Last Monday, ReiJane Huai, the co-founder and former president and CEO of FalconStor Software, committed suicide by shooting himself in the chest in front of his Long Island home. The suicide came the day before Huai was to plead guilty to charges related to a bribery scheme that led to his ouster from FalconStor a year ago. That story has gotten fairly extensive coverage in the Long Island press. What hasn't gotten the coverage it deserves is the fact that Huai was a crony of Charles Wang, the co-founder and former CEO of Computer Associates (now CA), and that Wang and another of his cronies showed up at Huai's home sometime later on the day of the suicide.
Huai and Wang had been close friends for years, dating back to 1996, when CA acquired Cheyenne Software, where Huai worked as the chief architect of Cheyenne's flagship ARCserve backup software product. Huai went on to become CA's executive vice president and general manager for Asia. He left CA in 2000 to start FalconStor, where he served as CEO until the bribery scheme caught up with him. That scheme involved $185,000 in payments to an employee of JPMorgan Chase to secure millions of dollars worth of business for FalconStor. What followed were an SEC investigation of FalconStor's accounting practices, a criminal proceeding by the U.S. Attorney's office, and class-action lawsuits brought by FalconStor shareholders.
That brings us to this excerpt from the New York Post's coverage of the suicide:
His friends -- billionaire New York Islanders owner Charles Wang and Huai's longtime legal adviser, Roy Reichbach -- arrived at the scene of the gruesome suicide [on Monday].
"They had a close working relationship for years," said a source close to Wang. "These men were very close, both professionally and personally. Mr. Wang is shocked."
Wang, whose Computer Associates in 1996 paid $1.2 billion for Cheyenne Software Inc., one of Huai's former companies, surveyed the scene from behind the tinted windows of a black BMW, while Reichbach went into the mansion.
Reichbach, Huai's "longtime legal adviser," is also Wang's longtime legal adviser. Reichbach was vice president, legal, at Computer Associates from 1994 to 2000, and he currently serves as corporate secretary and general counsel at NeuLion, Wang's struggling IPTV services provider that I wrote about in December in my post, "As Charles Wang's World Crumbles, Justice is Served." NeuLion has been hemorrhaging money that Wang's crumbling financial empire can ill afford-it lost over $19 million in 2009, over $17 million in 2010, and another $7.2 million in the first six months of this year.
According to the New York Post report, Huai lived in the home with his wife, but it wasn't known if she was home at the time of the suicide, which occurred around 9:00 a.m. It's unclear who, if anyone, was home by the time Wang and Reichbach arrived. In any event, it was a peculiar scene. If Huai's wife was home, why didn't Wang go in to console her? If she wasn't, why did Reichbach go into the home while Wang stayed in his car, peering out of the tinted windows? It just seems odd.
It's worth reiterating here for the benefit of anyone who's unfamiliar with the Wang saga that Wang's history at Computer Associates was a seedy one. Although he managed to dodge criminal prosecution in the accounting fraud scandal that landed his successor, Sanjay Kumar, in prison, CA's board of directors determined that Wang was the mastermind behind it all. The New York Times encapsulated the board's findings in a 2007 report:
Charles B. Wang, the founder and former chairman of Computer Associates, oversaw an accounting fraud lasting more than a decade at the software company, according to a scathing report released [on April 13, 2007] by the company's board.
Mr. Wang, who owns the New York Islanders and is among the most politically influential people on Long Island, masterminded accounting gimmicks that led his company to report inflated sales and profits, the report states.
As a result of the fraud, the company has been forced to spend over $500 million on fines and internal investigations. It is still struggling to rebuild the trust of employees and shareholders, the report says.
In a statement, Mr. Wang said he sharply disagreed with the report's conclusions and blamed Sanjay Kumar, his hand-picked successor, for the fraud.
Mr. Wang created a "culture of fear" at Computer Associates - now called CA - and deliberately put inexperienced executives in senior positions so that he would have more control, according to the report. He discouraged executives from meeting with each other and arbitrarily fired managers or employees who disagreed with him.
"Fraud pervaded the entire CA organization at every level, and was embedded in CA's culture, as instilled by Mr. Wang, almost from the company's inception," the report said.
Before Huai became one of Wang's Long Island cronies, he epitomized the American dream. He came to this country from Taiwan on a college scholarship, worked relentlessly and made what would be far-reaching contributions to the software industry here. He raised a family, enjoyed hard-earned financial success, and was widely admired as a software visionary. So what happened? What were the drivers of his downfall? Was he influenced by others whose skewed sense of ethics and morality made the path he ultimately chose seem acceptable? Those questions raise the one that ultimately needs to be asked: If Huai had not fallen in with the Wang crowd, would he still be alive today?