Two are acquitted in McKesson case

Two former McKesson Corp. executives were acquitted Friday on one count each of federal securities fraud, but a mistrial was declared on six other counts in a $9-billion accounting scandal at the pharmaceutical distribution company.

Charles W. McCall, the company’s former chairman, was charged with fabricating revenue and then trying to cover up a conspiracy to inflate profit before its 1999 merger with Atlanta-based HBO & Co.

Jay Lapine, the former general counsel of HBO, a health services software maker, faced similar charges.

The two were tried before a federal jury, which heard six weeks of testimony. After deliberating six days, the panel said it was deadlocked on the remaining charges.

Four other executives of the combined company, the nation’s largest pharmaceutical distributor, were convicted in the scheme in which HBO executives overstated revenue by more than $300 million.

McCall had been HBO chairman until the company was sold to San Francisco-based McKesson in January 1999 for $12 billion. He became chairman of the combined entity, which retained the McKesson name, before being fired in June 1999 after the accounting scheme was uncovered. Lapine kept his job as general counsel after the merger but was later fired.

U.S. District Judge Martin Jenkins declared a mistrial on the remaining six securities fraud counts against each defendant.

Prosecutors said they were considering whether to retry the men on those counts.

Attorneys for the two men said they were happy with the verdict and were keeping their fingers crossed that there would be no retrial. Guilty verdicts could result in 10-year sentences.

Albert Bergonzi, the former HBO president and later a McKesson executive vice president, pleaded guilty in 2003 to securities fraud, admitting that executives conspired to make the merger more attractive with McKesson.