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TutorNet.com Inc. has always been a poster child. It’s just that the pictures keep changing. First it represented all that was best about the Internet. Investors could apparently make a bundle while the company offered students affordable tutoring online. Then the image morphed into the bursting dot-com bubble — a stock that peaked at nearly $20 a share plunged in value to pennies. Now the company, its founder and its chief financial officer have been through a trial in which plaintiffs’ lawyers painted a portrait of fraud. A defense lawyer argued in his opening statement that the case had nothing to do with Enron or WorldCom. But lawyers on both sides say the influence was clear on Aug. 15, when eight federal jurors in Alexandria, Va., after a seven-day trial and eight hours of deliberations, awarded the plaintiffs $178 million. The 13 plaintiffs selected for the test case aren’t celebrating just yet, however. Nor should the additional 135 plaintiffs waiting in the wings. It’s far from clear that they will see any money. TutorNet has few assets, and its founder filed for bankruptcy months ago. The only deep pockets were those of Primus Telecommunications Inc., an early investor, and the judge granted Primus and two of its executives a directed verdict at the end of the plaintiffs’ case — after its lawyers argued that it had never controlled TutorNet and wasn’t responsible for fraud. The plaintiffs plan to appeal. ‘A BEACON OF HOPE’ It all looked very different in 1997, when Euburn Forde dreamed up TutorNet while working for Primus as a consultant. By August 1998, Forde was working for his new company full time, as was his right-hand man at Primus, Rajiv Dalal, who became his chief financial officer. By year’s end Primus had offered financial and other support. In the early days, even before it went public, investors flocked to the company. Forde’s background is in technology, but he doesn’t come across as a geek. Born in Guyana, the 44-year-old entrepreneur speaks with a British accent and, in the eyes of many people, exudes charisma. And what he was selling had a strong appeal. For $59 a month — later dropped to $29 — students could contact tutors online for immediate help. Whether they were stuck on homework or just needed help, qualified teachers — “netucators” — would be standing by. Students in public housing could use the service for free. “The concept,” says Stacey Palmer, a plaintiff in the trial, “was a beacon of hope for everybody, and it was a great investment as well. What more could you ask for?” Everyone involved agrees it was a noble idea. The problem was it didn’t make money. Eight plaintiffs testified live and the other five by deposition. Forde talked a good game, but he never delivered, they told the jury. He was going to generate large numbers of subscriptions by negotiating partnerships with companies like AOL, Coca-Cola and Quaker Oats. He often described these as consummated, revenue-producing deals when they were neither. Few subscriptions were sold (a plaintiffs’ witness testified they totaled $20,000). The most egregious fraud, the plaintiffs testified, was the promise that their privately held shares would be transferable once the company went public. Only those held by Forde and his friends and associates were ever convertible. Forde avoided an initial public offering that would have required him to open his books to auditors. Instead, he paid to take over a public company that was essentially a shell. Then, in April 2000, he engineered a “reverse merger,” folding his company into the new entity, TutorNet Group, which, everyone agrees, rendered plaintiffs’ shares worthless. Most lost $50,000 to $100,000. Lawyers for both sides and the jury forewoman agree that the key witness was Forde. One of the plaintiffs’ lawyers, Wayne Collins of Houston’s Collins & Watson, acknowledges Forde sounded persuasive on direct, but his testimony fell apart on cross-examination. Jury forewoman Mary Boyd agrees. “He out-and-out lied,” Boyd says. The plaintiffs kept good records, and Forde was also hurt by documents of his own. “The things he sent out in investor packages were really what hung him,” she says. He described “done deals and revenue-generating deals when they were not.” He also contradicted testimony he’d given in depositions and at a prior trial, Boyd says. Boyd insists that the jury wasn’t influenced by the scandal-du-jour headlines. “The only time Enron or WorldCom came up was when the attorneys brought them up. We didn’t talk about any of those things in the jury room.” She says of the defendants: “We went after them for what they did, not for anything that anyone else or any other company did.” What surprised her most was the dismissal of the claims against Primus. Told by the judge that Primus was no longer part of the trial, the jurors assumed “they saw that the case wasn’t going well for their side and they made a deal,” Boyd says. “Because we all thought they were just as culpable.” Neither Forde nor CFO Dalal responded to requests for interviews. Los Angeles solo practitioner Laurence Strick defended both men when they were sued last year in California — resulting in an $8.5 million verdict — and defended Forde again in Virginia. (Dalal appeared pro se.) Strick argues that they “acted in good faith with no intent to defraud.” Investors’ stock wasn’t swapped, he says, because his client ran out of money. Legal fees alone would have cost “$50,000 or $100,000 — which he didn’t have,” Strick says. The same problem hamstrung Forde’s defense. Strick withdrew from the California case for nine months “because he wasn’t paying my fees.” He was hired for the trials “at the 12th hour,” he says, “by which time they had crippled their case.” Unlike other CEOs in the headlines, Strick continues, Forde never took the money and ran. To this day he hasn’t sold a single share of the company’s stock. To plaintiff Stacey Palmer, that’s cold comfort. She’s 63 and her retirement money’s gone. The jury awarded her $3.5 million, but she wonders if she’ll ever collect. “Whether I can continue living in my house in California or have to move back to a fixer upper in the Midwest is hanging in the balance,” she says.

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