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american lawyer media news service San francisco-The U.S. attorney’s office in San Francisco has added former HBO & Co. top lawyer Jay Lapine to a growing list of criminal defendants in the McKesson Corp. securities fraud case. Lapine, prosecutors allege, helped his health care software and services company design and execute an elaborate plan to increase revenues artificially-sometimes by as much as 500%-prior to a merger with San Francisco-based McKesson, a distributor of pharmaceuticals and medical products. When the scheme was revealed, the combined company’s market value plunged $9 billion in a single day. The indictment on June 4 highlights prosecutors’ growing interest in legal and accounting professionals who help corrupt executives engage in securities fraud. “Major corporate fraud cannot happen over an extended period of time without the complicity of accountants, lawyers and other professionals,” Deputy Attorney General Larry Thompson said in a statement. He said that the case proves the government’s “commitment to follow the evidence wherever it leads-to not only those executives but also to those lawyers or other professionals who defraud the investing public.” In addition to Lapine, prosecutors charged HBO & Co.’s former chairman, Charles McCall. McCall also served briefly as chairman of the combined McKessonHBOC (now McKesson Corp.). Lapine and McCall each face several counts of securities fraud. Lapine surrendered to the FBI. He was released on his own recognizance after entering a not guilty plea before U.S. Magistrate Judge Edward Chen of the Northern District of California. McCall was out of the country and will be arrested when he returns. Charges were also added against Albert Bergonzi, HBOC’s former president, who served for a time as a McKessonHBOC vice president. U.S. Attorney Kevin Ryan also announced that three other former high-ranking employees of HBOC have pleaded guilty and are cooperating with prosecutors. When asked why the indictments took so long-coming four years after the initial fraud-Mark Mershon, the FBI special agent in charge said, “Very frankly, [the case] is advanced significantly when there is cooperation.” Helping prosecutors is McKesson’s internal investigation into the fraud. McKesson turned its report-a virtual road map to the fraud-over to the Securities and Exchange Commission (SEC) and prosecutors. “I will say that McKesson has been fully cooperative, and that they have been told they are not a target of the investigation,” Ryan said. Ryan added that the investigation remains open. Earlier SEC suit The SEC filed suit against Lapine in September 2001 and has an administrative proceeding against the company’s outside auditor, former Arthur Andersen LLP partner Robert Putnam. Prosecutors are alleging that Lapine did more than merely look the other way-that he actively participated in a fraud to deceive investors. When asked to comment, Lapine’s lawyer William Goodman said, “Is that what they say? We say just the opposite.” Goodman, of San Francisco’s Topel & Goodman, said his client did not initially appear to be a target of the investigation, but the government’s interest has increased recently. “They reinitiated contact with us regarding the matter only within the last couple months,” Goodman said. Whether the attorney-client privilege becomes a factor in Lapine’s defense remains to be seen. “It’s hard to say,” Goodman said. “It may. That’s an interesting point. It’s something we’ll have to look into when we get into discovery.” Previously indicted defendants have been scuffling with prosecutors over access to McKesson’s internal investigation. U.S. District Judge Martin Jenkins gave defense lawyers access to the report over the objection of prosecutors and McKesson itself, which argued that it was work product protected by the attorney-client privilege. Jenkins said that once the company turned it over to the government, the company waived the privilege. McKesson’s appeal is pending before the 9th U.S. Circuit Court of Appeals.

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