A former top official with McKesson Corp., the San Francisco-based health-services giant, pleaded guilty to securities fraud charges in connection with a massive accounting scandal that foreshadowed Enron, Global Crossing and other large-scale corporate swindles.
Albert Bergonzi, 53, former president and chief operating officer of HBO & Co., an Atlanta-based healthcare software company, admitted overstating earnings to present a more robust financial picture before the firm's January 1999 acquisition by McKesson, the nation's biggest healthcare supplier. The scheme, one of the largest ever involving a Fortune 500 company when it was exposed four years ago, stretched from January 1998 through April 1999, federal authorities said.
When McKesson announced on April 28, 1999, that it was conducting an internal investigation into widespread financial irregularities, shares fell 47.5%, from $65.75 to $34.50, in one day, costing shareholders about $9 billion. The stock price now hovers in the mid-30s.
Bergonzi, who became a McKesson executive vice president after the $12 billion acquisition, pleaded guilty in U.S. District Court in San Francisco and agreed to cooperate with authorities in a continuing investigation of a scandal that allegedly involves $300 million in overstated earnings. He faces a maximum 15-year prison term.
Mark Mershon, the FBI special agent in charge of the investigation, said the plea "demonstrates the FBI's commitment to hold corporate executives who abuse their positions and defraud the public accountable for their actions."
Three other executives tied to the scheme have pleaded guilty and are cooperating with federal officials. Charges are pending against two defendants, including Charles McCall, the former chairman of HBO & Co., whose indictment was unsealed in June. McCall, chairman of the merged company, was fired along with Bergonzi about two months after the allegations surfaced.
Bergonzi, reached at his home in Cummings, Ga., declined to comment. Michael Shepard, McCall's attorney, said his client had done nothing wrong.