Long-Running AOL Trial Heads to Jury
Friday, February 2, 2007
An Alexandria jury concluded its first day of deliberations yesterday without reaching a verdict on two former AOL executives accused of conspiring to help a business partner create phony revenue as the Internet boom turned bust in early 2001.
The six-man, six-woman jury began discussing more than three months' worth of evidence yesterday morning after a marathon session of closing arguments that ended hours after the federal courthouse had closed for business Wednesday.
Prosecutors got the last word in one of the longest-running criminal proceedings in the history of the U.S. District Court for the Eastern District of Virginia, known as the "rocket docket" for its speedy and efficient proceedings. Assistant U.S. Attorney Charles F. Connolly urged the jury shortly after 8:30 p.m. Wednesday not to follow defense lawyers' invitation to "look away from the facts" but instead to remember "a lesson we all learned from the time we were children: Simply tell the truth."
Kent D. Wakeford, former vice president of AOL's Business Affairs unit, and John P. Tuli, a former official with AOL's Netbusiness unit, have been charged with helping Las Vegas software maker PurchasePro meet revenue targets in March and April 2001 by lying to auditors and backdating contracts. At the time, both companies were struggling to meet analyst expectations and ultimately resorted to fraud to preserve the illusion of success, prosecutors said.
"These guys would rather cheat than fail," Assistant U.S. Attorney Adam Reeves told the jury Tuesday.
U.S. District Judge Walter D. Kelley Jr., however, has repeatedly pared the scope of the case and the number of criminal charges. Most recently he agreed to cut multiple wire fraud counts against Tuli, Wakeford and former PurchasePro employee Christopher J. Benyo.
That means each of the defendants faces two charges: conspiracy and aiding and abetting PurchasePro's founder, Charles E. Johnson Jr., to commit securities fraud. They assert their innocence, but only Wakeford testified in his own defense and tried to distance himself from Johnson.
An outsized, colorful character accused of directing subordinates to forge documents and destroy computers, Johnson split from the case last fall after his lawyer resigned for reasons that remain secret. He will be retried later. The judge urged jurors this week to neither speculate about the reasons for Johnson's departure nor consider him in their efforts to reach a verdict.
That may be difficult if prosecutors have their way. Johnson's alleged misdeeds permeated their closing argument. They essentially sought to convict Johnson in absentia and to use him to tar the three remaining defendants, each of whom carefully avoided sitting at the empty table where Johnson once sat.
The defense teams strived to portray their clients as scapegoats in a government investigation that fell short of catching high-ranking former AOL executives who may have engineered accounting tricks and sham deals. AOL ultimately paid more than $500 million to resolve federal charges.
Mark J. Hulkower, a lawyer for Tuli, told jurors that "there has been a complete failure of proof" in the government case. He attacked government witnesses' memory and branded a key cooperator who is serving more than four years in prison as a pathological liar whose testimony could not be believed.
Terrance Reed, a lawyer for Benyo, stressed his client's unfamiliarity with PurchasePro's accounting practices and his low rank in the corporate hierarchy. Reed urged the jury to "set yourself and Mr. Benyo free" from a trial that had been expected to conclude before Christmas.
"Obviously things are running later than usual," the judge said late Tuesday as the clock ticked. "It wouldn't be this trial if that didn't happen."
Henry W. Asbill, a lawyer for Wakeford, told jurors that his client was "stuck in the middle" between overbearing bosses and trying clients. Asbill asserted that Wakeford did not have authority to enter into major deals and that he did not benefit financially from the PurchasePro transactions. His client, he argued, was left at the defense table because "the prosecution couldn't figure out a way to charge, much less convict, any AOL senior executives who had to be the real targets during this investigation."
Prosecutors tried to protect themselves from that argument by entreating the jury that blaming the boss is not a defense. "They could be bit players and still be guilty," Reeves told the jury.