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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (251124)	7/18/2003 11:53:30 PM
From: ild	Respond to of 436258

Calpers Sues AOL For Fraud; Seeks $250M DOW JONES NEWSWIRES By Janet Whitman Of DOW JONES NEWSWIRES NEW YORK -- The California Public Employees' Retirement System said Friday it has filed a lawsuit against AOL Time Warner Inc. (AOL) seeking to recover more than $250 million in losses caused by the controversial accounting practices at the company's America Online unit. The lawsuit, filed in Superior Court of Sacramento County, alleges that America Online overstated advertising revenue by at least $1.7 billion through sham transactions and faulty accounting as it was seeking a merger with Time Warner and immediately after the merger. Calpers, a major AOL shareholder, alleges that AOL artificially inflated its advertising sales to avoid a negative reaction by the stock market ahead of the merger. AOL abandoned the questionable accounting procedure in October and took a charge of $385 million. The Securities and Exchange Commission and Department of Justice are currently investigating AOL's accounting. Calpers said the massive accounting restatement and "the flurry of stock sales to the new company by insiders soon after the merger was completed" are at the center of the suit. The suit names AOL Time Warner, America Online, as well as certain current and former executives including former AOL chairman Steve Case, former chairman Gerald Levin, former chief operating officer Robert Pittman, and David Colburn, America Online's former head of business affairs. The suit also names advisors involved in the AOL Time Warner merger, including Salomon Smith Barney Inc., Morgan Stanley & Co. (MWD), and Ernst & Young LLP. "Because of the magnitude of the fraud perpetuated upon investors, we are filing this suit in California to be in the strongest possible position to aggressively obtain recovery of assets lost through this fraud and deception upon investors," Mark Anson, Calpers' chief investment officer, said in a statement announcing the lawsuit. The suit alleges that company insiders amassed billions of dollars in proceeds by selling their own AOL Time Warner shares at prices that were artificially high. Calpers, the nation's largest pension fund, also said that the accounting shenanigans eventually led to AOL's write down of more than $54 billion in goodwill after the blockbuster merger. The fund also said that the ongoing probe into AOL's accounting has further devalued the company's stock price. A spokeswoman for AOL Time Warner declined to comment on Calpers' lawsuit. AOL has been served with a raft of lawsuits from angry shareholders involving its questionable accounting and the merger. AOL Time Warner's shares have tumbled more than 70% since the merger closed in January 2001, though the shares have recouped some of their losses in recent months. Payouts to settle lawsuits from disgruntled shareholders could reach as much as $1 billion, according to some estimates.