Monday, January 31, 2005
The U.S. Attorney's Office for the Central District of California (Los Angeles) announced yet another revenue recognition accounting fraud involving an internet company, this time L90, Inc., an internet advertising company. According to the press release, Keith Kaplan, a former vice president and head of sales for the company
conspired with two other former L90 executives to inflate the company's earnings so that it would meet Wall Street analysts expectations. Those other two executives - John C. Bohan, L90's former CEO, president, and board member; and Lucrezia Bickerton, L90's former vice president of finance - have already pleaded guilty to criminal charges. At the time of the alleged offenses, L90 was based in Santa Monica and Marina del Rey, and its stock was traded on the Nasdaq National Market System. L90 is now known as MaxWorldwide, Inc. In the final quarter of 2000, Kaplan and his co-conspirators were concerned that L90's total revenues for the quarter would not meet analysts' projections, according to the indictment. In order to make up the anticipated revenue shortfall, Kaplan and his co-conspirators allegedly developed several schemes to fraudulently inflate L90's revenue numbers.
The pressure to commit accounting tricks in response to the bursting of the internet bubble in 2000 continues to hit home. (ph)