Ohio Attorney General Marc Dann announced Thursday that Time Warner has agreed to pay $144 million to settle charges regarding its former AOL unit, brought on behalf of the state’s Bureau of Workers’ Compensation and five pension funds.
They had alleged that AOL inflated its stock price before merging with Time Warner in January 2001. According to Dann, the six plaintiffs lost a total of nearly $400 million when it was discovered that AOL had misrepresented sales, revenue, and subscriber figures in advance of the merger. The share price of the combined company then fell from $48 to less than $10
In addition to the workers’ compensation agency, the lawsuit was brought on behalf of five Ohio pension funds that owned Time Warner stock prior to the merger: the State Teachers Retirement System, the School Employees Retirement System, the Police and Fire Retirement System, the Highway Patrol Retirement System, and the State Employee Retirement System.
“We will not tolerate fraud, stock manipulation, or deceit in this state,” Dann said, in a statement. “If you abuse the public trust and steal from the taxpayers, you will pay the price.”
In 2003, when Ohio opted out of a federal class action against Time Warner, Attorney General Jim Petro set a recovery target of $100 million, according to Dann. The settlement substantially exceed that target, said the current attorney general, and it is proportionate to or greater than those reached by plaintiffs who have filed and settled similar cases against the company.
Last month, the California State Teachers’ Retirement System settled a similar lawsuit against Time Warner, as well its accountants, banks, and several former executives, for $105 million.