U.S. Securities and Exchange Commission
Litigation Release No.18358 / September 23, 2003
Accounting and Auditing Enforcement Release No. 1868 / September 23, 2003
, No. CA-03-1203-A (E.D. Va)
, No. CA-03-1202-A (E.D. Va)
SEC Files Accounting Fraud Charges Against Two Former Officers of
PurchasePro.com, Inc.
On September 23, 2003, the Commission filed accounting fraud charges
in the United States District Court for the Eastern District of
Virginia against Jeffrey R. Anderson and Scott H. Miller, both of whom
are former officers of PurchasePro.com, Inc., a Las Vegas-based
internet company now known as Pro-After, Inc. Both Anderson and Miller
settled the charges without admitting or denying the Commission's
allegations.
The Commission's complaint against Anderson alleges that from October
2000 through April 2001, while he was PurchasePro's Senior Vice
President of Sales and Strategic Development, Anderson knowingly or
recklessly participated in a series of acts and transactions designed
to inflate PurchasePro's revenues in contravention of generally
accepted accounting principles ("GAAP"). In particular, the complaint
alleges, Anderson negotiated or otherwise had reason to know about
side agreements with several customers that induced them to buy
marketplace licenses from PurchasePro during both the fourth quarter
of PurchasePro's 2000 fiscal year ("Q4 2000") and the first quarter of
its 2001 fiscal year ("Q1 2001"), thereby materially inflating
PurchasePro's publicly announced and reported revenues for those
quarters. According to the complaint, Anderson also concealed these
side agreements from PurchasePro's auditors, and falsely represented
to PurchasePro's auditors that there were no such side agreements.
The complaint further charges that Anderson knowingly falsified
PurchasePro's accounting books and records and thereby caused
PurchasePro to overstate the amount of revenue that was referred to it
by its most important strategic partner, America Online, Inc., and
that he directed a subordinate to create an inaccurate spreadsheet as
support for the inflated AOL referrals. Next, the complaint alleges
that, during Q1 2001, Anderson participated in PurchasePro's improper
recognition of $3.7 million in revenue from a purported agreement with
AOL called a "Statement of Work," which Anderson knew or was reckless
in not knowing was improper because, among other things, the parties
never reached an agreement with respect to the services at issue and
SNIPPETS:
U.S. Securities and Exchange Commission
SEC Files Accounting Fraud Charges Against Two Former Officers of PurchasePro.com,
Both Anderson and Miller settled the charges without admitting or denying the Commission's
The Commission's complaint against Anderson alleges that from October 2000 through April
In particular, the complaint alleges, Anderson negotiated or otherwise had reason to know
According to the complaint, Anderson also concealed these side agreements from PurchasePro's
The complaint further charges that Anderson knowingly falsified PurchasePro's accounting
Next, the complaint alleges that, during Q1 2001, Anderson participated in PurchasePro's
Finally, the complaint alleges that, during April 2001, Anderson received a $100,000
In its complaint against Miller, the Commission alleged that Miller, while serving as
the Commission charged both Anderson and Miller with violating Sections 10and 13of the
The Commission also charged Anderson with violating Exchange Act Rule 13b2-1 and with aiding
the U.S. Department of Justice and the United States Attorney's Office for the Eastern
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