By MARCY GORDON

WASHINGTON — Federal regulators on Monday said eight former Time Warner Inc. executives fraudulently inflated the company’s online advertising revenues by more than $1 billion between 2000 and 2002.

Four of the executives have agreed to settle the civil charges brought by the Securities and Exchange Commission by paying a total of roughly $8 million in fines and returning allegedly ill-gotten gains. They are David Colburn, Eric Keller, Jay Rappaport and James MacGuidwin. MacGuidwin was controller of the media company; the other three were in its business affairs unit.

Charges are still pending against the other four, who are contesting them: John Michael Kelly, chief financial officer of the company when it was known as AOL Time Warner; Joseph Ripp, ex-chief financial officer of the AOL division; Steven Rindner, a former senior executive in the business affairs unit, and Mark Wovsaniker, former head of accounting policy.

The world’s largest media company by revenue, Time Warner Inc. owns AOL, Warner Bros., CNN and Time magazine.

The SEC said the eight former executives either made or contributed to financial statements that distorted the company’s results. AOL Time Warner pumped up its own ad revenue by giving advertisers the money to buy online ads they didn’t want or need, the SEC charged.

New York-based Time Warner was roiled by the accounting scandal, which also involved subscriber counts. Time Warner agreed in late 2004 and early 2005 to pay $300 million in a settlement of civil fraud charges with the SEC and $210 million to resolve charges of criminal securities fraud in a separate investigation by the Justice Department. Time Warner also agreed to restate three years of financial results and to open its books to an independent examiner.

The restatements reduced Time Warner’s profits by about $1 million in 2000 and $161 million in 2001, while increasing its profits by about $62 million in 2002, $18 million in 2003, $30 million in 2004 and $16 million in 2005. For the first six months of 2006, the restatement raised its earnings by $15 million.

The SEC charges were an unpleasant reminder of a disastrous chapter in Time Warner’s history, when it agreed to be acquired by America Online Inc. in 2000 at the height of the Internet bubble.

Time Warner spokesman Keith Cocozza declined to comment Monday on the SEC allegations, laid out in a civil lawsuit filed in federal court in Manhattan.

AOL, now a Time Warner division, is trying to reinvent itself into an online advertising company as its dial-up online access business rapidly dwindles as people sign up for high-speed Internet from cable and phone companies.

Many observers expect Time Warner to sell off some or all of AOL or combine it with another online company soon. Jeff Bewkes, who became CEO of Time Warner in January, said AOL is separating its advertising business, which is potentially attractive to other partners, from the declining online access unit.

The SEC also said that Kelly and Wovsaniker, who are certified public accountants, misled the company’s outside auditors.

Through their attorneys, Kelly, Ripp, Rindner and Wovsaniker denied the SEC charges and said they would contest them in court.

“We strenuously reject any accusation that Mr. Ripp was involved in any way with fraudulent conduct,” said his attorney, David Geneson. He said that Ripp in fact had acted as a whistleblower within the company, initiating an internal investigation that uncovered the fraud.

Rindner’s lawyer, Mark Hulkower, said his client “conducted himself appropriately during his three years at AOL (and) looks forward to the opportunity to clear his name.”

Kelly “flatly denies the SEC’s claims and will vigorously defend himself in the courts,” said his attorney, Jonathan Tuttle.

Stephen Topetzes, representing Wovsaniker, called the SEC charges “groundless.” Wovsaniker engaged in no wrongdoing and was called by the government as a witness in related cases “to show that he actively sought to prevent improper conduct by others,” Topetzes said.

Of the four executives who agreed to settlements with the SEC, Colburn is paying a $750,000 civil fine and restitution plus interest of around $3.2 million; Keller is paying a $250,000 fine and $699,868 in restitution and interest; Rappaport also is paying a $250,000 fine as well as $493,629 in restitution, and MacGuidwin pays a $300,000 fine and is returning $2.1 million.

In addition, Colburn and MacGuidwin agreed to be barred for 10 years and seven years, respectively, from serving as officers or directors of any public company

By Georg Szalai

NEW YORK — Time Warner’s AOL has agreed to acquire global social network Bebo, which has a total membership of more than 40 million worldwide, for $850 million in cash.

The company is one of the leading online social networking providers in the U.K. and is the top-ranked network in Ireland and New Zealand. It says it is No. 3 in the U.S.

Bebo said Thursday its users view an average of 78 pages per usage day.

AOL said that Bebo’s offers fit in with its existing services, such as AIM.

“Bebo is the perfect complement to AOL’s personal communications network and puts us in a leading position in social media,” chairman and CEO Randy Falco said. “This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers.”

The deal is the latest in an AOL spending spree. The company said it has spent nearly $1 billion on online advertising acquisitions, including of such companies as AdTech, buy.at, Lightningcast, Quigo, Tacoda and Third Screen Media.

Bebo also bolsters AOL’s international growth. It has launched 17 international Web sites over the last year and plans to expand to 30 countries outside the U.S. by the end of 2008.

Bebo was founded by Michael and Xochi Birch. It has 11.4 million unique users in the U.K.

NEW YORK -(Dow Jones)- AOL promoted Lynda Clarizio to lead its division selling ads across the Web, as the Time Warner Inc. (TWX) unit continues to remake its advertising business.

Clarizio replaces her boss, Curt Viebranz, who has left the company. Viebranz is the former chief executive of Tacoda, an online advertising business AOL bought last year.

The promotion comes at a crucial time for AOL, which has placed a renewed emphasis on becoming a hub for ad sales across the Internet. Parent company Time Warner plans to sell AOL’s Web-access business, a move many believe is a precursor to a sale or split of all or parts of the Internet unit.

Clarizio has led AOL’s Advertising.com, which matches buyers of online advertising to thousands of Web sites with extra ad space to sell. Advertising.com is one of AOL’s most successful businesses, but overall AOL’s advertising revenue lately has lagged the industry.

AOL’s challenge under Clarizio’s watch will be to unify several advertising businesses, including Tacoda and Quigo, it bought in recent months. AOL’s ad businesses compete with increasingly powerful rivals, particularly if Microsoft Corp. (MSFT) succeeds in taking over Yahoo Inc. (YHOO).

“Our strategy is to be able to offer the best possible solutions for advertisers,” Clarizio said in an interview. “If we can drive greater alignment within this organization, we should see an improvement in the numbers.”

By Alex Woodson

NEW YORK — Generate, the digital production studio run by former WB Network CEO Jordan Levin, has secured $6 million in financing from Velocity Interactive Group, the new-media investment group run by former News Corp. and AOL execs.

Generate, which manages clients and creates original content, was founded two years ago by Levin and had an exclusive production contract with MTV Networks, which yielded Web series “Home Purchase Club” on VH1’s Vspot among other offerings. That agreement, though, ended last fall, and the studio is looking to spread its content through different Web destinations or traditional media.

“We’re talking with all platforms,” said Levin, Generate’s CEO. “We view our job as creating quality content that uses digital primarily to incubate and feed ideas and tying advertisers in as partners to ride alongside that distribution strategy.”

Former Fox Interactive Media president Ross Levinsohn, a partner at Velocity along with former AOL CEO Jonathan Miller, said Levin has proved that he’s able to “produce cheaply and manage efficiently,” a must in the Internet world, as evidenced by the relatively small $6 million investment.

“It could set a new model for all media, and he’s willing to try that,” Levinsohn said. “He’s a risk-taker, and in any industry that’s trying to reinvent itself you need risk-takers.”

Levin’s management team includes former CAA executive Jared Hoffman and “Bernie Mac” producer Pete Aronson.

Velocity also recently invested in online video ad company Broadband Enterprises. Levinsohn said that stake, along with the one in Generate, “certainly resonate together.”

Generate also unveiled a new production slate. “Pink — The Series” is a follow-up to a Web show that bowed in September and has garnered more than 4 million views; “LaQuisha” is based on a character created on L.A. radio station KROQ-FM; and “Knockers” is a comedy show from sketch group Good Neighbor.

Generate clients include Trevor Moore from Whitest Kids U Know, a comedy troupe with a show on IFC. The company is also one of the producers of the “Andy Milonakis Show.”