L90 Officers Plead Guilty in Ad-Revenue Scheme

Four former high-ranking officials at Internet advertising firm L90, which has since changed its name to Max Worldwide, admitted to a ad-bartering scheme designed to inflate the company’s ad revenues, according to a settled case filed by the Securities and Exchange Commission (SEC).

The four executives, including former CEO John Bohan, pled guilty to a number of criminal and civil charges, including securities fraud. Bohan faces up to 10 years in prison and $1 million in fines. He agreed to a $200,000 fine and to repay nearly $200,000 in bonuses.

The other L90 executives charged were Mark Roah, a senior vice president of business development; Lucrezia Bickerton, vice president of finance; and Changel Loo, controller and director of finance. Roah and Bickerton pled guilty to criminal and civil charges; Loo only faced civil charges.

Los Angeles-based L90, which is now headquartered in New York in its new incarnation as Max Worldwide, was a major Internet advertising player during the late 1990s.

MaxWorldwide settled the SEC investigation into its activities, agreeing not to employ bogus accounting practices. The company agreed to the SEC order without admitting or denying the charges.

The cases stem from a series of transactions the government said the company made to disguise barter revenue as regular revenue. In one, the SEC said the executives used L90 subsidiary webMillion.com for barter transactions with a number of Internet companies, swapping checks that inflated the value of the advertising and sometimes using third parties to hide the true nature of the transactions. By doing so, L90 was able to pump up its revenues and satisfy stock analysts during the Internet boom days.

Through this and other schemes, the SEC said that, from the third quarter of 2000 through the third quarter of 2001, L90’s revenues were inflated by at least $4.9 million. Along the way, the SEC alleges the four executives hid the scheme from L90’s auditors, forged its books, and foiled internal accounting controls.

The Justice Department filed a separate criminal charge against Roah for conspiring with Internet real estate company Homestore to inflate its revenues through so-called “round-trip” transactions, where money is funneled to a variety of companies to give the appearance of revenue generation. Roah allegedly profited $650,000 through a company he set up for the scheme.

Roah agreed to repay nearly $800,000 for bonuses and the money he gained from the Homestore transactions. He could also face up to 10 years in prison and a $500,000 fine. Bickerton will repay $11,000, while facing five years in prison and a $250,000 fine. Loo agreed to repay $7.500.

Bohan, Bickerton and Roah are due in court on May 19 to present the judge with the settlement.

Related reading

/IMG/550/200550/google-gmail-logo-320x198
nfl
hillary-clinton-text-message-signup
specs
<