Ex-McKesson Chairman Fraud Conviction Upheld

Ninth Circuit Courthouse
9th Circuit Courthouse

The former chairman of health care firm McKesson Corp. had his fraud conviction and 10-year prison sentence upheld by a federal appeals court.

McCall went to prison for his part in a scheme to inflate revenues for HBO & Co., a software firm, to make it look better for a McKesson (MCK) acquisition in 1999.  McKesson paid $13.9 billion for the firm and the government argued the revenue inflations cost shareholders $8.6 billion.

McKesson’s stock lost nearly half its value in a one day after the fraud came to light.

The 9th US Circuit Court of Appeals, in a brief order, upheld McCall’s conviction.

The defense wanted the case overturned based on claims of bad jury instructions.

But the 9th Circuit declined.  “The jury found that McCall knowingly and willfully circumvented internal controls, which required actual knowledge, and was not affected by the reckless disregard instruction,” the panel wrote.  The appeals court said jurors likely convicted him based on his actual knowledge, “rendering any error in the reckless disregard instruction harmless.”

Case: U.S. v. McCall, No. 10-10111

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