One year after it charged the former top executives of HBO & Co. with fraud, the Securities and Exchange Commission filed a civil complaint accusing six other former officials of the healthcare information technology giant of helping perpetrate one of "the largest financial reporting frauds" in U.S. history.
The new charges, filed in U.S. District Court in San Francisco, follow both civil and criminal charges last September against Jay Gilbertson and Albert Bergonzi, who shared the post of HBOC president and chief operating officer before the company was acquired in January 1999 by McKesson Corp. McKesson shed HBOC from its name earlier this year.
Prosecutors allege that Gilbertson and Bergonzi artificially boosted HBOC's revenue by about $270 million from January 1998 to March 1999 with illegal accounting practices, including backdating contracts to meet quarterly financial expectations, booking revenue on incomplete deals and providing false information to corporate auditors. Gilbertson and Bergonzi pleaded not guilty to the charges. A trial is pending for each.
According to the SEC, six other former executives were involved: Chief Financial Officer David Held; General Counsel Jay Lepine; Michael Smeraski, senior vice president of enterprise sales; Timothy Heyerdahl, senior vice president of finance and treasury; Deborah Mattiford, director of contracts and administration; and Elaine Decker, manager of contract accounting.
Four of the six executives charged-Held, Heyerdahl, Mattiford and Decker-settled with the SEC "without admitting or denying the allegations," Helane Morrison, district administrator of the SEC's San Francisco office, said in a statement. Heyerdahl agreed to return $521,492 in "ill-gotten gains," pay a $100,000 civil penalty and not serve as the officer of a public company for five years. Lepine and Smeraski have yet to answer the charges.