Convicted Lexington Fraudster Admits to Violating Release Terms in New Plea Agreement

LEXINGTON, Ky. — Charles E. Johnson Jr., a Lexington native convicted in a billion-dollar federal fraud case, admitted to violating terms of his release in a new plea agreement filed Monday in US District Court Eastern District of Kentucky. Johnson, who founded a billion-dollar software company called PurchasePro before it went under.

According to the plea agreement, Johnson was serving a term of supervised release overseen by the Probation Office and was required to periodically provide accurate financial disclosure statements, referred to as Probation Form 48. Johnson confessed that on April 14 and October 26 of 2021, he submitted these forms with intentionally inaccurate information.

Johnson admitted to having concealed his control over and personal use of a bank account at JP Morgan Chase associated with a compnay referred to as only Company A in court records, using pre-signed checks, a debit card issued in the name of his friend G.D., and electronic access. Johnson confessed to using the account to pay off over $60,000 in credit card debt, issue over $40,000 in checks and payroll payments to his then-girlfriend, who did not work for Company A, make $27,000 in payments on a loan, conduct cash-back transactions at local grocery stores totaling over $14,000, and to cover other personal expenses.

Johnson was previously indicted in August 2022 for these offenses and was subsequently released pending trial, under the condition that he would not leave the Eastern District of Kentucky without authorization and that he would attend all hearings. Despite these restrictions, Johnson confessed to intentionally missing a bond revocation hearing on April 14, 2023, opting to travel to Las Vegas, Nevada instead.

Johnson faces a statutory punishment of imprisonment for not more than 5 years, a fine of not more than $250,000, and a term of supervised release of not more than 3 years for making false statements to probation officers . Failure to appear for the hearing carries a potential sentence of up to 5 years in prison, consecutive to any other sentences, a fine of not more than $250,000, and another term of supervised release of not more than 3 years.

In 2008, Johnson was convicted of conspiracy, securities fraud, witness tampering, and obstruction in connection to the fall of PurchasePro, once valued at over $1 billion. Johnson was sentenced to nine years in prison and ordered to pay restitution of $9.7 million. He still owes millions on the debt.

Since his release, Johnson has continued to attract legal attention, with violations including unreported gambling and unauthorized interstate travel. The U.S. Marshals Service arrested him in Minnesota on May 3, 2023. Johnson is due back in court July 21.

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Photo: PurchasePro founder Charles Johnson. (Sherburne County Jail)