Ex-Homestore CEO Gets 15-Year Sentence
Thursday October 12, 11:38 pm ET
By Alex Veiga, AP Business Writer
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.
