07:05 AM PST on Thursday, February 3, 2005

Associated Press

ST. LOUIS -- A former Oregon congressman and another man defrauded investors in the St. Louis area of more than $2 million, a jury has ruled.

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Jurors in U.S. District Court in St. Louis ordered former Rep. Wester Cooley and businessman George Tannous to pay $2.2 million, the St. Louis Post-Dispatch reported Thursday. The trial lasted eight days.

The jury on Wednesday ruled the men, along with an associate who used the named John Montgomery, defrauded investors here by telling them that online auction giant eBay.com was on the verge of buying their startup company, BidBay.com.

Plaintiffs said the men conspired to indicate eBay's interest in BidBay. In fact, federal regulators had blocked BidBay from selling its shares to the public, and there were no plans for eBay to buy the company, plantiffs attorney Francis "Bud" Pennington III said in closing statements Tuesday.

Meanwhile, investors learned that John Montgomery was really De Elroy Beeler, who was previously convicted of 11 counts of loan fraud in federal court in California. Investors claimed in the lawsuit that Cooley and Tannous conspired to keep the investors from learning the truth about Beeler.

"This was not the honest selling of stock in legitimate businesses," Pennington told the jury. "This was the dishonest and corrupt business of selling stock."

The jury ordered Cooley and Tannous to pay Dr. Kenneth Rotskoff and his wife, Judith, $1.3 million. Nine other investors sank smaller amounts of money into the venture, and the jury ordered Tannous and Cooley to pay them about $900,000, said Pennington.

Cooley's attorney, Richard Keyes, said during the trial that his client was not involved in the fraud. He said that if investors were victims, then they were victims of Tannous and Beeler.

Cooley claimed in testimony that he had suffered three strokes and could remember nothing from the previous 15 years of his life, Keyes said. "He could not recall his wife, whom he married in 1993," he said.

Keyes did not know if Cooley would appeal.

Cooley was elected to Congress as a Republican from Oregon in 1994, but quit under pressure during his 1996 re-election campaign after being accused of lying about serving in the Korean War while with the Army Special Forces.

He was later convicted of lying in the Oregon Voters' Pamphlet, and was sentenced to two years' probation, 100 hours of community service and fined $5,000.

Barry Sabahat, attorney for Tannous, said Tannous will appeal. Sabahat said the plaintiffs' claims ought to have been dismissed because the plaintiffs themselves sought to trade on insider information about the eBay acquisition, and therefore were responsible for their own losses.