The Securities and Exchange Commission said on Monday that it had sued eight former executives of AOL Time Warner, alleging they had fraudulently inflated the company's online advertising revenues by more than $1 billion between 2000 and 2002.
The company is now called Time Warner Inc. Four of the former executives have agreed to settle the civil charges brought by the Securities and Exchange Commission by paying a total of around $8 million in fines ; four others have reached a settlement in which they did failed to admit or deny the agency's claims.
In the complaint, the S.E.C. said the scheme involved fraudulent transactions in which AOL Time Warner
inflated online ad revenue, a key measure for analysts and investors evaluating the company. The civil lawsuit, filed in federal district court in Manhattan, claims the company effectively financed its own advertising revenue by giving purchasers the money to buy online advertising that they did not want or need.
In lawsuit, the SEC named former AOL Time Warner Chief Financial Officer John Michael Kelly; Joseph Ripp, former CFO of the company's AOL division; Steven Rindner, a former senior executive in the company's business affairs unit; and Mark Wovsaniker, former head of accounting policy.
The SEC settled charges with David Colburn, former head of the company's business affairs unit; Eric Keller, former senior manager in the business affairs unit; James MacGuidwin, former controller; and Jay Rappaport, former senior manager in the business affairs unit. The four neither admitted nor denied they were guilty of the charges.
As part of their settlements, Colburn agreed to pay almost $4 million, Keller almost $1 million, MacGuidwin $2.4 million, and Rappaport almost $750,000, the SEC said.