Pension Fund Sues AOL TW Over Alleged Homestore Fraud

19 November 2002

A leading US pension fund is suing AOL Time Warner over the media giant’s alleged involvement in accounting improprieties at online listings firm

The California State Teachers’ Retirement System, one of the nation’s biggest pension funds, has filed a lawsuit claiming that executives at the America Online unit helped create fake ad deals with Homestore.

Three senior executives at the real estate listings firm were indicted in September [WAMN: 27-Sep-02], bringing to light a number of agreements reportedly made by AOL’s Eric Keller and David Colburn, each named as defendants in the suit. Both have since left the company.

It is claimed AOL and Homestore set up complex deals that amounted to little more than swapping money. These transactions, it is alleged, were then fraudulently booked as revenue.

Also named in the suit are Homestore’s auditor, PricewaterhouseCoopers, services firm Cendant and several smaller companies.

Data sourced from: Financial Times; additional content by WARC staff