Trial is scheduled to begin today in Los Angeles for Stuart Wolff, 42, the former Homestore CEO who allegedly participated in fraudulent transactions to boost the company’s stock performance.
Homestore Inc., which is in the process of re-branding as Move Inc., operates several property-search Web sites including Realtor.com, a home-search site that is affiliated with the National Association of Realtors trade group.
Wolff, who left the company in January 2002 amidst an internal investigation, is charged with conspiracy, filing of false statements with the U.S. Securities and Exchange Commission, circumvention of internal auditing controls, fraudulent insider trading, and falsification of corporate books and records – a total of 19 counts.
The federal criminal lawsuit was filed in April against Wolff and Peter Tafeen, another former Homestore executive. The charges carry a maximum possible sentence of 185 years in federal prison.
The trial is scheduled to begin at 8 a.m. in U.S. District Court in Los Angeles. Judge Percy Anderson will hear the case. According to a court notice, the trial is expected to last two to three months.
Tafeen, the former executive vice president of business development at Homestore, entered into a plea agreement earlier this month. Through that agreement, Tafeen entered a guilty plea to one count of securities fraud for participating in a scheme to inflate company revenues and faces a maximum sentence of 10 years in federal prison.
Also, Tafeen has agreed to testify against Wolff in the trial.
So far, 10 former Homestore employees have pleaded guilty to criminal charges relating to fraudulent advertising transactions that misled investors about company revenues. Wolff and Tafeen both exercised stock options during the course of the advertising scheme, obtaining millions of dollars in proceeds.
Homestore was almost ruined by the financial scandal that led to the federal lawsuit and criminal charges – the company’s stock price plummeted to pennies after the scandal was publicized in 2002 but the company has since rebounded financially.
Lawrence Barcella, a lawyer who is representing Wolff, said Monday that he had no comment on whether he is pursuing any plea agreement on behalf of Wolff, whose legal defense team also includes Jeff Ifrah, Gillian Garrett and Howard Privette.
The trial will open today with jury selection.
***
Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.
