Ex-Homestore CEO guilty of fraud

By Aarthi Sivaraman






LOS ANGELES - A Los Angeles jury has found the former chief executive of
Internet company Homestore guilty of insider trading, falsifying records and

inflating advertising revenue by about $67 million.






After deliberating for a day and a half, the jury also convicted Stuart Wolff of
conspiracy, lying to the company's accountants and in U.S. Securities and

Exchange Commission filings. Wolff faces between 25 and 35 years in prison,

Assistant U.S. Attorney Douglas Fuchs said.






Towards the end of the two-month trial in Los Angeles on Wednesday, Fuchs said
common sense showed Wolff had to have been aware that the company was recording

its own money as fresh revenue.






Wolff was engaged in a "round-tripping" conspiracy where the once-successful
company paid inflated amounts to various vendors, prosecutors said. The vendors

in turn used the money to buy advertising from media companies like AOL, which

then bought advertising from Homestore, and Homestore booked that amount as

income.






The company funneled $86 million into the fraudulent deals out of which $67
million made it back on the round trip.






"You can't buy your own revenue," Fuchs told the jury.





Prosecutors previously said Wolff and other executives hid the scheme from
auditors and also tried to mislead them by altering Web sites and press releases

of vendors to delete incriminating information, preparing and backdating

documents, and using false addresses for related businesses.






These deals kept the company's stock value healthy and Wolff cashed in his stock
making more than $8 million in profit at that time.






Prosecutors said Wolff also played along with an executive's idea to blame the
Sept. 11 attacks for the company's dismal performance of $20 million below

estimates that quarter.






U.S. District Judge Percy Anderson set Wolff's sentencing for Sept. 11 this
year. He also faces civil charges filed by the SEC.






The company, which witnessed its share price plummet during the scandal, has
since been renamed Move Inc.






Homestore executives who pleaded guilty in the case were formervice president
Peter Tafeen, ex-chief operating officer John Giesecke and ex-chief financial

officer Joseph Shew.