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
SEC Charges Ex-AOL Execs With Fraud
People walk by the Time Warner building, Wednesday, Nov. 7, 2007, in New York.    (AP Photo/Diane Bondareff)

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. (More AOL stories.)

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