Alexandria, Va.—Two former America Online executives on Monday were charged with stock fraud as part of a Justice Department investigation into accounting irregularities at AOL, which is owned by Time Warner.
Kent Wakeford, former executive director of AOL's business affairs unit, and John Tuli, former VP of AOL's NetBusiness unit, were charged with securities fraud, making false statements to auditors and wire fraud.
Also charged with fraud were four former executives at defunct Las Vegas-based software company PurchasePro: Charles E. Johnson Jr., former chairman-CEO; Christopher Benyo, former senior VP-marketing; Joseph Michael Kennedy, former senior VP-chief technology officer; and Scott Wiegand, former senior VP-general counsel.
Prosecutors charged that PurchasePro and AOL entered into secret deals to help PurchasePro inflate its revenue in early 2001.
According to the indictment, Johnson and Wakeford cut deals with companies that bought PurchasePro's product, which facilitated b-to-b transactions on the Internet. The deals ensured that companies that bought the licenses would be reimbursed in some way, such as getting free ads on AOL, the indictment charged.
Last month, Time Warner agreed to pay $510 million to settle accounting concerns with the Justice Department and the Securities and Exchange Commission.