Ex PurchasePro CEO sued over $2.77 million loan

Tuesday, Oct. 16, 2001 | 9:39 a.m.

Firm sued

Verizon Yellow Pages Co. has sued Las Vegas technology company PurchasePro, alleging it failed to pay more than $1 million in business directory advertising fees. PurchasePro declined comment.

Bank One Corp. sued Charles "Junior" Johnson, former chairman and chief executive of Las Vegas technology company PurchasePro, alleging he defaulted on a $2.77 million loan.

The bank's Lexington, Ky., branch, which said the loan was secured by 410,000 PurchasePro shares, sued Johnson in U.S. District Court in Las Vegas on Oct. 9, alleging it has applied the proceeds of the collateral to the loan but was still owed $2.093 million as of Oct. 5.

Johnson, a Lexington native, said the bank's suit is a reaction to a lawsuit he had filed against the bank in U.S. District Court in Lexington on Sept. 12.

Johnson, who said he wasn't obliged to repay the loan, said the bank should have sold the stock when the loan went into default on Feb. 15, the day PurchasePro shares closed at $16.875.

The Lexington Herald Leader reported Johnson's suit alleged the bank would have collected $6.9 million -- enough to recover the debt and leave at least a $4 million surplus for Johnson -- if the bank had sold the stock on Feb. 15.

Instead, the bank sold the shares between June 10 and June 13 -- after PurchasePro's shares had tumbled in value -- for only $524,774, Johnson's suit said.

"The bank had a margin loan and when it reached margin limit, it should have sold the stock but it didn't do anything," Johnson said. "Since the loan was in default on Feb. 15, why wait until the collateral is worth substantially less than the loan before selling?"

Johnson, who claims the bank owes him $4 million, said he is asking for punitive damages of more than $12 million.

Bank One declined comment on Johnson's lawsuit.