Mistrial Called in Online Ad Fraud Case
Saturday, November 11, 2006
A federal judge declared a mistrial in the fraud case against former PurchasePro Inc. chief executive Charles E. Johnson Jr. after his attorney successfully petitioned to withdraw nearly three weeks into the case, according to court records.
The prosecution of Johnson, an entrepreneur who came under government scrutiny for engaging in questionable last-minute advertising deals with America Online Inc. during the Internet boom, will be separated from the case against three other defendants in the Alexandria trial. Johnson will be tried separately, U.S. District Judge Walter D. Kelley Jr. ruled Thursday.
The exact reasons for the mistrial remained under court seal, although two sources who spoke on condition of anonymity because of the judge's order said they pertained to allegations of misconduct by Johnson, 45, a tough-talking former college basketball player. Johnson, who is known by his nickname "Junior," did not return calls to his cellphone yesterday.
In opening statements to the jury last month, Assistant U.S. Attorney Charles F. Connolly accused Johnson of directing subordinates to destroy e-mail messages, computers and other evidence and suggested that Johnson, whose father was a policeman and former security company operator, had threatened employees who failed to bend to his will.
Johnson denied the charges against him and argued that he put his wealth and his health on the line in an ill-fated attempt to save PurchasePro, his Las Vegas software company.
Johnson's former lawyer, onetime Washington federal prosecutor Preston Burton, yesterday declined to comment, citing ethical strictures. Burton, of the law firm Orrick, Herrington & Sutcliffe LLP, appeared in court Thursday morning for sealed proceedings related to the mistrial, according to the court docket.
Mark W. Foster, a legal ethics expert at Zuckerman Spaeder LLP in the District, said allowing a defense lawyer to quit midstream is rare, particularly in the U.S. District Court for the Eastern District of Virginia, known as the "rocket docket" for its speed and judicial efficiency.
Under Virginia ethics rules, however, defense lawyers are required to come forward if they become aware that their clients intend to break the law or if they possess information that clients have "perpetrated a fraud" on the court by tampering with evidence or other maneuvers.
It remains to be seen what impact the absence of Johnson, who took an active role in his defense, will have on the case. Johnson's actions in the first few months of 2001, as his company struggled to meet analyst targets and as he faced a personal financial crunch, were a centerpiece of the prosecution.
The unusual move left three defendants, former AOL employees Kent D. Wakeford and John P. Tuli and former PurchasePro executive Christopher J. Benyo. The fraud and conspiracy case against them will resume Thursday, when the judge is expected to inform jurors about the mistrial.
Prosecutors contend that PurchasePro and AOL employees worked in tandem to mislead auditors about the nature of a series of ad deals in early 2001. The agreements helped both companies meet revenue expectations at a time when the technology sector had begun to crater.