Closing arguments got underway today in the government’s case against two former executives at America Online Inc. and one former executive of PurchasePro.com, who were accused of cooking the books. The defendants — former AOL executive Kent Wakeford and former PurchasePro officials Christopher Benyo and Michael Kennedy — are accused of taking part in a scheme to deceive investors and accountants by inflating the revenues of Las Vegas software company PurchasePro. (See Legal Times' earlier story on the case here.)
David Gottesman, a trial attorney in the Securities and Exchange Commission’s commercial litigation branch, told jurors, “The whole scheme was a fraud. All three defendants were in fraud up to their necks. They couldn’t get enough revenue, so PurchasePro, with the help of the defendants, cooked the books.” The SEC charges the defendants with aiding and abetting a securities fraud related to a $3.7 million transaction.
The six-week trial has been heard in front of Senior Judge Gladys Kessler of the U.S. District Court for the District of Columbia.
All three defendants were acquitted last year by a jury in the U.S. District Court for the Eastern District of Virginia of criminal charges related to the scheme.
If jurors side with the government in this most recent case, the defendants face penalties and fines and the possibility of being permanently barred from holding office in a publicly held company.
A fourth defendant, former AOL executive John Tuli, is being tried separately, and his trial is set for July.
Closing arguments by the defendants’ attorneys will take place this afternoon and tomorrow. Legal Times will continue its coverage of the trial.
— Reported by Pedro Ruz Gutierrez
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