3 Acquitted In Lengthy AOL Trial

By Carrie Johnson
Washington Post Staff Writer
Wednesday, February 7, 2007

An Alexandria jury acquitted two former AOL executives on all the conspiracy and fraud charges against them yesterday, dealing a blow to prosecutors and marking a decisive end to one of the longest trials in the federal courthouse.

Jurors spent slightly more than three full days in deliberation before clearing Kent D. Wakeford and John P. Tuli of charges that they helped a Las Vegas software client post fictitious revenue in early 2001. As the court clerk read the verdict, Tuli wept while his mother and his wife gasped with delight. Wakeford trembled, clapped his hands twice and hugged his lawyers.

The six-man, six-woman jury also acquitted Christopher J. Benyo, a former vice president at the Las Vegas company, PurchasePro.com. Defense lawyer Terrance Reed last week appealed to the jury to "set yourselves and Mr. Benyo free" from a case that stretched into a fourth month, a rarity in a courthouse known for dispensing speedy justice.

"You're free to go, gentlemen," U.S. District Judge Walter D. Kelley Jr. told the jubilant defendants. Wakeford and Tuli clasped in a tearful embrace as prosecutors filed out of the eighth-floor courtroom without a word to spectators or opponents.

The case marks the second defeat for the government in its five-year-old investigation into accounting misdeeds at PurchasePro and AOL in the early days of the Internet bust. The same judge acquitted a former top lawyer for PurchasePro in December 2005 after a two-week trial. Once the focus of intense government scrutiny, high-ranking AOL sales and marketing officials ultimately avoided criminal charges, an issue that defense lawyers for their subordinates seized on as scapegoating during the trial.

Chuck Rosenberg, the U.S. attorney for the Eastern District of Virginia who joined the office last year, issued a statement praising the government team and concluding: "Sometimes, jurors see things in a different way. We respect their decision."

In the course of the trial, which began in October, Tuli's defense lawyer Mark J. Hulkower assailed nearly every aspect of the prosecution, from the integrity of former PurchasePro employees who pleaded guilty and testified in exchange for leniency to the tactics of the investigators.

The defense teams also heaped blame on Charles E. Johnson Jr., PurchasePro's former chief executive who was severed from the case last fall for reasons that remain secret. Johnson will be retried in August. Defense lawyers stressed that Wakeford and Tuli had not received payments or other direct financial benefits for entering into deals with PurchasePro, and asked jurors to consider whether they had a motive to engage in the alleged fraud.

"We're pleased with the verdict," said Hulkower, who spent a week in the hospital after his appendix burst but returned to deliver an impassioned three-hour closing argument last week. "It's been five years in coming, and now John Tuli can reclaim his life."

Tuli's wife, his brother, his mother and other relatives relocated from the Boston area to occupy a nearby town house for the duration of the trial. Wakeford's parents and friends appeared in the courtroom to support him.

Alone among the three, Wakeford took the witness stand in his defense, testifying emotionally in January -- a move that his attorney, Henry W. Asbill, said followed a gut feeling. "All's well that ends well," Asbill said yesterday.

After the verdict, Wakeford told reporters that the experience had been "hell," and in a telephone interview hours later spoke out against government tactics that he labeled "grossly unfair."

"At what point do the questionable tactics become so unfair that a government body should step in to make sure that innocent people are not wrongly convicted?" he asked.

AOL and parent company Time Warner paid more than $500 million two years ago to settle related charges over accounting practices. Spokesman Andrew Weinstein declined to comment on the jury's decision. AOL, which had been paying millions of dollars in attorney fees for Wakeford and Tuli, may have a difficult time recovering the money in light of the acquittals.

All three men continue to face civil fraud charges lodged by the Securities and Exchange Commission, which delayed its case while the criminal proceedings moved forward.

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