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AOL probe expanded, daily says

WASHINGTON — Shares of AOL Time Warner Inc. fell more than 5 percent in trading Wednesday following a published report suggesting the government's investigation into accounting practices at the America Online unit was widening.

In an article Wednesday, The Washington Post article said regulators were looking into whether the company was "aiding and abetting" schemes by other companies to artificially inflate reported revenue.

Securities and Exchange Commission investigators will investigate whether AOL and other companies exchanged cash through sham transactions to inflate their revenue reports, and whether former executives David M. Colburn and Eric Keller were involved, the Post said, quoting unidentified sources. Attorneys for Colburn and Keller declined to comment, the report said.

An SEC spokeswoman said the agency had no comment on the article. An AOL Time Warner spokeswoman also had no comment other than to say the company is cooperating with the government.

In afternoon trading on the New York Stock Exchange, shares of AOL Time Warner dipped 64 cents to $10.47.

The events under investigation allegedly occurred before and after AOL merged with Time Warner Inc. in January 2001. AOL Time Warner has said it hopes to avoid criminal charges by cooperating with federal investigators.

The company has reported $190 million in accounting discrepancies and turned over thousands of documents to investigators. The company is being investigated by the SEC, the FBI and the U.S. attorney's office for the Eastern District of Virginia.