SEC: AOL Inflated Ad Revenue by $1B Plus
ADOTAS – Truth in advertising has taken another hit: the Securities and Exchange Commission has filed suits against eight former AOL execs, charging them with inflating revenue reports by more than $1 billion between 2000 and 2002.
In the complaint filed in Manhattan, the SEC claimed they “knowingly or recklessly engineered, oversaw and executed a scheme to artificially and materially inflate the company’s reported online advertising revenue.”
Among those charged: former CFOs John Michael Kelly and Joseph Ripp; former AOL business affairs exec Steven Rindner; former head of accounting policy Mark Wovsaniker; former head of business affairs, David Colburn; former comptroller James MacGuidwin; business affairs exec Eric Keller and business affairs exec Jay Rappaport. MacGuidwin, Colburn, Keller and Rappaport agreed to settle with the SEC for a total of about $8 million. None admitted or denied any wrongdoing. The other executives are contesting the charges.
The whole shebang results from a probe the SEC launched in 2002; in 2005, Time Warner (AOL’s parent company), agreed to pay the SEC $300 million. While the one charge was settled, the other – against the execs who just happened to inflate their reported revenue around 2000 when they merged with Time Warner — is seen much more significant.
And in an industry rife with minor revenue inflation and plain old bald whoppers, the $1 billion inflation is seen as a sign of unparalleled corruption and cynicism among AOL’s former elite.
Reader Comments.
The SEC filed civil fraud charges against former AOL Time Warner CFO Mike Kelly, ad sales quarterback David Colburn, and 6 other former Business Affairs Group executives.
Ron Grant and Linda Clarizo were trained in the Business Affairs Group according to Myer Berlow.
http://www.alleyinsider.com/2008/4/friday_afternoon_aol_scuttlebutt_twx — How do you think Clarizio got her job at Advertising.com? Is sure wasn’t because she had a track record running online ad networks. She and Ron Grant go way back. The guy that caused all of AOL’s SEC and Justice Department problems several years back, was David Colburn. Two surviving members of that guy’s infamous team are Ron Grant and Lynda Clarizio. Is it any surprise that under Grant that AOL has been auguring in the way it has?
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