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Ex-Homestore CEO Gets 15-Year Sentence

Thursday October 12, 2006

Former CEO of Homestore Sentenced to 15-Year Prison Term for Scheme to Defraud Investors

LOS ANGELES (AP) -- The founder and former chief executive of online real estate listings company Homestore Inc. was sentenced Thursday to a 15-year prison term and ordered to pay a $5 million fine for his part in a scheme to defraud investors.

Stuart Wolff, 43, was convicted in June on charges of insider trading, lying to company accountants and federal regulators, and conspiracy in a scheme to inflate online ad revenues at the Westlake Village-based company.

U.S. District Judge Percy Anderson scheduled a hearing for Nov. 13 to determine whether Wolff will have to pay restitution and if he will be able to remain free on bond pending an expected appeal.

Homestore shareholders lost more than $100 million when the company's stock price fell in 2001 on news of the federal investigation into the company's irregular accounting practices.

Wolff is the 11th former Homestore employee convicted on federal charges stemming from the scheme.

"The lengthy sentence handed out to Mr. Wolff should serve as a warning to other business leaders who may be tempted to cook their books in order to please market analysts," U.S. Attorney Debra Wong Yang said in a statement.

Wolff headed Homestore from 1997 until he resigned in January 2002. The company, which provides real estate listings and related services on the Internet, has since changed its name to Move Inc.

During the trial, prosecutors said the scheme involved Homestore paying some vendors extra for their products or services and the vendors would then use the money to buy advertising from two media companies.

The media companies, in turn, would buy advertising from Homestore, whose officials would improperly list the revenue on the company's financial statements in order to exceed Wall Street analysts' expectations.

Prosecutors argued that Wolff must have known about the $86 million in deals that other executives have acknowledged were fraudulent.

Wolff's lawyers blamed other employees, including many of the executives who have already pleaded guilty in the case, for the scheme and questioned whether Wolff knew of the dealings.



Homestore execs to plead guilty to accounting fraud WASHINGTON, Sept 25 - Three former executives from the nation's largest online property firm have agreed to plead guilty for their role in fraudulently inflating their company's earnings, U.S. officials said on Wednesday. The U.S. government will file a criminal information in federal court in Los Angeles charging Homestore Inc's former chief operating officer John Giesecke and former chief financial officer Joseph Shew with conspiracy to commit securities fraud.

They will also charge Giesecke with wire fraud and former vice president John DeSimone will be charged with insider trading, officials said. The California-based company said late last year that it would conduct an internal audit to untangle extensive accounting errors from the past two years.

The deals it was looking into reportedly involved companies including America Online, the Internet arm of media giant AOL Time Warner Inc. In August, AOL Time Warner said its America Online unit may have improperly accounted for three advertising deals with revenue totaling $49 million.

One source familiar with the situation said on Wednesday the Securities and Exchange Commission informed AOL that it was not a target in the Homestore investigation but was a third party witness.

Federal law enforcement officials said Giesecke and Shew, along with some other high-ranking corporate officers, participated in a scheme from March 2001 to December 2001 to defraud investors by manipulating Homestore's reported revenues to make them appear higher than they really were. The conspiracy involved an illegal practice known as "round-tripping", when a company fraudulently inflates the revenues it reports to the investing public.



February 13, 2002 11:02

Nasdaq Changes Status of HomeStore.com Inc. and Requests Additional Information from Company NEW YORK, Feb. 13 /PRNewswire/ -- The Nasdaq Stock Market(R) announced today that the trading halt status in HomeStore.com Inc. (Nasdaq: HOMS) was changed to "additional information requested" from the company. Trading in the company had been halted today at 9:10 a.m. Eastern Time for News Pending at a last sale price of $.72. Trading will remain halted until HomeStore.com Inc. has fully satisfied Nasdaq's request for additional information.



February 13, 2002 09:42

Homestore To Conclude Internal Inquiry By Mid-March; The Company Will Restate Year 2000 Results WESTLAKE VILLAGE, Calif., Feb. 13 /PRNewswire-FirstCall/ -- Homestore.com, Inc. (Nasdaq: HOMS) announced today that it will restate its financial results for the year ended December 31, 2000 and is expected to conclude its internal accounting inquiry and file restated financial statements by mid-March 2002.

"The restatements involve historical accounting issues that will be corrected, but do not relate to the ongoing operations of Homestore," said Mike Long, Homestore's Chief Executive Officer. "We are intensely focused on serving our customers. The company has sufficient financial resources to meet our customer commitments and to fund the growth of our business."

The company stated that it expects its cash flow from operations to be positive for the full year 2002 and that it had cash and cash equivalents available to fund operations of approximately $48 million at December 31, 2001, in addition to restricted cash of approximately $100 million.

The company previously announced that it intends to restate its quarterly financial statements for the quarters ended March 31, June 30 and September 30, 2001. Accordingly, investors should not rely on the company's previously filed reports on Forms 10-Q for those quarters, the previously filed report on Form 10-K for the year ended December 31, 2000, or the financial statements contained therein. The restatements are a result of the ongoing inquiry being conducted by the Audit Committee of the company's Board of Directors into the company's historical accounting practices.



Homestore (Nasdaq: HOMS) is the leading supplier of online media and technology to the real estate industry. The company operates the #1 network of home and real estate Web sites including flagship site REALTOR.com(R), the official Web site of the National Association of REALTORS(R); HomeBuilder.com(TM), the official new homes site of the National Association of Home Builders; Homestore.com(TM) Apartments & Rentals; and Homestore.com(TM), a home information resource.

Nasdaq is making its own inquiries into Homestore.com's financial reporting. Several of the company's top executives, including co-founder and (former) chairman and CEO Stuart Wolff, have resigned from the company.