Digital Trends

The Security and Exchange Commission has filed charges against eight former AOL Time Warner executives for a scheme that overstated the company's ad revenue by over $1 billion.

The United States Security and Exchange Commission has announced it has charged eight former AOL Time Warner executives for their roles in a scheme that overstated the company's advertising revenue by more than $1 billion. Four of the defendants have settled with the SEC, while the other four are facing fraud charges in a New York federal court.

According to the SEC, the scheme ran from 2000 to 2002, and falsely inflated the company's reported online advertising revenue by giving ad purchasers money to buy online advertising they didn't want or need. The net effect of these transactions that AOL Time Warner was effectively funding its own ad sales, which are used as a key metric by analysts and investors looking at the company. Two of the defendants were also charged with misleading external auditors about the fraudulent transactions.

As part of the settlements, four former AOL Time Warner execs have agreed to pay over $8 million in fines, with former head of the company's business affairs unit personally forking over almost $4 million. The SEC says it is seeking civil penalties from the four former executives who have not settled, as well as disgorgement of ill-gotten gains.

Time Warner settled a related case with the SEC in 2005 for $300 million.