Former AOL Time Warner Execs Accused of Inflating Earnings
Eight former AOL Time Warner executives fraudulently inflated the company's online advertising revenues by more than $1 billion between 2000 and 2002, news services reported today.
The revelation comes nearly six years after The Post's Alec Klein examined a number of the online division's advertising and commerce deals, focusing on several transactions that added up to $270 million. AOL was trying to boost its ad revenues as it sought to take over Time-Warner -- a merger that later was seen as one of most troubled in history. Federal investigations began after Klein's stories were published.
Those deals, which were deemed unconventional at the time, showed that AOL converted legal disputes into ad deals; negotiated a shift in revenue from one division to another; sold ads on behalf of online auction giant eBay Inc., booking the sale of eBay's ads as AOL's own revenue; bartered ads for computer equipment; and counted stock rights as ad and commerce revenue.
AOL also found ways to turn the dot-com collapse to its advantage, renegotiating long-term ad contracts it risked losing into short-term gains that boosted its quarterly revenue.
Four of the executives accused in the probe agreed to settle the civil charges brought by the Securities and Exchange Commission by paying roughly $8 million in fines and returning allegedly ill-gotten gains, the Associated Press is reporting. Four others are awaiting SEC charges.
By Derek Kravitz |
May 19, 2008; 7:47 PM ET
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