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SEC Charges Ex-AOL Execs With Fraud

Alleges they inflated revenue during merger with Time Warner

By Rob Quinn,  Newser Staff

Posted May 20, 2008 9:42 AM CDT
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(Newser) – The Securities & Exchange Commission has filed civil fraud charges against eight former AOL executives for allegedly inflating AOL's advertising revenues before its merger with Time Warner, the Wall Street Journal reports. The men are accused of giving firms money to buy ads on AOL that they didn't want or need in "round-trip' transactions.

The SEC says that the fraudulent transactions boosted AOL's value by more than a billion dollars between 2000 and 2002, sending AOL's share price soaring and giving it leverage to buy Time Warner. The merger is now viewed as one of the worst in business history, with Time Warner's market capitalization having shriveled from $280 billion to $56 billion in the years since.

People walk by the Time Warner building, Wednesday, Nov. 7, 2007, in New York.
People walk by the Time Warner building, Wednesday, Nov. 7, 2007, in New York.   (AP Photo/Diane Bondareff)
The AOL Running Man logo and other decorations are shown in AOL's New York office on Monday, May 12, 2008.
The AOL Running Man logo and other decorations are shown in AOL's New York office on Monday, May 12, 2008.   (AP Photo/Mark Lennihan)
The America Online logo is seen at the AOL booth at the Consumer Electronics Show in Las Vegas, Jan. 5, 2008.
The America Online logo is seen at the AOL booth at the Consumer Electronics Show in Las Vegas, Jan. 5, 2008.   (AP Photo/Paul Sakuma)
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SEC wants execs to return ill-gotten gains
PC World

 
Time Warner • AOL • fraud • online advertising • merger • SEC

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