Former PurchasePro.com CEO Sentenced for Securities Fraud

(Alexandria, VA) -Charles E. Johnson, Jr., age 47, of Las Vegas, Nevada, former chairman and CEO of PurchasePro.com, Inc., was sentenced today to 108 months in prison to be followed by a term of three years supervised release. He was also ordered to pay $9.7 million in restitution to the PurchasePro.com Liquidating Trust, the company's successor in interest. Johnson was found guilty on May 15, 2008, after a bench trial before United States District Judge Walter D. Kelley, Jr. that was completed in December 2007, of conspiring to commit securities fraud, securities fraud, witness tampering, and obstructing an official proceeding. Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia, Matthew Friedrich, Acting Assistant Attorney General, Criminal Division, Department of Justice, and Joseph Persichini, Jr., Assistant Director in Charge, Federal Bureau of Investigation, Washington Field Office, made the announcement after the sentencing by United States District Judge Liam O'Grady.

PurchasePro, a now-defunct, public company based in Las Vegas, had sold computer software, including a so-called business-to-business "marketplace license." This license allowed businesses to buy and sell products on the Internet, to participate directly in PurchasePro's own web-based marketplace, and to create their own branded marketplace using PurchasePro's software.

According to court documents, Johnson and his co-conspirators, including other senior officers at PurchasePro, conspired to falsely inflate the first quarter 2001 revenue that PurchasePro recognized and announced to the public. They misled PurchasePro's auditors by forging documents, altering fax headers, and backdating contracts, and then placing the documents in PurchasePro's files where the auditors would find and rely on them. Johnson's coconspirators also caused the company to improperly recognize revenue from marketplace license sales by falsely certifying that there had been no undisclosed side agreements with the purchasers.

Johnson originally faced trial on the conspiracy, securities fraud, and witness tampering charges in a jury trial before Judge Kelley that began in October 2006. Johnson's first trial ended after Judge Kelley granted a motion by Johnson's defense attorney to withdraw from the case. A mistrial was declared as to Johnson. In the retrial, which began in October 2007, an obstruction charge was added to the original charges. In addition to the guilty verdict on the original charges, Judge Kelley also found Johnson guilty of obstructing justice as a result of his conduct during his first trial.

Previously, in related cases, former PurchasePro executives Dale L. Boeth, James S. Sholeff, Jeffrey R. Anderson, Scott H. Miller, R. Geoffrey Layne, and Shawn P. McGhee pled guilty to charges stemming from their participation in the scheme to inflate PurchasePro's revenues and were sentenced. In December 2004, a criminal complaint was filed against AOL charging the company with aiding and abetting securities fraud at PurchasePro. Pursuant to a deferred prosecution agreement, AOL agreed to accept responsibility for the conduct of its employees in transactions between AOL and PurchasePro, cooperate fully in the government's continuing criminal investigation, adopt internal compliance measures, and pay $150 million into a compensation and settlement fund and a criminal penalty of $60 million.

This case was investigated by the Federal Bureau of Investigation. The United States Attorney's Office also received assistance from the Division of Enforcement of the Securities and Exchange Commission and the Criminal Prosecution Assistance Group of NASD Regulation, Inc. The case was prosecuted by Assistant United States Attorneys Timothy D. Belevetz and Stephen P. Learned and Trial Attorney Brigham Q. Cannon with the Fraud Section of the Department of Justice's Criminal Division. Assistant United States Attorney Thomas H. McQuillan also assisted with the investigation of the charges related to Johnson's obstruction of justice during the 2006 trial. The investigation was conducted under the auspices of President Bush's Corporate Fraud Task Force, created in July 2002 to investigate allegations of fraud and corruption at U.S. corporations.

A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.usdoj.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.