Former finance bosses at AOL Time Warner are being sued by the SEC for fraud. The complaint, filed in federal district court in Manhattan, alleges they took part in a scheme that caused the company to overstate its online advertising revenue by more than $1bn (£0.51bn).

According to the Wall St Journal former AOL Time warner CFO John Michael Kelly, Joseph Ripp, previously finance chief of the company’s AOL division and Mark Wovsaniker, former head of accounting policy are contesting the charges.

Jonathan Tuttle of law firm Debevoise & Plimpton, representing Kelly, said, 'Mr Kelly flatly denies the SEC’s claims and will vigorously defend himself in the courts. We are disappointed that the SEC has decided to make these allegations against Mr Kelly, particularly given the significant length of time that has passed since the events in question.'

The charges relate to accounting periods between 2000 and 2002 and the SEC has also claimed that AOL Time Warner used 'elaborate accounting schemes' to boost online ad revenue figures.

David Geneson, a partner at Sheppard Mullin Richter & Hampton in Washington who is representing Ripp said, 'Joe Ripp is the last guy at AOL Time Warner you’d ever accuse of fraud. When he went to the AOL division of AOL Time Warner, he initiated an internal investigation that exposed fraud and led to two federal prosecutions. Federal prosecutors in those cases referred to him as the "white hat at AOL who was fixing problems, not causing them." There is no question that this lawsuit is plain wrong.'