US general counsel up on fraud charges

For The first time in US corporate history, a general counsel has been indicted for alleged securities fraud.

Jay Lapine, former general counsel of healthcare information company HBO & Co, which was acquired by McKesson in early 1999, surrendered himself to the FBI last Tuesday (3 June) to face charges of securities fraud. This is the first time the US Justice Department has indicted a corporate general counsel in connection with a securities fraud.

Lapine is alleged to have helped HBO design and execute a scheme to artificially inflate the company’s revenues before it was acquired by McKesson. In October 2001, the US Securities and Exchange Commission filed fraud charges against six former HBO executives.

William Goodman of Topel & Goodman, who is defending Lapine, said his client flatly denies the claims against him. He was released after pleading not guilty.

HBO’s former chairman of the board Charles McCall was also charged last week and will be arrested when he returns to the US. Charges were also added against Albert Bergonzi, HBO’s former vice president.