New Charges Made in Suit on Homestore Executives of Homestore and AOL Time Warner invented schemes to inflate revenue of both companies without detection by creating three-way transactions that used bogus advertising buyers as intermediaries.
A shareholder lawsuit against Homestore now alleges that AOL Time Warner Inc. and Cendant Corp. were involved in a complex web of shady deals that contributed to Homestore Inc.'s financial woes.
Homestore inflated its revenue by $192.6 million in 2000 and 2001, allowing the Westlake Village-based company to beat analysts' expectations and yielded its insiders more than $70 million in stock-sale profits.
Shareholders lost more than $1 billion, including $9 million by the State Teachers' Retirement System, according to Jack Ehnes, the organization's chief executive. "This isn't just a few low-level employees at one company gone astray. This is corporate greed at the highest levels."
Federal charges also have been filed against Homestore executives. Former Homestore vice president John Desimone pleaded guilty last month to a federal charge of insider trading, and two other former executives have pleaded guilty to federal charges of conspiracy to commit securities fraud and wire fraud. Their sentencing is set for April. [NY Times]
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