Peter Tafeen, a former Homestore executive who pleaded guilty to one count of securities fraud for his participation in a fraudulent advertising scheme, today was sentenced to serve 30 months in federal prison.
Tafeen was also sentenced to three years of supervised release following the prison sentence, and six months of the supervised release program must be served in home confinement.
Tafeen, who faced a maximum sentence of 10 years in prison, served as executive vice president of business development at Homestore from 1997 to November 2001. Homestore, which has operated Realtor.com and other property-search Web sites, this year re-branded as Move Inc.
Assistant U.S. Attorney Michael R. Wilner said, “The sentence … was very fair and it reflected both Tafeen’s involvement in the crime and his assistance in cooperating with the government during (Stuart) Wolff’s trial.”
Brian J. Hennigan, a lawyer for Tafeen who is a partner at Los Angeles law firm Irell & Manella LLP, said that Tafeen, who is currently out on bond, will report to prison Jan. 8. The judge, he said, has recommended that Tafeen serve his prison sentence in a Pensacola, Fla.-area prison near Tafeen’s home.
A facility in that area is the Federal Prison Camp in Pensacola, a minimum-security prison that is on the grounds of the Saufley Field Naval facility.
As part of a plea agreement announced in March, Tafeen had agreed to testify against his former boss, Stuart Wolff, who was chief executive of Homestore during the accounting scandal. Tafeen had faced similar charges to Wolff before entering into the plea agreement, which came a few weeks before his trial was scheduled to begin.
The U.S. Securities and Exchange Commission and U.S. Justice Department had filed criminal and civil cases against Wolff and Tafeen in April 2005.
Last month, Wolff was sentenced to 15 years in federal prison and ordered to pay a $5 million fine and restitution to victims of a financial scheme that deceived investors by artificially inflating revenues.
U.S. District Court Judge Percy Anderson found Wolff guilty of conspiracy, three counts of filing false statements with the U.S. Securities and Exchange Commission, four counts of lying to accountants, five counts of fraudulent insider trading, and five counts of falsification of corporate books and records.
The judge had also ordered that Wolff must not be involved in any business relating to Internet advertising, and Wolff is reportedly appealing his conviction. A hearing is scheduled next Monday related to Wolff’s request to stay out of custody on bail pending his appeal.
Tafeen, after leaving Homestore, in October 2003 filed a lawsuit against the company charging that he was owed millions of dollars relating to legal expenses. Homestore officials reached a settlement through which the company would pay up to $11.9 million to support Tafeen’s legal costs.
The company also had reached a separate agreement to pay up to about $15.2 million related to Wolff’s legal expenses.
Nine other individuals have been prosecuted in connection with the illegal financial scheme at Homestore, which involved multimillion-dollar “circular” advertising transactions with AOL and other companies through which Homestore essentially paid itself by routing money to and from other companies and disguising the true nature of those transactions.
Wilner said three former Homestore employees are still awaiting sentencing, including the company’s former CFO Joseph Shew, 37; former chief operating officer John Giesecke Jr.; and Jeffrey Kalina, who had served as senior manager of mergers and acquisitions transactions at Homestore.
