The national plaintiffs' law firm
Lieff Cabraser Heimann & Bernstein, LLP, announced
that yesterday it filed a motion to amend the complaint
in an accounting and securities fraud lawsuit against
McKesson HBOC, Inc.; its predecessor HBOC; Arthur Anderson,
LLP; and certain individual defendants. The proposed
amended complaint names WebMD as a defendant and adds
allegations regarding the company's conduct. Lieff
Cabraser serves as counsel for plaintiffs Merrill Lynch
Fundamental Growth Fund, Inc. and Merrill Lynch Global
Value Fund, Inc. ("Merrill Lynch Funds").
The motion was filed in California Superior Court.
The Merrill Lynch Funds charge that a massive accounting
fraud occurred at HBOC before and following its 1999
acquisition by McKesson Corporation. The Merrill Lynch
Funds allege that defendants artificially inflated
the price of securities of McKesson HBOC, the name
McKesson adopted after acquiring HBOC, as a result
of improperly recognizing revenues and making false
and misleading representations and omissions concerning
the financial condition of HBOC. Once the fraudulent
conduct of defendants was discovered and disclosed,
the value of McKesson HBOC's shares fell sharply, causing
significant losses to the Merrill Lynch Funds.
Yesterday,
the Merrill Lynch Funds filed a motion to add WebMD
as a defendant. The new allegations against WebMD consist
of the following: WebMD agreed to enter into transactions
which (a) allowed HBOC to improperly record $5 million
in "revenue" for the quarter ending December
31, 1998 on a transaction that amounted to little more
than an exchange of inventory; (b) permitted HBOC to
record that revenue in the quarter ending December
31, 1998 even though the transaction was not completed
nor even entered into as of that date; and (c) allowed
McKesson HBOC to improperly record $9 million in "revenue" from
a contract that was subject to undisclosed "options" which
rendered the contract terms undeterminable, for the
quarter ending March 31, 1999, all in violation of
Generally Accepted Accounting Principals (GAAP). |
