• The New York Times, Monday, June 9, 2008 11:32 AM

The New York Times reports a shocking turn of events in the accounting scandal that followed the disastrous Time Warner-AOL union in 2001: Joseph A. Ripp, the man who helped uncover fraudulent transactions between AOL, Time Warner and the now-defunct accounting firm Arthur Andersen six years ago, was indicted by the Securities and Exchange Commission three weeks ago along with seven other former AOL executives in a lawsuit alleging financial fraud.

"I think it's fair to say that everyone at Time Inc. is completely shocked by this. Joe Ripp is as far from being a crook as anyone you'll ever know," said John Huey, the editor-in-chief of Time Inc., who also described the complaint as "almost Kafkaesque." Added former Time Warner CEO Gerald Levin, "This is precisely the type of guy you'd want to manage your financial group."

Ripp, the former Time Warner and AOL CFO, was identified as a pivotal figure in exposing criminal fraud at AOL. So how did he wind up in the defendant's corner? The SEC claims Ripp "knowingly or recklessly engineered, oversaw and executed a scheme to artificially and materially inflate the company's reported online advertising revenue." As Scott W. Friestad, an associate director in the SECs division of enforcement, said, Ripp may not have been "the architect or the originator of the conduct," but "We don't view Mr. Ripp as an innocent bystander."

Read the whole story at The New York Times »