Risk & Compliance

CA Shareholders Teased with Restitution Payments

Some of the money investors got because of the company's accounting scandal resulted from a miscalculation and must be returned.
Stephen TaubDecember 20, 2007

A calculation error is forcing former CA shareholders to return some of the money they received from a restitution fund created to redress the company’s massive accounting scandal.

The 88,444 ex-shareholders were overpaid by $59.2 million, Newsdayreported, citing a letter sent to the recipients and filed last week with the U.S. District Court in Brooklyn. The letter said returning the overpayments is mandatory and must be done by Jan. 4.

In addition, 2,000 shareholders entitled to payments mistakenly received none at all.

The error was made by Gilardi & Co. of Larkspur, Calif., an outside firm working for the court-appointed fund administrator, Kenneth Feinberg, according to the report.

CA stopped payment on all uncashed restitution checks, but most shareholders are receiving letters ordering them to return about 20 percent of the money, Newsdaynoted.

Peter Crudo, chief operating officer at Gilardi, told the paper the problem was “human error,” namely that the payment calculations failed to include 2,000 eligible shareholders. Gilardi is paying the costs to fix it.

Feinberg said in a letter to Judge I. Leo Glasser that an initial review indicates that recovery from the 3,000 largest recipients will largely fix the problem, because they account for $50 million of the overpayment.