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AOL Accused Of Fraud And Forgery

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If a senior-level executive at a company cuts a deal with you, would you assume that senior-level executive has the authority to make that deal? Jake Steinfeld, of Body by Jake fame, did take that leap of faith, but now finds himself suing AOL for fraud and forgery.

According to the claims in Steinfeld’s lawsuit, it’s not just a matter of breach of contract or nonpayment for services rendered, reports GoogleWatch, but after the executive left the company, AOL doctored the books and claimed the original contract was entered without the proper authority.

Jake claims he entered into an agreement with former senior vice president Paul Schmidman. Under the agreement, AOL agreed to pay Steinfeld nearly $600,000 for consulting fees plus promote his book ” I’ve Seen a Lot of Famous People Naked, and They’ve Got Nothing on You!” on the AOL portal, and agreed to buy 100,000 books.

Steinfeld’s complaint alleges AOL still owes him $295,000 for consulting, never bought the books, and didn’t hold up other ends of the deal. But the extraordinary claim is that AOL employees forged signatures of Body by Jake representatives, lowering the agreed upon amount, and forged purchase orders as well.

AOL’s response? Jake was “conspiring” with Schmidman to defraud AOL because the agreement was not approved through internal corporate procedures. Therefore, they owe him nothing.

This lawsuit could be another ugly stain on AOL’s reputation in a string of bad incidents in 2006 ranging from cancelled subscriptions, to the Goodmail Fiasco, to “the call,” to the “Data Valdez,” to being labeled “badware,” to Steve Case apologizing for the Time-Warner merger.

And now, reneging on deals and forging documents? An AOL attorney said the lawsuit was “unfounded and misdirected.”

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AOL Accused Of Fraud And Forgery
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