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The brewing accounting scandal at the newly renamed Time Warner Inc. has taken on a new angle. BizProLink LLC, successor to the Fort Lauderdale, Fla., tech firm BizProLink.com that shut down in late August, has filed a federal fraud suit claiming the New York-based media giant drove the dot-com out of business and cheated it out of millions of dollars. In a 23-page complaint assigned to U.S. District Judge James I. Cohn of Fort Lauderdale, BizProLink alleges it spent two years and $10 million developing valuable content and technology for America Online Inc. under the terms of an “integration agreement” with the former AOL Time Warner. But instead of getting paid millions of dollars in anticipated development and license fees, BizProLink said it got the shaft. BizProLink LLC is not an active business. It was incorporated to file the lawsuit. The lawsuit, which also asserts breach of oral contract, unjust enrichment and breach of implied covenant of good faith and fair dealing, was set for trial next June. “I just wish AOL never walked in our doors,” BizProLink founder Steven Sponder said in an e-mail interview. “These guys at AOL make the architects of the Enron scam look like amateurs.” Raymond V. Miller, a partner in Gunster Yoakley & Stewart in Miami, and Gary L. Reback and Robert J. Yorio, partners at Carr & Ferrell of Palo Alto, Calif., represent BizProLink. In widely publicized probes, the Justice Department and the Securities and Exchange Commission are looking at Time Warner’s accounting practices. The company restated $190 million in revenue following an internal inquiry a year ago, and according to the Washington Post, it voluntarily has turned over more than a million pages of documents to federal agents. Time Warner spokeswoman Tricia Primrose confirmed that Time Warner is working with those federal agencies, but declined to provide any details. “We are continuing to seek to cooperate with the SEC and the Justice Department investigations. Beyond that, we just aren’t saying anything,” said Primrose. Primrose said Time Warner would not comment about BizProLink’s pending lawsuit. That hefty revenue restatement apparently stemmed, in part, from AOL’s partnership with a defunct Las Vegas software company called PurchasePro.com Inc. Last month, two former PurchasePro executives pleaded guilty in federal court in Alexandria, Va., to charges that they were part of a criminal conspiracy to falsely inflate corporate revenues, dupe investors and inflate stock prices. The AOL-PurchasePro connection is the focus of the lawsuit brought by BizProLink’s, which is a privately held company. BizProLink’s business was in creating online commerce resources tailored to meet the information needs of small businesses in dozens of industries. In March 2001, the complaint says, AOL executives “initiated contact” in hopes of partnering with BizProLink. The ostensible idea was for BizProLink, a company with 23 employees, to supply business content for AOL’s five million small business subscribers. For example, as cited in the complaint, an AOL user in the construction industry could use BizProLink’s tools to search for construction companies for sale, construction consulting services, industry employment and the like. In exchange, AOL would provide the platform for BizProLink to market its content and technology, seasoned with a promise to “spend $150 million marketing AOL’s services to small businesses in the first year alone,” the complaint says. To secure the deal, according to the lawsuit, BizProLink paid AOL $380,000. Likewise, AOL required BizProLink to sign a “preferred supplier agreement” with PurchasePro.com for its business-to-business software, and to pay PurchasePro $220,000, the suit says. The suit describes the PurchasePro deal as “the beginning of the fraud perpetrated by AOL” because BizProLink got no benefit from it. So why were those conditions required? To defraud BizProlink, Sponder said. “They knew we had money, content and technology they wanted,” Sponder said. “At the time, I was not aware of AOL’s intentions to use my company as a pawn to inflate their revenues through a roundabout revenue scam they set up with � PurchasePro.” The alleged scheme was launched around the time of AOL’s 2001 merger with Time Warner. According to the complaint, executives at AOL and Purchase Pro forged what Sponder called a “sham partnership” whose only purpose was to inflate revenues at both companies by “extracting money from unsuspecting companies like mine and funneling it to PurchasePro.” BizProLink’s complaint cites the Justice Department’s statement of facts in the criminal case against former PurchasePro senior vice president of sales Jeffrey R. Anderson. The complaint said Anderson and an unidentified associate “engaged in a complex shell game that was hidden from auditors and investors.” That “game” featured an exchange of warrants to buy PurchasePro stock for future guarantees of revenue for PurchasePro to be achieved when Time Warner employees “entered into side deals with suppliers and partners that then bought PurchasePro software licenses,” the complaint said. Using that “round trip scheme,” both Time Warner and PurchasePro “booked their tit for tat agreements as revenue,” the complaint said. “AOL earned $3 in [PurchasePro] stock warrants for each dollar it funneled to PurchasePro. AOL is believed to have booked in excess of $20 million in ‘ad and commerce revenue’ from its unorthodox relationship with PurchasePro,” the complaint says. In fact, the suit said, the relationship was so unorthodox that PurchasePro’s independent auditor, the firm Arthur Andersen, resigned because of it after an internal investigation at AOL. According to the suit, AOL also saved at least $31 million that it would have needed to spend to develop in-house a system equivalent to what BizProLink actually built and placed online. Sponder said that’s an example of another shoe that’s yet to drop in Time Warner’s accounting troubles. “What may also come out is that AOL under-reported their expenses by getting us to build a mass of content and technology for them,” Sponder said. By October 2002, alarm bells about AOL started going off in Fort Lauderdale. “BizProLink had become increasingly concerned that AOL would not fulfill its promises, namely compensating BizProLink and/or acquiring the company,” the suit says. BizProLink made repeated demands on AOL to make good on its promises, and to pay it for the millions of dollars it had sunk into the deal “for the sole benefit of AOL.” At one point, the complaint says, Ted Leonsis, vice chairman of AOL, contacted BizProLink about meeting personally with Sponder. A meeting was held in November 2002, but without Leonsis, and nothing was resolved, the complaint says. A month later, AOL “repudiated” its agreement to pay BizProLink, the complaint said. BizProLink limped on during the first half of 2003. In August, the company sold its remaining technology and content assets to InfoDesk Inc. of Tarrytown, N.Y., Sponder said. “At the time AOL approached us, we were a company that had everything going for it,” said Sponder. “We folded up when we were not able to sustain after AOL reneged on their promises.”

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