A jury has convicted the founder and former chief executive of an online real estate listings site of orchestrating a $67 million accounting fraud.
Stuart Wolff, 43, was found guilty of conspiracy, insider trading, making false regulatory filings and lying to auditors, all in a scheme to inflate revenue at Homestore Web sites -- including the former Realtor.com, Homestore.com, HomeBuilder.com and RentNet.com. Homestore changed its name earlier this year to Move Inc., and will bring all of its sites under the single domain Move.com.
Wolff headed the company from 1997 until he resigned in January 2002, and was later charged by the government with inflating revenues to meet earnings targets for 2001. In early 2002, the company restated its sales for 2000 and 2001 and watched as its stock plummeted in value. Wolff quit later that year, and 10 former executives have already pleaded guilty to related charges.
According to prosecutors, Homestore inflated its revenue by engaging in three-way transactions with other companies, including America Online Inc -- typically overpaying vendors and expecting the cash to be returned to the company through advertising buys.
Wolff's sentencing was set for Sept. 11, and his lawyers have already said that they plan to appeal the verdict. Wolff and Homestore's former chief of business development, Peter Tafeen, also face a lawsuit from former shareholders and a civil suit from the Securities and Exchange Commission. Homestore's auditor, PricewaterhouseCoopers, settled with investors last year.
Previously on WebCPA:
SEC Charges Homestore Execs in Accounting Fraud (Sept. 27, 2002)
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