Ex-media execs must testify in LV firm’s bankruptcy

Kevin Rademacher

Friday, July 23, 2004 | 10:45 a.m.

Several former executives of AOL-Time Warner Inc. have been ordered to appear before attorneys for the estate of PurchasePro.com Inc., a failed Las Vegas e-commerce company.

A U.S. Bankruptcy Court judge in Las Vegas this month ordered former executives Dave Colburn, Neil Davis, Kent Wakeford and Eric Keller -- as well as the media giant's current custodian of records -- to answer questions about the company's relationship with PurchasePro.

The move is the latest development in the estate's effort to recover funds on behalf of the once high-flying local company's creditors and shareholders. Attorney Greg Garman, who represents the estate, has indicated that once the process is complete and creditors are satisfied, there could be money left for shareholders. Those shareholders saw their stock -- which once traded for more than a split-adjusted $395 a share -- become worthless when the company filed for bankruptcy in September 2002.

The relationship between America Online and PurchasePro has been the subject of investigations by both securities regulators and the FBI.

At issue is an apparent effort by both companies to use deals with each other to boost sales and revenue figures.

Last year, two former PurchasePro executives -- Jeffrey Anderson and Scott Miller -- pleaded guilty in a fraud investigation and provided information into the AOL deals.

A Justice Department statement said PurchasePro had an agreement to give AOL $30 million in PurchasePro warrants in exchange for arranging for the purchase of license agreements to the Las Vegas company's e-commerce software. The transactions were used to inflate revenue figures for PurchasePro in the fourth quarter of 2000 and the first quarter of 2001.

"We are evaluating what claims the estate may or may not have against Time Warner," Garman said, adding that the interviews are likely to be frustrating.

"I would estimate that I will hear a lot about the Fifth Amendment," he said.

The hearings are scheduled for Aug. 16-20 in New York.