Ex-McKesson officers cleared in fraud
SAN FRANCISCO -- Two former McKesson Corp. executives were acquitted yesterday on one count each of federal securities fraud, but a mistrial was declared on six other counts in a $9 billion accounting scandal at the pharmaceutical distribution company.
Charles W. McCall, the former McKesson Corp. chairman, was charged with fabricating revenue and then trying to cover up a conspiracy to inflate profit before its 1999 merger with Atlanta-based HBO & Co.
Jay Lapine, the former general counsel of HBO, a health services software maker, faced similar charges.
The two were tried before a federal jury that heard six weeks of testimony. The panel, after deliberating six days, said it was hopelessly deadlocked on the remaining charges.
One holdout juror led to an 11-1 vote of guilt on three securities fraud counts against each defendant. A unanimous vote of all 12 jurors is needed to establish guilt.
"It got to the point where he didn't want to be talked to anymore," jury foreman Carl Friedrich said of the holdout .
Four other executives of the combined company, now the nation's largest pharmaceutical distributor, were convicted in the scheme in which HBO executives overstated revenue by more than $300 million.
McCall had been HBO chairman until the company was sold to McKesson in January 1999 for $12 billion. He briefly became chairman of the combined entity, which retained the McKesson name, before getting fired in June 1999 after the accounting scheme was uncovered.
Lapine briefly kept his job as general counsel after the merger, but was later fired.
US District Judge Martin Jenkins declared a mistrial on the remaining six securities fraud counts against each defendant. Prosecutors said they were considering whether to retry the men on those counts.
Attorneys for the two men said they are happy with the verdict and are keeping their fingers crossed that there will be no retrial. Guilty verdicts could result in 10-year sentences.
Through their attorneys, both defendants declined to comment.
