US financial regulator the Securities & Exchange Commission said in a statement that it charged former executives at what was then AOL Time Warner, with allegedly providing money to advertisers to buy online ads from AOL between 2000 and 2002.
The SEC filed the complaint against former executives John Michael Kelly, Steven Rindner, Joseph Ripp and Mark Wovsaniker, claiming that they "engineered, oversaw and executed fraudulent round-trip transactions in which AOL Time Warner effectively funded its own advertising revenue".
The scheme boosted the company's ad revenue by more than $1bn.
The SEC said: "The commission is seeking injunctive relief, disgorgement of ill-gotten gains with pre-judgment and post-judgment interest, civil penalties, and officer and director bars against Kelly, Rindner, Ripp and Wovsaniker."
"Kelly and Wovsaniker, both certified public accountants, also are charged with misleading the company's external auditor about the fraudulent transactions."
Separately, the SEC sued four other former AOL executives for allegedly participating in the same scheme but these four men have already reached a settlement.
David Colburn, the former head of business affairs; Eric Keller, a former senior manager of business affairs; James MacGuidwin, the former controller; and Jay Rappaport, a former senior manager in business affairs, have agreed to pay a total of $8m in disgorgements and fines without admitting or denying the allegations.
The biggest payments will come from Colburn, for a total over $4m, and MacGuidwin, $2.4m.
In addition, Colburn and MacGuidwin agreed not to serve as officers or directors of a public company for 10 years and seven years, respectively.