Friday, March 3, 2006

Former Homestore Executive Pleads Guilty

Former Homestore Inc. executive Peter Tafeen agreed to plead guilty to one count of securities fraud in connection with an accounting fraud at the internet company.  The scheme involved round-trip transactions in which Homestore would record revenue from deals in which there was no real exchange of value but that allowed the company to show increased revenue, feeding Wall Street's desire for ever-increasing growth.  Tafeen admitted to making $6.5 million from selling Homestore shares, and has agreed to testify against former CEO Stuart Wolff at his fraud trial scheduled to begin in late March.  Tafeen has been involved in continuing litigation in Delaware state court regarding the company's obligation to pay his attorney's fees under an indemnification agreement, and that aspect of the case is likely to come to a close with the guilty plea (see earlier post here on the insurance company getting out of its obligation to reimburse the cost of counsel). An AP story (here) discusses the guilty plea. (ph)

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