LV tech firm, rival in lawsuit

Grace Leong

Wednesday, Feb. 7, 2001 | 11:44 a.m.

Harter joins PurchasePro Board

PurchasePro said today that UNLV President Carol Harter has joined its board of directors.

"As a premier educator and leader in the community, Dr. Harter will serve as a strong figure and crucial member of our board of directors," said PurchasePro Chairman and Chief Executive Charles Johnson Jr. "The broad scope of her experience, as well as her perspective on contemporary business will make a significant contribution to our board, its counsel to PurchasePro and the attainment of the company's strategic and business objectives."

"I am pleased to have the opportunity to enhance PurchasePro's leading position in the e-commerce industry," Harter said in a PurchasePro statement. "PurchasePro's interest and support for education is admirable. I look forward to contributing to PurchasePro as a whole."

Las Vegas-based online procurement company PurchasePro.com Inc. and two senior executives were accused of racketeering in a lawsuit filed Tuesday by a local e-commerce rival.

PurchasePro denied the allegations and identified a man it says is behind them, Russell Pike, as being "notorious in Las Vegas for prior criminal activity."

Tuesday's lawsuit follows a plunge in the price of PurchasePro's shares of more than 17 percent on Monday after it was criticized in a Barron's article for its accounting practices and what Barron's called its shaky partnerships.

PurchasePro says the Barron's story was innacurate.

All Creative Technologies Inc., which claims it began developing what it called "CyberMall" or the "e-marketplace concept" in 1995, sued PurchasePro, its Chairman and Chief Executive Charles Johnson Jr. and Renel Erickson, who it identified as ACT's former chief technical officer, in Clark County District Court, alleging they stole and used its business plan, financial records, customer lists, trade secrets and vendor and subscriber agreements to build PurchasePro.

Attorneys for All Creative Technologies either declined comment or couldn't be reached for comment on whether Pike is associated with the company. Pike couldn't be located. All Creative is represented in the lawsuit by the law firms Campbell & Williams and Harrison, Kemp & Jones.

The suit said CyberMall would enable member buyers and vendors to access prices, make purchases and deliver products for a monthly subscription fee. All Creative would also receive revenue from advertising and partnerships with suppliers.

PurchasePro creates and operates Internet-based marketplaces designed to allow companies to reduce costs by putting their purchase orders on the Internet for competitive bidding. Through these marketplaces, small and medium-sized businesses and suppliers can buy and sell products and compete with larger competitors, PurchasePro says.

All Creative claims its plan to establish an Internet-based procurement network for the hotel/gaming and the office supply industry was stolen in 1996 by PurchasePro, which, the suit alleges, used it to strike strategic alliances in 1999 with office supply retail chain Office Depot.

The suit also accused PurchasePro of stealing its license and marketing agreement with Boston-based business information publications company Advanstar Communications Inc.

Johnson, whom the suit said, was a former shareholder and former vice president of corporate development of All Creative, allegedly asked Erickson to "replicate and expand certain confidential computer system and software designs, coding and data" to operate a business-to-business website and allegedly solicited All Creative's staff to join the defendants in forming PurchasePro.

Johnson and Erickson were also accused of failing to disclose they were former executives with All Creative in PurchasePro's initial public offering filings with the Securities and Exchange Commission. PurchasePro raised $48 million in its initial public offering on Sep. 14, 1999.

The lawsuit called Johnson's and Erickson's activities "a felonious conspiracy under Nevada law and further constituted a crime related to racketeering" as defined by Nevada law.

PurchasePro responded in a statement: "Johnson was an investor in ACT and lost his entire investment."

And Matthew Brimhall, PurchasePro's spokesman, disputed ACT's allegations as "meritless."

"The lawsuit is without merit and we will defend the suit vigorously," he said. "All Creative Technologies, which ceased operations in 1996, reinstated its charter just prior to initiating this suit although it maintains no operations." Kevin Liske, a co-founder of PurchasePro, also disputed All Creative's claims.

"There's a huge difference between Russell Pike's technology and PurchasePro's technology. He created a CD ROM, an electronic catalogue that contains advertising information and distributed that to hotel-casinos."

"There's no Internet basis to ACT's business, no concept of building marketplaces and PurchasePro doesn't use CD ROMS," he said. "The data on a CD ROM is static. There's no ability to update information unless you mail the user a new CD ROM. There's no purchasing tool on the CD ROM. In 1995, the concept of the Internet network where purchases could be done online wasn't conceived. Websites weren't pervasive back then."