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Sarbanes-Oxley News & Developments
PurchasePro Fraud May Expand AOL InquiryTwo former executives of PurchasePro.com Inc. pleaded guilty to criminal charges of fraud.
> > Scott H. Miller, the former controller and senior vicepresident of finance, pleaded guilty to impending and obstructing a federal criminal investigation. Jeffery R. Anderson, former senior vice president of sales and strategic development, pleaded guilty to conspiracy to commit wire fraud. The charges stemmed from their roles in a scheme to inflate sales revenue of PurchasePro for the fourth quarter of 2000 and the first quarter of 2001.
PurchasePro, now known as Pro-After Inc., was engaged in the sale of computer software, including business-to-business marketplace license. This license allowed small and large businesses to buy and sell products on the Internet, to participate directly into the PurchasePro own website-based marketplace, or to create their own marketplace using PurchasePro software.
Miller was charged with an obstruction-of-justice offense that was recently codified as part of the Sarbanes-Oxley Act, said the Justice Department.
The government accused Miller of failing to turn over documents in response to an SEC subpoena and lying to the SEC under oath.
Anderson and an employee of a majoe media company conspired to falsely inflate the revenue that PurchasePro reported. A substantial amount of the reported revenue was earned from marketplace license sales - sales that were improperly recognized as revenue. The Justice Department said Anderson and others achieved the sales as a result of side agreements with the purchasers that have been kept secret from outside auditors and the investing public of PurchasePro.
The Justice Department did not name the major media company. However, The New York Times, cited people involved in the investigation, confirmed that the media company is AOL.
Source: CFO
Published:2003-09-24
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