Fourth ex-'Homie' pleads guilty to fraud
March 5, 2003
Kalina admits to insider trading, agrees to repay $74,000 to stockholders
Inman News Features
A fourth former Homestore employee pleaded guilty to a federal securities fraud charge Monday as part of an agreement to assist in the investigation of a phony revenue scheme that last year resulted in the restatement of the company's 2000 and 2001 financial results, news sources said.
Jeffrey Kalina, Homestore's former senior manager of mergers and acquisitions, was charged in January by the Securities and Exchange Commission and the U.S. Attorney's Office for the Central District of Californiawith participating in a financially fraudulent scheme by which the online real estate company used millions of dollars of its own cash in round-trip transactions to generate revenues and meet Wall Street's expectations, according to the U.S. Attorney's Office.
The SEC's complaint alleged that Kalina helped Homestore's management implement the scheme and conceal it from the company's auditors, even though he knew the round-trip transactions had no economic substance and violated generally accepted accounting principles, according to the U.S. Attorney's Office.
Kalina, a 31-year-old resident of Woodland Hills, Calif.,agreed in January to plead guilty to one count of securities fraud, a charge that carries a maximum penalty of five years in prison and a $250,000 fine, according to the U.S. Attorney's Office.
Kalina admitted to insider trading and agreed to repay to the benefit of Homestore's shareholders approximately $74,000 in gains and interest from his exercise of Homestore stock options. He also will be suspended from appearing or practicing before the SEC as an accountant.
Stuart Wolff, founding chief executive of Homestore, and top marketing strategist Peter J. Tafeen remain under criminal investigation, but no charges have been filed.
Copyright: Inman News Service