The attorney for Charles "Junior" Johnson, co-founder and former chief executive officer of failed PurchasePro.com, believes the acquittal of Scott Wiegand, the former general counsel of failed PurchasePro.com, bodes well for his client's prospects in a trial next August.
"I think this entire case was about government over reaching," said Yale Galanter, a South Florida attorney who represents Johnson and has represented O.J. Simpson.
Advertisement
"It's not that the prosecutors are bad guys. They're actually pretty good guys," Galanter said Wednesday.
"PurchasePro or its corporate officers really didn't do anything wrong," he said.
The criminal cases revolve around government allegations that PurchasePro officers and managers with America Online carried out a fraudulent scheme to report revenues higher than they actually were. America Online was provided with securities as incentives to enhance PurchasePro's revenue.
PurchasePro conducted Internet auctions for businesses seeking to buy goods and services from other businesses. The company also authorized other businesses to use its software to run their own Internet auctions.
PurchasePro was a high-flying stock during the dot-com boom days. The company went public in September 1999 at $12 per share and shares rose as high as $87.50 just three months later.
But Johnson left the company in May 2001, amid allegations of misstated financial reports. The company filed for bankruptcy court protection in September 2002.
Galanter, who represents Johnson, said his client is innocent.
"Junior was totally 100 percent isolated from the accounting and revenue recognition process because of an ongoing dispute he had with (auditors at) Arthur Andersen," Galanter said.
U.S. District Judge Walter Kelly this week found Wiegand not guilty of conspiracy, securities fraud and false statements.
"The judge found that Mr. Wiegand was doing his best in a very difficult situation," said Bob Ullmann, Wiegand's defense attorney. "There was fraud at PurchasePro, and Mr. Wiegand did his level best to expose it."
Ullmann surprised some observers when he waived a jury trial Wiegand's behalf and left the decision of guilt or innocence to the judge.
"That was a brilliant defense move," said one lawyer familiar with the case, who spoke on the condition of anonymity. "The judge is likely to be more sympathetic (than a jury) to a lawyer, particularly a judge who has been a corporate lawyer for all of these years."
Ullmann said: "Mr. Wiegand had the facts on his side, and we felt that a fair and objective fact finder would rule in his favor."
The defense called no witnesses during the 11-day trial.
"There was no need to call any witnesses. The government failed to prove its case," Ullman said. "Many of the government witnesses ended up being helpful to Mr. Wiegand."
Kelly found Wiegand not guilty of securities fraud, conspiracy and false statements, but he is scheduled to try Johnson and three other former executives in August.
The trial does not mean Johnson and the other defendants can expect vindication in their trial, the anonymous lawyer said.
Johnson and other defendants face a different set of facts, he said.