Jurors begin deliberating in Homestore Inc. fraud trial
Associated Press
LOS ANGELES - Jurors began deliberating Tuesday in the fraud trial of Homestore Inc.'s ex-CEO after prosecutors argued he knew the company was booking phony revenue and the defense sought to shift blame to other executives.
In closing arguments, a federal prosecutor maintained that Stuart Wolff, 42, was highly involved in the company's day-to-day operations and knew about $86 million dollars allegedly used in fraudulent deals to inflate revenue.
The government also said he tried to use the Sept. 11, 2001, terror attacks as an excuse when he knew the online real estate listings company would miss earnings projections.
Defense attorneys countered that the ex-employees were blaming their boss in exchange for favorable plea bargains.
Ten Homestore employees have pleaded guilty in the case, including a former vice president, chief operating officer and chief financial officer.
Wolff is charged with conspiracy to commit securities fraud, insider trading and falsifying books of the company, which has since changed its name to Move Inc.
According to prosecutors, Westlake Village-based Homestore would pay some vendors, including AOL, Cendant and others, extra for their products or services and the vendors would turn around and use the money to buy advertising from two media companies.
The media companies, in turn, would buy advertising from Homestore, whose officials would improperly list the revenue on the company's financial statements in order to exceed Wall Street analysts' expectations.
Prosecutors said Wolff made more than $8 million by selling stock in April, May, July and August of 2001, the year the deals were made. The deals stopped before the terror attacks, and the company said in a news release the attacks were the reason it was $20 million below projections that quarter.
In plea bargains, former employees said that when news of a federal investigation became public in 2002, stocks plunged and shareholders lost at least $100 million. |
