Two Ex-AOL Execs Charged in PurchasePro Scheme

The Securities and Exchange Commission's cleanup of America Online continued Monday.

The SEC on Monday filed civil charges against two former AOL executives and three others, accusing the group of a bubble-era scheme to inflate the revenue of PurchasePro.com, a business-to-business software company with which AOL formerly did business.

Additionally, the U.S. attorney's office for the Eastern District of Virginia filed criminal securities fraud charges against the five executives, including Charles Johnson Jr., the founder and onetime CEO of PurchasePro.

The news comes nearly a month after AOL parent Time Warner ( TWX) announced a settlement of SEC and Justice Department charges related to the online unit's turn-of-the-century accounting and business practices.

That settlement resulted in Time Warner's agreement to pay a total of $510 million to cover penalties and a settlement fund, and to assist Justice Department investigations into whether AOL aided other companies in inflating revenue.

In its complaint, the SEC alleges that various activities by the five executives resulted in PurchasePro's reporting of revenue for the fourth quarter of 2000 that was overstated by more than 11%, and PurchasePro's filing of a 10-Q for the first quarter of 2001 in which revenue was overstated by 37%.

Earlier, two former PurchasePro executives pleaded guilty to fraud charges in connection with a scheme to inflate PurchasePro's revenue. According to a statement of facts included in the Justice Department settlement, at least six AOL officers "aided and abetted" PurchasePro officer's revenue-inflation scheme in 2000 and 2001 in return for increased AOL revenue.

Time Warner's shares rose 14 cents Monday to close at $19.04.

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