In a mixed verdict, jurors today acquitted a former America Online Inc. executive and a former official at PurchasePro.com of securities fraud violations in a civil case brought by the Securities and Exchange Commission.
A second former PurchasePro executive was found liable on one count of violating securities laws after a six-week trial before Senior Judge Gladys Kessler of the U.S. District Court for the District of Columbia.
The civil case is the second redemption for ex-AOL attorney Kent Wakeford and Michael Kennedy, a former chief technology officer at PurchasePro. Both were also absolved of criminal wrongdoing in a related case tried by federal prosecutors in the Eastern District of Virginia. Christopher Benyo, a former senior vice president of marketing at PurchasePro, was found liable of aiding and abetting violations of the Securities Exchange Act related to a $3.7 million transaction in 2001.
At the time, SEC attorneys argued at trial, PurchasePro falsely included a $3.7 million contract to boost its first-quarter revenues on the eve of the collapse of the dot com era. Benyo and others were accused of backdating the contract in order to deceive investors and auditors.
Kessler must now decide whether to assess fines and if Benyo should be permanently barred from holding office in a publicly-held company.
Henry Asbill, a Dewey & LeBoeuf partner who represents Wakeford, said: “Today, a second federal jury in Washington has studied the facts of this case, and like the first jury, unanimously concluded that Kent Wakeford was wrongly accused.”
The seven-week civil trial involved several top-tier white-collar criminal practices.
“This is a wonderful vindication for Michael Kennedy in a case that never should have been brought against him by the SEC,” said David Schertler, one of the attorneys for Kennedy at Schertler & Onorato. Schertler said the verdict was a “resounding defeat for the SEC, which spent hundreds of thousands of dollars pursuing and litigating the claims.”
In addition to Asbill, Wakeford also was represented by Kerri Ruttenberg of Dewey & LeBoeuf and Paul Hugel of Clayman & Rosenberg. Terrance Reed and William Coffield of Lankford, Coffield & Reed, represented Benyo.
Steptoe & Johnson partner Mark Hulkower and associate Marc Levin represent John Tuli, a fourth co-defendant who will be tried separately later this year.