are misusing a criminal statute revised as part of the Sarbanes-Oxley Act, possibly leading to severe prison sentences — up to 20 years — that were not intended by federal legislators. The dispute involves the prosecution of Sanjay Kumar, the former chairman and CEO of Computer Associates, and Stephen Richards, a former sales executive, on various fraud and obstruction charges. Federal prosecutors accuse both men of lying to the government and lying to their company’s outside counsel, Wachtell, Lipton, Rosen & Katz, which was conducting an internal investigation of the company’s accounting practices. Kumar and Richards are in a fight over the meaning of a federal criminal statute that was amended as part of the Sarbanes-Oxley Act. While defense attorneys argue that the SOX revisions have created a narrow statute that applies only to physical evidence, such as documents, the government contends it reaches beyond that to include any conduct that could obstruct an official proceeding. In the government’s view, the statute essentially provides a useful tool for prosecuting fraud under one statute, rather than bringing charges piecemeal from various sections of the law. Arguments over the dispute were heard last week.
Tom Perrotta is a reporter for the New York Law Journal , an ALM publication.

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