Former Chair of Health Care IT Company McKesson Indicted on Accounting Fraud Charges
A federal grand jury on Tuesday indicted Charles McCall, former chair of San Francisco-based health care information technology company McKesson, for his role in accounting fraud to inflate profits and increase the company's stock price, the AP/Philadelphia Inquirer reports. Three other McKesson executives have pleaded guilty in the case and have agreed to cooperate with the federal investigation; McCall will plead not guilty to the charges, according to his attorney (Liedtke, AP/Philadelphia Inquirer, 6/5). McCall had served as chair of the health care software company HBO & Company, which McKesson acquired in 1999, when he served as chair of the new company, McKesson HBOC; McKesson HBOC became McKesson in 2001. McCall, who helped negotiate a $20 million agreement with software company Data General after the end of the first quarter in 1999, allegedly backdated the sale and reported the revenue for the first quarter, according to the Securities and Exchange Commission (Marciniak, Wall Street Journal, 6/5). McKesson HBOC announced the accounting fraud in April 1999, which prompted shares to decrease from $65.75 to $34.50 in one day; shareholders lost $9 billion because of the price decrease. McCall faces five to 10 years in prison and fines of as much as $1 million for each of the seven charges against him. Federal prosecutors also said that they hope to force McCall to forfeit some of the $49.7 million that he received when he exercised HBOC stock options in 1997 (AP/Philadelphia Inquirer, 6/5).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.