Former McKesson HBOC Chairman Charles McCall got 10 years for securities fraud Friday, even though federal prosecutors had sought 15 years and the probation office thought he deserved even more than that.
McCall is the last defendant to be sentenced in a decade long case involving cooked books at the company. In fashioning McCall’s punishment, Northern District Judge William Alsup stressed the need to deter corporate executives from committing these kinds of crimes. However, he said McCall’s crimes — while serious — are not the same as those perpetrated by the likes of Bernard Madoff. McKesson HBOC was a real company with real products, Alsup said, while Madoff’s business was a total sham.
“It is easy for the government to get carried away,” Alsup said.
But Alsup trained heavy fire on McCall’s defense team, led by Ted Wells of Paul, Weiss, Rifkind, Wharton & Garrison, for trying to keep McCall out of prison pending appeal. Alsup called an attempt to quibble with his jury instructions “frivolous,” and dinged the defense team for failing to preserve objections during trial.
“I ask the Ninth Circuit to please carefully read these transcripts,” Alsup said. Afterwards, Wells told me he “respectfully disagreed” with Alsup’s stance, and planned an immediate appeal to the Ninth Circuit.
Alsup ordered McCall to pay a $1 million fine, and to surrender at noon on March 31. He then complemented the lawyers on both sides for superb work.
“Justice has been a long time coming in this case,” he concluded.
A jury convicted McCall after top executives at his company made up sales shortfalls by ginning up side letters that allowed customers to pull out of sales contracts, and then hiding those letters from company auditors. McCall allegedly learned of the scam during HBOC's merger talks with McKesson.
The feds tried to lock up McCall in December, saying he didn't disclose a 2006 arrest for soliciting a prostitute. But Alsup hiked his bail instead.
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