U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21213 / September 18, 2009
Accounting and Auditing Enforcement Release No. 3052 / September 18, 2009
Securities and Exchange Commission v. Charles Johnson, Jr., Christopher Benyo, Michael Kennedy, John Tuli, and Kent Wakeford, Civil Action No. 05-CV-0036-GK (D.D.C.)
COURT IMPOSES OFFICER AND DIRECTOR BAR, INJUNCTION AND CIVIL PENALTY AGAINST FORMER CHIEF EXECUTIVE OFFICER OF PURCHASEPRO.COM, INC.
The Securities and Exchange Commission announced today that the U.S. District Court for the District of Columbia granted summary judgment against Charles Johnson, Jr., former Chief Executive Officer of PurchasePro.com, Inc. (PurchasePro) after finding that he had violated the securities laws in connection with an accounting scheme at the company.
On September 15, 2009, Judge Gladys Kessler entered a final judgment against Johnson that imposed a civil monetary penalty of $3 million, permanently enjoined him from violating Exchange Act Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), 13(b)(5) and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1, 13b2-2 thereunder, and Securities Act of 1933 Section 17(a), and permanently barred him from acting as an officer or director of a publicly traded company.
Following a bench trial before Judge Walter D. Kelly in District Court for the Eastern District of Virginia, Johnson was convicted of conspiracy to commit securities fraud, securities fraud for violating Exchange Act Section 10(b) and Rule 10b-5 thereunder, witness tampering and obstruction of justice on May 15, 2008. On November 14, 2008, Judge Liam O'Grady (E.D. Va.) sentenced Johnson to, among other things, 108 months in prison and ordered him to pay restitution of $9.7 million. Following Johnson's sentencing, the stay of the Commission's case against Johnson was lifted on January 12, 2009.
Previously, on April 24, 2008, a jury found Christopher Benyo, former Senior Vice President for Marketing and Network Development for PurchasePro liable for aiding and abetting PurchasePro's violation of the antifraud provisions of the Securities Exchange Act of 1934 (Section 10(b) and Rule 10b-5 thereunder). The jury found Benyo not liable on other charges. The jury also found Michael Kennedy and Kent Wakeford not liable on the charges against them. The SEC voluntarily dismissed the allegations against John Tuli on November 3, 2008.
Moreover, as previously announced, the Commission settled with six other former executives of PurchasePro — R. Geoffrey Layne, James S. Sholeff, Dale Boeth, Shawn McGhee, Jeffrey R. Anderson, and Scott H. Miller — for violations of the federal securities laws. A PurchasePro vendor, Garg Data International, Inc., and its President, Sushil K. Garg, also previously settled with the Commission for aiding and abetting PurchasePro's financial fraud.
Additional information concerning this action and Commission actions related to this matter can be found at: