Ousted PurchasePro chief denies wrongdoing

Kevin Rademacher

Friday, April 9, 2004 | 10:38 a.m.

Charles "Junior" Johnson is denying allegations that he committed securities violations, corporate waste and breach of fiduciary duty in running the failed Las Vegas technology company PurchasePro.com Inc.

Johnson's response in a court filing last week was in answer to a Clark County District Court lawsuit filed by the estate of the bankrupt company against Johnson, PurchasePro's former chairman and chief executive, and other PurchasePro executives and directors.

"Johnson denies each and every allegation," the filing said.

The lawsuit, which stems from complaints brought by disgruntled shareholders in 2001, outlines a series of questionable transactions by the company in 2000 and 2001.

"In short, defendants entered into illegitimate transactions and manipulated certain financial information to make it look like PurchasePro earned more revenue than it did," the lawsuit said.

The answer repeatedly denies allegations or indicates that "Johnson lacks the knowledge or information sufficient to form a belief" as to the lawsuit's claims.

Johnson does acknowledge some transactions, with companies such as America Online, which have seen been called into question. Johnson, however, denied allegations that the dealings were improper.

He also acknowledges the recent guilty plea of Jeffrey Anderson, PurchasePro's former senior vice president of sales and strategic development. In that plea, Anderson stated that the company conspired to manipulate the company's revenue figures.

"Johnson denies participating in a scheme artificially to inflate PurchasePro's revenue," Johnson's court filing said.

Gregory Garman, a Las Vegas attorney representing the PurchasePro, would not estimate the total damages sought in the lawsuit.

The estate's lawsuit has now been allowed to take the place of investor lawsuits in both Clark County District Court and U.S. District Court. Garman said ultimately just one suit will be pursued.

PurchasePro was founded by Johnson in 1996. At its pinnacle the company employed more than 1,000 people and its stock traded as high as $395.94 (split-adjusted) in December 1999.

In May 2001, Johnson was ousted by the company's board of directors amid mounting accounting problems. PurchasePro filed for Chapter 11 bankruptcy protection in September 2002.

By the time the sale of PurchasePro 's assets to California-based Perfect Commerce was approved by a bankruptcy court judge in January 2003, the company had about 70 employees. The assets of the company -- which carried a stock value of $3.2 billion in 2000 -- sold for about $2.5 million.

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