The federal investigation of America Online Inc. and two of its former key executives has been broadened to include alleged "aiding and abetting" of schemes by other companies to artificially inflate reported revenue, sources familiar with the probe said yesterday.
Federal investigators are scrutinizing the roles that AOL and two dealmakers, David M. Colburn and Eric Keller, may have played in enabling certain companies, including Homestore Inc., an online real estate firm, to improperly pump up financial results. At the core of the investigation, sources said, Securities and Exchange Commission investigators are examining alleged quid pro quo schemes in which AOL and other companies exchanged cash through sham transactions to falsely boost revenue, both before and after America Online's merger with Time Warner Inc. in January 2001.
AOL Time Warner has been cooperating extensively with investigators in the hope that the company can avoid criminal charges. Still, insiders expect the media giant to face civil sanctions from the SEC.
Yesterday, attorneys for Colburn and Keller, who were ousted from America Online's once highflying dealmaking unit, declined to comment. AOL Time Warner officials reaffirmed their desire to assist in the probe. The company already has reported internal accounting problems totaling $190 million and has turned over thousands of pages of documents to investigators.
News source: TechNews
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