/ May 27, 2008

AOL in Hot Water Once More…

This week the S.E.C. charged eight former AOL executives for ad-revenue fraud, accusing the men of exaggerating online advertising revenue during the company’s merger with Time-Warner in 2000. The case will go forward in the Southern District Court of New York, where four of the defendants will contest the charges. The other four men have decided to settle the case out of court. Since 2003, Time Warner has restated three times its quarterly earnings to correct for earlier inflation of their figures.

Speaking about the allegations, Scott Friestad of the S.E.C. states that AOL probably hoped to create an image of a “…healthier, stronger company than it really was. The conduct occurred at a time when the Internet bubble was deflating.”

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