Updated from April 14
A class-action suit against
AOL Time Warner
will reportedly allege that revenue overstatements at the Internet and media company have totaled more than $1.7 billion.
The amendment to be filed Tuesday by the law firm Heins Mills & Owen, which represent the lead plaintiffs in the case, isn't based on any specific document review, but rather is an assessment of accounting for previously disclosed transactions, including stock and advertising barters,
The New York Times
AOL Time Warner last fall admitted it had overstating ad revenue by about $190 million over 18 months, then disclosed two weeks ago in an
filing that another $400 million of questionable revenue had turned up.
Its shares were down 12 cents, or 1%, to $12.39 on the Instinet premarket.
The report comes one day after the University of California filed a separate suit in California state court, alleging securities fraud committed by the company, its auditors, bankers, executives and others in connection with the 2001 merger of America Online and Time Warner.
In filing the lawsuit, UC and its co-plaintiff, the New York-based
, opted out of the Heins Mills-led consolidated class-action that is ongoing in U.S. District Court for the Southern District of New York.
The university has a number of reasons for dropping out of the class action, according to UC spokesman Trey Davis. In state court, says Davis, the university can pursue certain claims it can't in federal court, such as the claim that Time Warner directors breached their fiduciary duty by selling the company at the particular price of the deal.
UC believes that California statutes are more favorable to its securities claims, says Davis. A jury vote in the plaintiffs' favor won't have to be unanimous, he says, and pre-trial discovery isn't automatically stayed the way it is in federal court.
Among other allegations in its lawsuit, UC says that AOL's executives, in the months leading up to the merger's closing, "engaged in contrivances and falsifications" to inflate its subscriber statistics and the state of its online advertising business.
An AOL spokeswoman had no comment.
AOL Time Warner's shares rose 20 cents to $12.51 Monday.