In a suit filed Friday in Circuit Court of Loudoun County, Va., AOL claims that Horton and several associates conspired to defraud the company by having it enter bogus contracts, and then having the money sent to a shell company that they controlled.
AOL fired Horton in August after reviewing the suspect payment. AOL said it later discovered what it called "a scheme to defraud AOL" after it reached a separation agreement with Horton.
In October, AOL fired another executive in its human resources division who had worked for Horton, Ruben Moreno. AOL also named Moreno in the lawsuit, claiming that he participated in the embezzlement scheme.
AOL, which provides subscribers with access to the Internet and other online services, is seeking compensatory damages to be determined at trial, as well as punitive damages and other compensation.
AOL also says the defendants used a similar scheme to siphon money from "at least one other of Horton's former employers," but it did not specify which one.
Horton's previous employment includes stints at PepsiCo Inc., AutoNation Inc., and Qwest Communications International Inc. A spokesman for AutoNation declined to comment, and Qwest did not return a call seeking comment.
PepsiCo said it was conducting its own investigation, and that Angel Rodriguez, a current PepsiCo executive who was named in the AOL lawsuit, was cooperating. PepsiCo said Rodriguez asserts that he has done nothing wrong.
An AOL spokesman declined to comment on the case. Horton's lawyer, Judith Wheat, did not return a phone call seeking comment.
While the amount of money at stake is relatively small, the case is sure to resonate in the current climate of corporate scandals and fraud.
AOL's parent company, Time Warner Inc., is being investigated itself by securities regulators over the accounting for an advertising deal that AOL made with the German media company Bertelsmann.