Saturday, April 30, 2005

Former Homestore.Com CEO Charged with Securities Fraud

Former Homestore.Com CEO Stuart Wolff and executive vice president Peter Tafeen were charged with securities fraud for a scheme to inflate Homestore's on-line advertising revenues through "round-trip" transactions in which the company recognized income by lending funds to advertising purchasers, who used the money to purchase ads on the firm's website.  The source of the funds was not disclosed, and according to the government the transactions allowed the company to meet Wall Street's revenue expectations.  Nine other former executives of the company have entered guilty pleas and settled civil charges filed by the SEC related to the fraud. A press release from the U.S. Attorney's Office for the Central District of California (here) discusses the indictment and related prosecutions. (ph)

Fraud, Prosecutions, Securities | Permalink

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