2nd UPDATE: SEC Sues Ex-AOL Time Warner Executives In Ad-Revenue Case
Monday May 19th, 2008 / 22h53
(Updates with comment from Kelly's attorney in sixth paragraph.) By Judith Burns Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- The Securities and Exchange Commission filed fraud charges Monday against eight former executives at AOL Time Warner Inc. (TWX), alleging they took part in a scheme that caused the company to overstate its online-advertising revenue by more than $1 billion. Four of the former executives are contesting the SEC's charges; four others have reached a settlement in which they neither admitted nor denied the agency's claims. The company, now called Time Warner Inc., paid $300 million in 2005 to settle the SEC's charges and restated earnings three times between 2003 and 2006 to correct reported revenue from online ads, a key measure for analysts and investors. The executives named in the lawsuits filed Monday "intended to inflate revenue and they succeeded," said David Frohlich, an assistant director in the SEC's enforcement division in Washington, D.C. The SEC said the scheme to cook the books began in mid-2000 and ran through mid-2002, affecting earnings through May 2005. In one civil lawsuit, filed in federal district court in Manhattan, 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 is seeking to fine the four and bar them from serving as public company officers or directors. "Mr. Kelly flatly denies the SEC's claims and will vigorously defend himself in the courts. We are disappointed that the SEC has decided to make these allegations against Mr. Kelly, particularly given the significant length of time that has passed since the events in question," his attorney, Jonathan Tuttle, said in a statement. Ripp's attorney couldn't be reached immediately for comment. "Mark Wovsaniker engaged in no wrongdoing. Indeed, the federal government called him as a witness in several related cases to show that he actively sought to prevent improper conduct by others and that various persons acted contrary to his instructions," said his attorney, Stephen Topetzes. "It is unfortunate that the SEC brought this action, particularly after the inordinate delay. We look forward to a full airing of the relevant facts." Ridner's lawyer, Mark Hulkower, said in a statement that Rindner "is a decent and honorable young man who conducted himself appropriately during his three years at AOL. While he is disappointed that the SEC has decided to pursue this unjustified course of action, he looks forward to the opportunity to clear his name." The SEC reached settlements in a separate lawsuit, also filed in federal court in Manhattan on Monday, with former AOL controller James MacGuidwin, and three former officials from the company's business-affairs unit, including its head, David Colburn. Colburn, 49 years old, of Potomac, Md., will pay disgorgement and prejudgment interest of $3.2 million and a $750,000 penalty, while MacGuidwin, 52, of McLean, Va., will return $2.1 million and pay a $300,000 penalty, according to the SEC. Colburn agreed to a 10-year ban on serving as a corporate officer and director and MacGuidwin will be subject to a seven-year ban, the SEC said. Eric Keller, 39, of McLean, will return $699,869, and Jay Rappaport, 43, of Reston, Va., will return $493,629 to settle the SEC's charges, and each will pay a $250,000 fine. Attorneys for Colburn, MacGuidwin and Keller weren't immediately available to comment. "Mr. Rappaport is pleased this matter has been put behind him without any restraint on his ability to act as an officer or director of a public company," said his attorney, Neil Eggleston. SEC lawyers said they expect Monday's lawsuits will be the last enforcement actions filed in connection with the alleged accounting fraud at AOL Time Warner. Frohlich attributed the lengthy investigation to the fact that "these are complex frauds." -By Judith Burns, Dow Jones Newswires; 202-862-6692; Judith.Burns@dowjones.com
La Bourse de Paris a ouvert en légère baisse mercredi, dans le sillage des places asiatiques qui craignent une forte récession. Au lendemain d'un rebond de 1,11%, l'indice...
Les valeurs américaines s'inscrivent toujours en fort recul jeudi avec la publication de mauvais chiffres hebdomadaires de l'emploi et les inquiétudes concernant...
La Bourse de Tokyo a fini en forte baisse jeudi, les craintes de récession et la fermeté du yen affectant les exportateurs en général, et les constructeurs automobiles en...
L'euro se replie face au dollar, et le billet vert perd du terrain face au yen après la publication de l'indice américain des prix à la production, qui a...
Le baril de brut léger américain a clôturé jeudi sur le marché Nymex en baisse de 7,46%, sous les 50 dollars le baril, la chute des Bourses ne faisant qu'alimenter la crainte...
