We Think Its About Time - Ohio, California Pension Funds Sue AOL

COLUMBUS, Ohio July 18, 2003: Carrie Spencer writing for the AP reported that Ohio and California sued media conglomerate AOL Time Warner Inc. on Friday to recover hundreds of millions of dollars in investments lost by state public employee pension funds.

The lawsuits accuse the company of misleading investors before the merger that created it.

Ohio's five pension funds and the Bureau of Workers Compensation - which lost more than $100 million - didn't join a pending class-action lawsuit by individual stockholders. They instead sued under a different statute that covers institutional investors.

California's Public Employees' Retirement System filed a similar lawsuit seeking recovery of $250 million in the Sacramento-based Superior Court of California, spokeswoman Pat Macht said. The sister fund for state teachers was expected to do the same, she said.

"The class-action lawsuit, you get peanuts at the end of it," Ohio Attorney General Jim Petro said.

The lawsuits say America Online and Time Warner misled investors about the companies' financial conditions and falsified documents filed with federal regulators to complete their merger in 2001.

"An intentional breakdown in corporate accountability - a cooking of the books - has caused Ohio pension funds to suffer," Petro said, adding other states are likely to file similar lawsuits.

A spokeswoman for the New York City-based company declined to comment.

Ohio's complaint accuses the company of fraud, breach of fiduciary duty and other violations of federal securities and state laws. Both states also named as defendants the companies' executives and board members and the investment and accounting firms that participated in the merger.

"In order to inflate AOL's stock prior to the merger and to secure Time Warner shareholder approval of the sale of Time Warner to AOL and then to continue to inflate the price ... after the merger, defendants presented AOL's business as achieving record growth and profitability," Ohio's lawsuit says.

The Securities and Exchange Commission and the U.S. Justice Department are investigating the company's financial and accounting practices.

Ohio has filed other lawsuits alleging that corporations misled investors, costing the pension funds hundreds of millions of dollars.

The pension funds sued in state court against Enron Corp. and WorldCom Inc. in the hopes of winning bigger awards than in a class-action. Two Ohio pension funds are the lead plaintiffs in a federal class-action lawsuit against Global Crossing Ltd. and its accountant, Arthur Andersen.