Homestore.com founder to plead guilty
The founder and former chief executive of Homestore Inc. agreed Thursday to plead guilty to conspiring to commit securities fraud for his part in a scheme to artificially inflate the company’s revenue in 2001.
Stuart Wolff, whose 2006 conviction in the case was overturned on appeal, agreed to plead guilty rather than face a second trial.
Previously sentenced to 15 years in prison, Wolff faces no more than five years under the new agreement with federal prosecutors.
Wolff, 46, was Homestore’s CEO and chairman from 1997 until 2002, when he resigned amid an investigation of the company’s accounting practices.
Homestore, which operated Homestore.com, was a high-flying company during the Internet boom. Its stock reached a record close of more than $122 a share in January 2000 before tumbling to less than $1 a share when news of the accounting investigation surfaced.
Prosecutors said the Westlake Village company inflated revenue through a series of sham transactions with vendors. The company overpaid the vendors with the understanding that much of the cash would be returned and reported as advertising revenue, prosecutors alleged.
The 9th U.S. Circuit Court of Appeals overturned Wolff’s prior conviction in 2008 after concluding that the trial judge should have been recused from the case because of a conflict of interest.
He agreed to return to federal court in Los Angeles on Tuesday to enter his guilty plea. He will become the 12th person convicted of federal charges related to the scheme. Now known as Move Inc., the company provides real estate listings and related services on the Internet.
