November 8, 2006
Former Homestore Executive Receives 30-Month Sentence
Peter Tafeen, formerly vice president of business development at Homestore.Com Inc., received a thirty-month prison term for his role in inflating the company's revenue from advertising through "round trip" agreements that did not generate any money for the company. Tafeen also settled an SEC securities fraud complaint by agreeing to pay $2.6 million and accepting a lifetime bar from serving as an officer and director of a publicly-traded company. For those interested in attorney's fees -- and who isn't these days -- Tafeen won a case before the Delaware Supreme Court in 2005 in which the company was ordered to advance his attorney's fees pursuant to its corporate by-laws (Homestore Inc. v. Tafeen, 888 A.2d 204 (Del. 2005)). Usually, such advancements require the former officer or director to agree to repay the money if the person is found not to be entitled to it, for example by pleading guilty to securities fraud. However, I suspect Move Inc., the corporation's new name, won't get very much from someone headed to jail for over two years who will also pay the SEC $2.6 million. A Los Angeles Times article (here) discusses the sentencing and SEC settlement. (ph)
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Too bad that "Peter and the Wolff" were awarded so much in attorney fees. They deserved to get nailed and having their legal fees paid by the stockholders who trusted them is just adding salt to the wound.
Posted by: Steve Finney | Aug 16, 2007 7:47:54 AM