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Microcap & Penny Stocks : SEVU: New Invention of Great Potential... -- Ignore unavailable to you. Want to Upgrade?

To: who cares? who wrote (1323)	1/13/2001 10:08:08 AM
From: StockDung	Read Replies (1) \| Respond to of 1992

Former HBO & Co. execs face more fraud allegations SAN FRANCISCO, Jan 12 (Reuters) - Two former executives of the software firm HBO & Co., who have already been indicted in an alleged book-keeping fraud to inflate the company's earnings, faced new allegations from federal prosecutors on Friday for arranging secret financing for customers and booking sales of products that did not yet exist. Prosecutors said the book-keeping fraud cost shareholders more than $9 billion when it was discovered and made public by the company that acquired HBO & Co., medical products supplier McKesson Inc. <MCK.N>, making it one of the biggest financial crimes ever investigated by the FBI and the Securities and Exchange Commission. The former executives, Jay Gilbertson and Albert Bergonzi, were indicted in September on 17 counts of conspiracy and fraud. The statement released Friday by federal prosecutors did not add any criminal charges to that indictment, but provided new allegations of backdoor financing and sales of products that did not exist. Gilbertson and Bergonzi were co-presidents and co-chief operating officers at Atlanta, Georgia-based HBO, which was acquired by McKesson in early 1999 and then renamed McKesson HBOC Inc. Gilbertson was also HBO's chief financial officer. The United States Attorney for the Northern District of California said on Friday that Gilbertson had made $42 million in secret financing deals on behalf of customers with General Electric Capital, the financing arm of General Electric Co. <GE.N>. Under those agreements, which were hidden from auditors, HBO guaranteed to make payments to the GE finance unit if its customers failed to pay, prosecutors said. ACCUSED OF GENERATING REVENUE ON PAPER The superseding indictment also alleges the pair schemed to generate revenue on paper for HBO by recording sales of products that were still in the research and development stage, violating applicable accounting rules. A lawyer representing Gilbertson declined to comment. Joe Rossoniello, who represents Bergonzi, said there were no significant changes in the indictment regarding his client. "In my opinion there no materially significant changes to the indictment with respect to Mr. Bergonzi," Rossoniello said in a telephone interview. The original federal indictment alleged that for more than a year before the merger the two former executives carried out a scheme that defrauded HBO shareholders and the investing public by illegally inflating the firm's financial results. This allowed the pair to sell some $11 million of their own McKesson stock before the alleged fraud was uncovered, and receive lucrative bonuses based on the false financial statements, authorities said. Authorities said the alleged fraud was concealed from McKesson during merger negotiations but still continued after the deal was completed. Gilbertson left HBO before the merger but Bergonzi remained until he was fired in June 1999 following an investigation by McKesson HBOC's board. When the firm announced in April, 1999 that they discovered financial irregularities, McKesson's stock price plunged more than 40 percent from $65 per share to $34 per share. The drop lowered the firm's market value by more than $9 billion. 20:44 01-12-01