Business Crimes Hotline

CALIFORNIA

Former Chairman of McKeeson Corporation Sentenced to 10 Years in Prison

U.S. District Court Judge William H. Alsup sentenced Charles McCall to 10 years in prison and ordered him to pay a $1 million fine for his alleged role in a fraud designed to inflate sales revenue.

McCall was indicted in 2003 and, after a 2006 jury trial, was acquitted on conspiracy charges, but the jury failed to resolve other charges. Thereafter, federal prosecutors re-indicted McCall, leading to his 2009 re-trial. McCall was convicted in November 2010 of five counts of securities fraud and circumventing accounting rules. The government alleged that McCall had backdated sales contracts to meet projections by recognizing revenue early.

The prison term was the minimum sentence, five years less than what the government requested. McCall's attorney said that he would appeal the conviction and that his client maintains his innocence.

Five other former McKeeson executives had pleaded guilty as a part of the government's investigation. In 2005, the company settled investor suits by agreeing to pay $960 million.

DISTRICT OF COLUMBIA

Online Sales of Counterfeit Goods Targeted in Nationwide 'Cyber Monday' Seizure of Web Site Domains

On Nov. 29, 2010, Attorney General Eric Holder and Director John Morton of the Department of Homeland Security's Immigration and Customs Enforcement (ICE) announced that Operation in Our Sites v. 2.0, a joint operation targeting online retailers of counterfeit goods, had led to the execution of 82 seizure orders against commercial Web site domain names for their sale and/or distribution of copyrighted works and counterfeit goods. The National Intellectual Property Rights Coordination Center (IPR Center), led by ICE's Office of Homeland Security Investigations (HIS), headed up the investigation, with assistance from the Computer Crime and Intellectual Property, and Asset Forfeiture and Money Laundering sections of the DOJ's Criminal Division and U.S. Attorney's Offices in nine districts.

Operation in Our Sites v. 2.0 built upon Operation in Our Sites I, which was announced in June 2010. While the latter targeted nine Web site domain names engaged in sales of pirated first-run movie copies, the scope of the former expanded to include domain names selling counterfeit sporting goods and athletic clothing, handbags and sunglasses, in addition to copies of copyrighted software, music, and DVDs. As part of their efforts to secure the seizure orders needed to shut down the Web sites, federal law enforcement agents worked undercover to purchase suspected counterfeit items online. Once purchased, the goods, which were often shipped via international express mail into the U.S. from suppliers abroad, were determined to be counterfeit or illegal in some other manner. Magistrate judges issued the requested seizure orders for the respective Web site domain names. According to the government, those Web sites now contain a banner notifying those seeking to access each Web site that the domain name has been seized by federal authorities.

In the Courts and Business Crimes Hotline were written by Associate Editor Kenneth S. Clark and Matthew J. Alexander, respectively. Both are associates at Kirkland & Ellis LLP, Washington, DC.

CALIFORNIA

Former Chairman of McKeeson Corporation Sentenced to 10 Years in Prison

U.S. District Court Judge William H. Alsup sentenced Charles McCall to 10 years in prison and ordered him to pay a $1 million fine for his alleged role in a fraud designed to inflate sales revenue.

McCall was indicted in 2003 and, after a 2006 jury trial, was acquitted on conspiracy charges, but the jury failed to resolve other charges. Thereafter, federal prosecutors re-indicted McCall, leading to his 2009 re-trial. McCall was convicted in November 2010 of five counts of securities fraud and circumventing accounting rules. The government alleged that McCall had backdated sales contracts to meet projections by recognizing revenue early.

The prison term was the minimum sentence, five years less than what the government requested. McCall's attorney said that he would appeal the conviction and that his client maintains his innocence.

Five other former McKeeson executives had pleaded guilty as a part of the government's investigation. In 2005, the company settled investor suits by agreeing to pay $960 million.

DISTRICT OF COLUMBIA

Online Sales of Counterfeit Goods Targeted in Nationwide 'Cyber Monday' Seizure of Web Site Domains

On Nov. 29, 2010, Attorney General Eric Holder and Director John Morton of the Department of Homeland Security's Immigration and Customs Enforcement (ICE) announced that Operation in Our Sites v. 2.0, a joint operation targeting online retailers of counterfeit goods, had led to the execution of 82 seizure orders against commercial Web site domain names for their sale and/or distribution of copyrighted works and counterfeit goods. The National Intellectual Property Rights Coordination Center (IPR Center), led by ICE's Office of Homeland Security Investigations (HIS), headed up the investigation, with assistance from the Computer Crime and Intellectual Property, and Asset Forfeiture and Money Laundering sections of the DOJ's Criminal Division and U.S. Attorney's Offices in nine districts.

Operation in Our Sites v. 2.0 built upon Operation in Our Sites I, which was announced in June 2010. While the latter targeted nine Web site domain names engaged in sales of pirated first-run movie copies, the scope of the former expanded to include domain names selling counterfeit sporting goods and athletic clothing, handbags and sunglasses, in addition to copies of copyrighted software, music, and DVDs. As part of their efforts to secure the seizure orders needed to shut down the Web sites, federal law enforcement agents worked undercover to purchase suspected counterfeit items online. Once purchased, the goods, which were often shipped via international express mail into the U.S. from suppliers abroad, were determined to be counterfeit or illegal in some other manner. Magistrate judges issued the requested seizure orders for the respective Web site domain names. According to the government, those Web sites now contain a banner notifying those seeking to access each Web site that the domain name has been seized by federal authorities.

In the Courts and Business Crimes Hotline were written by Associate Editor Kenneth S. Clark and Matthew J. Alexander, respectively. Both are associates at Kirkland & Ellis LLP, Washington, DC.