LOS ANGELES — Two former employees of Homestore (now Move Inc.) were questioned here Friday morning in the trial of Stuart Wolff, the company’s former chief executive, who has been charged with conspiracy, filing false statements with the Securities and Exchange Commission, circumvention of internal auditing controls, fraudulent insider trading, and falsification of corporate books and records.
First on the witness stand for the defense was Joe Zwicker, a wide-eyed young man in a gray suit and white shirt, who worked for Homestore in a business planning capacity in 2001. Zwicker appeared unenthusiastic, though perhaps short of hostile, about his participation in the courtroom drama.
Jeff Ifrah, one of Wolff’s attorneys, questioned Zwicker about e-mail messages and meetings connected to Homestore’s business plans and risks and opportunities reports, which tracked the company’s projected quarterly sales. Zwicker, who is no longer employed at Homestore, answered most of the questions with statements that he had no recollection of the documents, messages or events presented to him.
Ifrah closed his examination of Zwicker with questions about whether anyone had mentioned “AOL,” “round-trip transactions,” “triangular transactions” or “buying revenue” at any of the meetings that Zwicker attended six years ago to discuss Homestore’s 2001 annual operating plan. Zwicker’s answer: “No.”
Next on the witness stand was Jason Boling, a dark-haired and broad-chested young man, who managed Homestore’s SEC reporting functions from June 2000 until June 2002. Boling testified that he researched SEC issues, fact-checked financial data in press releases and organized documents for the company’s auditors, though he didn’t verify the financial information and wasn’t involved in any of the transactions that are at issue in the trial. Ifrah at one point asked Boling whether he’d ever met Wolff. Boling’s response: “Yes, once.”
Both witnesses were cross-examined for the prosecution by Assistant U.S. Attorney Michael R. Wilner, who established that neither of them had been an officer of the corporation nor had any knowledge of the alleged senior management meetings at which Wolff and other corporate officers allegedly discussed the transactions that fraudulently inflated Homestore’s revenues to meet Wall Street analysts’ quarterly projections of the company’s financial results.
“Do you have any information with respect to the substance of these transactions?” Wilner asked Zwicker. Answer: “No, I do not.”
Ifrah returned fire on redirect, when he asked Zwicker whether there were any “secrets lurking” in Homestore’s risks and opportunities reports. Zwicker’s reply: “Not that I was aware of.”
Wilner was repeatedly on his feet throughout the testimony to object to Ifrah’s questions as being vague, broad, ambiguous or without foundation. Judge Percy Anderson sustained these objections more often than not, after which Ifrah rephrased his questions to the witnesses, both of whom said they hadn’t met with any of the attorneys in advance to discuss or prepare their testimony.
The testimony of both employees was also interrupted by a number of sidebars, during which Anderson conferred with Ifrah about documents the defense wanted to present. The government and defense attorneys (including Lawrence Barcella in a snazzy purple tie) huddled about the court reporter for these discussions out of the hearing of the witnesses, the jurors and the few observers in the courtroom.
The jurors, who have endured several weeks of testimony about Homestore’s advertising contracts and financial reporting procedures, appeared to be exceedingly bored throughout most of Friday’s testimony. Several of them were nearly asleep at times while others fidgeted in their chairs.
The defense has called Joe Hanauer, Homestore’s chairman of the board, and Wolff’s former secretary to the witness stand as well, and has signaled its intention to question other former employees this week. Whether Wolff, who appeared gaunt, tired and noticeably thinner than his former self, will testify in his own defense has not yet been revealed.
Ten former employees have pleaded guilt to criminal charges and violations of SEC regulations in the case, which has been called “the Enron of real estate.” Wolff is the only defendant in the trial, which opened March 28 at the U.S. district courthouse in downtown Los Angeles.
Marcie Geffner is a real estate reporter in Los Angeles.
For more Inman News coverage of the Stuart Wolff trial, see “Former Homestore CFO testifies against Wolff,” “Chickenpox delays Wolff trial,” “Sixth witness testifies in Stuart Wolff trial,” “Ex-Homestore CFO testifies against Wolff,” and “Trial begins for former Homestore exec.”
