AOL Whistle-Blower Becomes SEC Target

On May 14, 2001, Joseph A. Ripp, the newly appointed chief financial officer of America Online, faxed a letter to the Las Vegas offices of the accounting firm Arthur Andersen with disturbing news: it appeared that an AOL business partner, and Arthur Andersen client, had forged a signature on a contract and booked several million dollars of sham revenue.

That letter set off a chain of events that culminated in the accounting scandal that followed Time Warner's merger with AOL, including huge fines and criminal convictions. Mr. Ripp, a longtime finance executive at Time Warner who had been sent to AOL's Dulles, Va., headquarters to oversee the accounting operations there, was called one of the "white hats" in the whole affair by the Justice Department.

But three weeks ago, on May 19, the Securities and Exchange Commission, after nearly six years of investigating accounting at AOL, filed a civil lawsuit against eight former executives alleging financial fraud. Seven were AOL executives before the merger; the eighth was Mr. Ripp.

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