Alleging that AOL Time Warner had inflated its stock price by overstating its revenues, America's mightiest penson fund, CalPERS (the California Public Employees' Retirement System), on Friday filed a $250 million (€221.99m; ₤157.6m) lawsuit against the troubled giant.

Not only is corporate AOL in CalPERS’ firing line; former executives, such as Stephen Case, Gerald Levin and Robert Pittman are also named. As are financial big guns involved in the merger between AOL and Time Warner in January 2000, such as Salomon Smith Barney, Morgan Stanley and Ernst & Young.

At the time of the merger and its aftermath, AOL's reported advertising revenue was overstated by at least $1.7bn through the use of sham transactions and improper accounting practices, alleges the lawsuit.

Accuses CalPERS’ chief investment officer Mark Anson: “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. ”

AOL TW was unavailable for comment.

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