U.S. Securities & Exchange Commission
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U.S. Securities and Exchange Commission

United States of America
before the
Securities and Exchange Commission

Securities Exchange Act of 1934
Release No. 48248 / July 29, 2003

Accounting and Auditing Enforcement
Release No. 1825 / July 29, 2003

Administrative Proceeding
File No. 3-11195

In the Matter of





The Securities and Exchange Commission (the "Commission") deems it appropriate and in the public interest that administrative proceedings be, and hereby are, instituted against Jay P. Gilbertson ("Gilbertson"), a certified public accountant, pursuant to Rule 102(e)(3)(i)(A) of the Commission's Rules of Practice.1


In anticipation of the institution of these proceedings, Gilbertson has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purposes of these proceedings and any other proceedings brought by or on behalf of the Commission, or in which the Commission is a party, and without admitting or denying the findings contained herein (except that Gilbertson admits the jurisdiction of the Commission over him and over the subject matter of these proceedings and that a final judgment of permanent injunction has been entered against him), Gilbertson consents to the entry of this Order Instituting Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings and Imposing Remedial Sanctions ("Order") as set forth below.


On the basis of this Order and Gilbertson's Offer, the Commission finds that:

A. Gilbertson, 43, a certified public accountant who is duly licensed by the Texas Board of Accountancy, is a defendant in Securities and Exchange Commission v. Jay Gilbertson, et al., Case No. C-00-3570 MJJ in the United States District Court for the Northern District of California. Gilbertson, former Co-President, Co-Chief Operating Officer and Chief Financial Officer for HBO & Co. ("HBOC" or the "Company"), resides in Georgia.

B. On July 1, 2003, in the above-referenced matter, the United States District Court for the Northern District of California: (a) permanently enjoined Gilbertson from future violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5, 13b2-1 and 13b2-2 thereunder; (b) ordered Gilbertson to pay a civil monetary penalty of $1,000,000; and (c) barred him from serving as an officer or director of a public company. Gilbertson consented, without admitting or denying the allegations contained in the Commission's complaint (except as to jurisdiction, which he admitted), to the issuance of the order of permanent injunction and the entry of final judgment.

C. The Commission's complaint in the above action alleged that Gilbertson was a primary and active participant in a scheme to defraud investors by causing HBOC to materially inflate the profits that it reported to the investing public. Gilbertson carried out this fraudulent scheme by causing numerous improper journal entries to be input into HBOC's general ledger, which falsely reduced HBOC's expenses. Gilbertson also facilitated the recognition of revenue on software sales that were subject to contingencies contained in side letters and therefore could not properly be recorded as revenue. He also took steps to conceal the company's accounting improprieties from HBOC's auditors. The fraud caused HBOC to significantly overstate its revenue and net income for several consecutive quarters. Gilbertson signed HBOC's Forms 10-Q filed with the Commission for the March, June, and September 1998 quarters knowing that the financial statements contained therein were false and misleading as a result of the fraud. Gilbertson also signed HBOC's registration statements on Forms S-4 and S-4/A that were filed with the Commission on August 14, August 21, August 24, and October 1, 1998. These forms incorporated HBOC's false and misleading financial statements for the quarters ended March 31 and June 30, 1998.


Based on the foregoing, the Commission deems it appropriate and in the public interest to impose the sanction consented to by Gilbertson in his Offer.

Accordingly, it is hereby ORDERED, effective immediately, that Gilbertson is suspended from appearing or practicing before the Commission as an accountant.

By the Commission.

Jonathan G. Katz


1 Rule 102(e)(3)(i)(A) of the Commission's Rules of Practice provides, in pertinent part, that:

. . . (i) The Commission, with due regard to the public interest . . . may . . . suspend from appearing or practicing before it any . . . accountant . . . who has been by name . . . permanently enjoined by any court of competent jurisdiction, by reason of his or her misconduct in an action brought by the Commission, from violating or aiding and abetting the violation of any provision of the Federal securities laws or of the rules and regulations thereunder.



Modified: 07/29/2003