Time Warner (TWX) yesterday said it's probing whether its chief financial officer used company funds to act as a "sugar daddy" for a buxom young Brazilian woman accused of running a high-end Manhattan call-girl ring.

The probe was spurred by alleged madam Andrea Schwartz's claims that the married Wayne Pace, 56, showered her with gifts, clothes and cash, and even helped her buy an apartment during a four-year relationship that began after he met her in the bar of the Four Seasons hotel.

"While there have been no allegations of illegal behavior regarding Mr. Pace, and this appears to be a personal matter, we are taking appropriate steps to confirm, and Mr. Pace has assured us, that there was no misuse of corporate assets or other improprieties with respect to this matter that would affect Time Warner and its shareholders," the company said in a statement.

Schwartz, 31, denies charges that she operated a prostitution ring out of her $1.2 million West 58th Street condo, where police said clients were charged between $700 and $1,500 for a variety of sexual services. She remains jailed on Rikers Island. Pace's lawyer said Time Warner's investigation will not uncover any financial misdeeds by the executive, who last year earned $3.7 million in salary and bonus at the company, which owns CNN, Time Warner Cable, People magazine and other media entities.

"This matter is purely personal and has nothing to do with Time Warner, Time Warner funds or with Mr. Pace's position at Time Warner. Mr. Pace was not involved in any illegal conduct, and he was unaware of the alleged improper conduct now attributed to Ms. Schwartz," said Mark Pomerantz, Pace's lawyer.

"Mr. Pace deeply regrets the embarrassment he has caused his family and his employer," said Pomerantz, who has admitted his client knows Schwartz.

Pace's wife, Bobbi, was asked about the scandal yesterday outside a grocery store in Atlanta, where she and her husband of 35 years are pillars of local society.

"I have no comment whatsoever. Please leave me alone," a visibly shaken Bobbi Pace said frostily before climbing into her Mercedes-Benz and driving back to the couple's gated mansion in the exclusive neighborhood of Buckhead.

Meanwhile, the halls of the world's largest media company were abuzz with chatter about the weekend revelations that Pace, who showed up for work at the Time Warner Center, had been Schwartz's "sugar daddy."

"I'm pretty friggin' shocked," said one Time Warner insider. "Obviously he knew this woman. Obviously they had some kind of relationship."

Pace's lawyer has denied their relationship was "inappropriate."

Time Warner brass did not formally communicate with employees yesterday about the scandal.

"We're all sort of amazed about the lack of response from Time Warner," the insider said.

Sources said company boss Dick Parsons is sticking by Pace for the moment, pending the outcome of the internal probe.

Pace already had been expected to retire by the end of 2007.

If the probe clears Pace of any wrongdoing involving company funds, he would likely keep his job.

"The first thing he has to do is a mea culpa," said another insider. "What's incredibly sad about it is that he's such a great guy. He's a sweet, Southern guy."