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Industry News

Ex-Homestore execs. plead guilty

October 22, 2002

Giesecke, Shew appear in Los Angeles courtroom; sentencing expected in April

Inman News Features

Homestore's former COO John Giesecke yesterday pleaded guilty to securities fraud in a Los Angeles courtroom, according to news reports, and Homestore's former CFO Joseph Shew pleaded guilty to securities fraud and wire fraud charges. Former Homestore VP John DeSimone is expected to plead guilty to insider trading in Los Angeles on Oct. 28.

The three executives were involved in an illegal scheme to inflate the company's revenues by $46.4 million in 2001 through so-called "round-trip transactions" that enabled the company to fraudulently recognize it's own cash as revenue. All three have agreed to repay specific sums of ill-gotten stock option trading gains to the company's shareholders.

Sentencing will be held on April 21, 2003. Shew and Desimone each face up to 10 years in prison. Giesecke faces up to five years in prison.

Terms of Giesecke's, Shew's and DeSimone's settlement agreements with the Federal government require them to cooperate with a still-ongoing investigation into the company's former management. Homestore's former CEO Stuart Wolff and former EVP Peter Tafeen reportedly are under investigation for their alleged role in the accounting fraud.

The plea agreements were announced last month by Attorney General John Ashcroft at a press conference.

"The defendants and other high-ranking corporate officers at Homestore admitted selling stock options and selling stock in the company for their own benefit despite knowing Homestore's revenues and earnings were fraudulently overstated," Ashcroft said at that time.

Copyright: Inman News Service

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