U.S. Department of Justice|
Debra Wong Yang
United States Attorney
Central District of California
United States Courthouse
312 North Spring Street
Los Angeles, California 90012
FOR IMMEDIATE RELEASE
December 12, 2005
For Information, Contact Public Affairs|
Thom Mrozek (213) 894-6947
Los Angeles, CA - A Manhattan Beach man who was the chief executive officer of L90, Inc., an Internet advertising firm now known as MaxWorldwide, Inc., was sentenced today to 27 months in federal prison for committing securities fraud.
John C. Bohan, 40, was sentenced this morning by United States District Judge Percy Anderson. In addition to the 27-month prison term, Judge Anderson ordered Bohan to serve an additional 10 months of home confinement and to pay a $100,000 fine.
Bohan pleaded guilty in March 2003 to a felony count of securities fraud, admitting that from June 2000 through March 2002 he participated in a scheme to generate fraudulent revenues for L90 through advertising barter transactions with other Internet companies in order to meet securities analysts' revenue estimates.
L90, through its subsidiary webMillion.com, engaged in a series of advertising barter transactions with other Internet companies, swapped checks with those companies for the purported "value" of the bartered advertising, and fraudulently recorded those amounts as revenue without disclosing that they resulted from barter transactions. Frequently, L90 inserted a sham third party into the check swap in order to hide the true nature of the barter transaction from its auditors and the investing public.
Bohan helped conceive and organize the barter transactions used to fraudulently inflate L90's revenue numbers. Bohan also helped to conceal the fraudulent nature of those transactions from L90's auditor and made false representations to the auditor about L90's financial statements. Bohan also signed L90's Form 10-K and Forms 10-Q that were filed with the Securities and Exchange Commission and contained false and misleading financial information.
Through the fraudulent barter transactions, L90 overstated its revenues in the third quarter of 2000 through the third quarter of 2001 by at least $4.3 million, or 7.9 percent overall, and by as much as 29 percent in one quarter. As a result, L90 was able to meet analysts' revenue estimates in all but one of these quarters.
At the time of the offenses, L90 was based in Santa Monica and Marina del Rey, Calif., and its stock was traded on the Nasdaq National Market System.
As part of an earlier settlement of a civil lawsuit filed by the SEC, Bohan paid more than $400,000 in disgorgement and penalties, and submitted to an order barring him from serving as an officer or director of a public company.
The government's case was investigated by the Federal Bureau of Investigation, which received the assistance of the U.S. Securities and Exchange Commission.
L90's chief financial officer, Thomas Sebastian, and senior vice president Finance, Lucrezia Bickerton, were previously sentenced to 18 months and 12 months imprisonment, respectively. L90's senior vice president for business development, Mark Roah, pleaded guilty to conspiring to commit securities fraud at L90 and conspiring to commit securities fraud at another Internet company - Homestore.com, Inc. - and is scheduled to be sentenced in March.
Release No. 05-167
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