Charges being dropped against ex-Medical Manager CEO Singer
Published: Wednesday, January 13, 2010 at 7:49 p.m.
Last Modified: Wednesday, January 13, 2010 at 7:49 p.m.
The U.S. Attorney's Office on Wednesday agreed to drop charges against former Medical Manager Corp. CEO Michael "Mickey" Singer of Alachua with the federal fraud conspiracy trial against other former executives scheduled to start next week.
Singer must pay a $2.5 million settlement, and prosecutors will drop any efforts to seize proceeds of his company stock sales as part of the agreement approved Wednesday in U.S. District Court in Charleston, S.C.
John Kang, of California, and John Sessions, of South Carolina, will be tried on charges of fraudulently inflating the company's earnings by $16.8 million from 1997 to 2001 to meet earnings expectations and increase stock prices. The jury was selected Tuesday, and the trial starts Jan. 19.
Charlie Hutchinson and Franklyn Krieger, both of Tampa, were granted a change of venue and will be tried in Tampa at a later date.
All have pleaded not guilty. If convicted, they could face as much as 25 years in prison and be required to forfeit profits of the alleged fraud.
Originally, 10 former Medical Manager executives were indicted. Charges previously were dismissed against Maxie Juzang, of California, and in recent months against Rick Karl, of Gainesville; David Ward, of Tampa; and Ted Dorman, also of Tampa; while Lee Robbins, of North Reading Beach, died.
Other executives have pleaded guilty to inflating the company's reported earnings and are expected to be witnesses. Singer's lead attorney, Randy Turk, previously had said the government's witnesses testified to receive reduced sentences and have "convinced the government that the entire executive team should be held responsible for their actions."
Charges against Singer technically will remain for six months as part of a deferred prosecution, after which the charges will be dismissed unless he commits a federal crime.
Turk said the six-month deferment is rare. He said he doubts Singer will testify in the trial but does not know for sure.
Kevin McDonald of the U.S. Attorney's Office said that until the remaining trials have concluded, he could not elaborate on why the charges against Singer are being dismissed.
Turk said he thought it was the accumulative effect of successful motions to prevent the government from using certain evidence and legal theories.
"This case never should have been brought in the first place," he said in a written statement. "The complete dismissal of these charges totally exonerates Mr. Singer of charges relating to conduct that took place as long as 13 years ago, and that he has been forced to defend himself against for almost seven years now."
Turk said he would not make Singer available for comment.
Singer founded the company that makes software for medical practices in Alachua in 1981. At the time of the indictment in December 2005, Medical Manager was headquartered in Tampa but maintained an office in Alachua. It later was bought by WebMD Corp., Emdeon Corp. and Sage Software. Sage continues to operate an office in Alachua.
The U.S. Attorney's Office says Medical Manager's former vice president of mergers and acquisitions, Robert Davids -- their lead witness -- converted sales revenue from some of the 135 companies Medical Manager purchased to deferred revenue and improperly included the revenue in later reporting periods to help meet earnings estimates.
The case is being tried in South Carolina, where Davids lives.
The other executives were complicit by being made aware of the fraudulent accounting practices in regular conference calls, the charges contend.
The company also allegedly made bulk software sales to some of the companies being acquired, improperly reporting the revenue from the sales to help meet earnings estimates, according to the charges.
As part of the deferred prosecution agreement, Singer acknowledges that he now understands the accounting procedures were improper. At the time, however, he was led to believe that they were proper, according to the agreement.
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