10 ex-execs of WebMD arm indicted

The former Tampa-based Medical Manager officials face fraud and money laundering charges.

Published December 16, 2005

Ten former executives of WebMD's Medical Manager unit in Tampa were indicted Thursday for accounting fraud and money laundering, charged with inflating revenues of the software company by more than $16.8-million between 1997 and 2001.

Among those indicted by the U.S. attorney's office in South Carolina were John H. Kang, 42, president of Medical Manager in 1996 until its sale to WebMD in 2000. Kang, who became active in the Tampa technology community after leaving Medical Manager, later founded LiquidMetal Technologies, which he runs from Lake Forest, Calif.

Kang's attorney, John Lauro, said his client "emphatically denies the allegations."

Phone calls seeking comments from the remaining defendants were not returned. There was no answer late Thursday at the Tampa or Alachua offices of Medical Manager, now known as Emdeon Practice Services. A spokeswoman for Emdeon Corp., WebMD's parent company in New York, did not return a call seeking comment.

Thursday's indictments stem from an investigation dating to September 2003, when federal agents seized documents from Medical Manager's offices in Tampa and Alachua. At the time, a WebMD spokeswoman said the search warrants were "based on misleading information from two terminated employees." The company said it was cooperating with the investigation.

The investigation heated up this year when four former Medical Manager associates pleaded guilty to various charges, including mail fraud, tax evasion and accepting kickbacks.

Robert W. Davids, a Tampa vice president for acquisitions, pleaded guilty to taking bribes from software dealerships he helped acquire for the company. Davids was fired in 2003. In August, Davids was ordered by a federal judge in Tampa to reimburse Emdeon $8.1-million taken in kickbacks as part of a civil case filed by the company.

Also pleading guilty in the government's case were ex-employees Kevin M. Kennedy, Glen S. Moss and William Kottage.

In Thursday's federal indictment, the government alleges the 10 executives conspired to artificially inflate quarterly revenues of Medical Manager, which Kang took public in 1997.

Kang's attorney said the allegations are baseless.

"We believe these charges resulted from the vivid imagination of an ex-employee who admitted to stealing millions of dollars from the company," Lauro said.

Maximum penalties on the fraud conspiracy are five years in prison and a fine of $250,000. Penalty on money laundering is 20 years in prison and a fine of $500,000.

Times researcher Caryn Baird contributed to this report. Kris Hundley can be reached at hundley@sptimes.com or 727 892-2996.