General Crime

* Charles McCall Sentenced To Ten Years in Prison For HBO & Co and McKesson HBOC Fraud

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A former chairman of San Francisco-based McKesson Corp. has been sentenced in federal court to 10 years in prison for securities fraud in an accounting scheme that cost shareholders $8.6 billion in 1999. Charles McCall, 65, of Delray Beach, Fla., was given the prison term by U.S. District Judge William Alsup in San Francisco on Friday. McCall was convicted by a jury in Alsup’s court in November of four counts of securities fraud and one count of circumventing the company’s internal accounting controls. McCall served as chairman of McKesson’s board from January to June 1999. McKesson is the nation’s largest distributor of prescription drugs At the time, the company was called McKesson HBOC and had recently acquired HBO & Co., a medical software firm based in Alpharetta, Ga. McCall had been chief executive officer of HBO & Co. McCall was fired as board chairman after McKesson discovered accounting discrepancies. When the company announced in April 1999 that it needed to restate its sales revenues, the value of its stock plunged by 47 percent in one day, costing shareholders $8.6 billion in stock value. Prosecutors said that in the fraud, HBO & Co. and McKesson HBOC inflated revenues by backdating software sales and concealing side letters that would have allowed buyers to cancel proposed purchases that the company had counted as revenue. Alsup also ordered McCall to pay a $1 million fine and refused to allow him to be released on bail while he appeals. He ordered McCall to surrender to U.S. marshals to begin serving his sentence on March 31. Four other former HBO & Co. officials pleaded guilty in connection with the scheme. McCall’s trial last fall was his second. His first trial on the charges in 2006 ended in acquittal on a conspiracy count and a mistrial on other charges.

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