BKD forensics expert helps in earnings scam conviction

Two former medical system executives in South Carolina were convicted earlier this month of inflating earnings reports, and a forensic accountant from BKD in Springfield helped with the investigation.

John Kang and John Sessions, former executives with Charleston, S.C.-based Medical Manager Health Systems Inc., were convicted of conspiracy to commit mail, wire and securities fraud by inflating the company's reported earnings by more than $16.8 million between 1997 and 2003, according to a U.S. Department of Justice news release.

The reports were artificially inflated on a quarterly basis to meet analysts' expectations, which inflated the market price of the company's stock, according to the release.

The scheme also included inflating the purchase prices of companies Medical Manager was acquiring in order to compensate those companies for the simultaneous purchase of Medical Manager software the companies were being compelled to purchase as part of their acquisitions.

BKD accountant Angela Morelock acted as the expert forensic accountant for the Department of Justice in the case.

"As the president and vice-president of their company, these defendants were supposed to lead their company with honor and integrity,"  said Assistant Attorney General Lanny A. Breuer of the Criminal Division in the release. "Instead, they orchestrated an elaborate accounting scheme meant to defraud investors about the financial success of their company."

The two await sentencing; the maximum penalty for the charges is five years in prison and a fine of either $250,000 or twice the amount of personal gain resulting from the illegal acts.[[In-content Ad]]