Charles McCall, chairman and CEO of the former HBO & Co., Atlanta, was indicted by a federal grand jury on criminal charges of securities fraud and named in a civil complaint by the Securities and Exchange Commission. McCall, 59, allegedly participated in a long-running practice of fraudulently inflating revenue and net income at the healthcare information systems company before it was acquired by McKesson Corp., San Francisco, in January 1999. Accounting irregularities surfaced at HBO following the acquisition, triggering a $9 billion drop in McKesson's market value. The government filed fraud charges against HBO co-presidents Jay Gilbertson and Albert Bergonzi, as well as several other former executives, starting in September 2000. But McCall until now had not been touched by the probe. The indictment includes new fraud-related charges against Bergonzi. Also indicted on criminal fraud charges was former HBO General Counsel Jay Lapine.
The indictment coincided with a guilty plea by Gilbertson. In his plea, according to federal investigators, Gilbertson admitted that he conspired with other officers, including McCall, to inflate revenue and earnings in order to mislead investors and the SEC about the company's true performance. Also entering guilty pleas were Dominick DeRosa, former senior vice president for sales, and Timothy Heyerdahl, former senior vice president for finance. -- by John Morrissey