Two former AOL executives were yesterday indicted as part of an
ongoing investigation into the company's deal with
business-to-business software firm PurchasePro.com that allegedly
allowed it to exaggerate its profits.11 Jan 2005
Four former employees of PurchasePro.com were also indicted.
The investigation relates to an alleged scheme to swap revenue so as to fraudulently increase both the revenue that PurchasePro reported to the Securities and Exchange Commission (SEC) and the investing public, and the revenue generated for AOL by its Business Affairs and Interactive Marketing units.
As part of the scheme, according to the indictment, the conspirators forged contracts, back-dated documents, used secret, undisclosed side agreements, and made false entries in the books and records to support the fraudulent revenue numbers that were reported to the investing public and the SEC.
Paul J McNulty, US Attorney for the Eastern District of Virginia, said: "In less than two years, the market capitalisation of PurchasePro went from $1.2 billion to bankruptcy. This indictment charges them with lying to their investors about the true revenue of their company."