Ethics Newsline®

WASHINGTON
Three months after settling related criminal charges, Time Warner Inc. last week agreed to pay $300 million to settle civil charges of fraud for overstating the company’s revenues from 2000 through 2002.

Federal investigators accused Time Warner of deliberately overstating both revenues and the number of Internet subscribers following its ill-fated merger with AOL, reported the Washington Post.

The company settled the criminal allegations for $210 million last December, anteing up with $300 million last week to settle civil charges, bringing the government’s case against the company to a close.

Time Warner still faces about 30 class-action lawsuits related to the fraud.

The Securities and Exchange Commission (SEC) also settled with three Time Warner executives accused of negligently failing “to pursue facts and circumstances” that would have detected the fraud.

While none of the executives — all of whom remain employed as Time Warner’s chief financial officer, controller, and deputy controller paid any penalties, the SEC last week said it may pursue other officers.

As part of its settlement, Time Warner must restate its revenues by $500 million for the affected period, bringing the total reduction to $690 million, noted the Post.

The firm, which was not required to admit wrongdoing, also must allow an independent examiner to inspect transactions with 17 other companies from June 2000 to December 2001 for other possible fraud.