By MATTHEW BARAKAT, AP Business Writer
McLEAN, Va. - A jury on Thursday found a former AOL executive and a former executive at a defunct Las Vegas software company were not liable for sham financial transactions in 2001 as federal regulators argued.
A third defendant was found liable on one count and cleared on three counts.
The civil verdicts in U.S. District Court in Washington, D.C., come more than a year after all three executives were acquitted at criminal trials stemming from some of the same transactions.
Kent Wakeford, a former executive director at AOL's business affairs unit, and Michael Kennedy, who was chief technology officer at Las Vegas-based PurchasePro Inc., were found not liable on all counts.
The jury found that Christopher Benyo, who was PurchasePro's senior vice president for marketing, helped PurchasePro in a scheme but did not mislead accountants, prepare false books or circumvent accounting regulations.
Benyo faces civil fines and penalties that could exceed $100,000.
Regulators accused the executives of scheming to boost PurchasePro's revenue in the first quarter of 2001 as the dot-com economy was collapsing.
At the time, PurchasePro was leaning heavily on AOL to help it sell its core product, a "marketplace license" designed to facilitate business-to-business purchases, but AOL had a hard time even giving the licenses away for free.
Prosecutors with the Securities and Exchange Commission said the three defendants engaged in a variety of deceptions to make it appear to investors that PurchasePro's business was solid, including secret side deals to reimburse companies that bought the software.
Wakeford testified in his own defense at both the criminal and civil trials and underwent more than 15 hours of cross-examination.
"My family and I have spent seven years fighting to clear my name in this matter, and I'm relieved that two juries have now concluded that I was, in fact, key to exposing fraud at a company that was doing business with AOL," Wakeford said in a statement.
Benyo's lawyer, Terrance Reed, said he will ask the judge to toss out the finding against him.
"We respect the jury's decision, but we're disappointed they didn't give us a complete, 100 percent victory," Reed said.
Kennedy's lawyer, David Schertler, said the verdict is "a wonderful vindication for Michael Kennedy in a case that never should have been brought against him by the SEC."
Two civil trials — of former AOL executive John Tuli and PurchasePro founder Charles "Junior" Johnson — remain. Tuli was acquitted in the criminal case, and Johnson is still awaiting a verdict in his separate trial.
AOL, now a division of Time Warner Inc., paid a $210 million fine in December 2004 to settle criminal charges that it helped PurchasePro commit stock fraud.
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