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AOL Execs Face Indictment
AOL is being investigated for illegal acccounting practices, and six people including two former AOL execs were charged with fraud and making false statements to auditors.
The remaining four people charged were from PurchasePro.com. All six have been accused of inflating earnings by improperly booking advertising sales. Previously, six other execs from PurchasePro pleaded guilty.
According to the prosecutors, AOL and PurchasePro had secret deals in 2001 to help PurchasePro increase its revenues.
It "shows a story of trying to create an appearance of success in business when it just wasn't there," said U.S. Attorney Paul McNulty.
According to an article at SmartMoney.com,
"The PurchasePro.com saga began when the two companies entered into a partnership in March 2000 to provide Internet services to small businesses. PurchasePro.com, an Internet procurement software company, paid America Online $70 million and one million warrants as part of the partnership deal.
The partnership, however, didn't generate the expected revenue. The government complaint said America Online employees helped mislead PurchasePro.com auditors on how the companies' revenue was being earned, leading to an overstatement of revenue at both companies. "
Last month, Time Warner agreed to pay $510 million to settle an investigation into the possibility that AOL improperly scheduled advertising sales. As long as AOL stays clean for a couple of years, Time Warner won't be charged.
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