Three former Homestore executives agreed to plead guilty and settle charges that they participated in a fraudulent scheme to inflate the company’s advertising revenue, the Securities and Exchange Commission said Wednesday.

Clayton Chang, 39, former vice president of Homestore’s strategic alliances group, and Geoffrey Infeld, 36, a former salesperson with Homestore, agreed to plead guilty to criminal charges and settle with the SEC. Infeld also owned or controlled several private Internet companies that he used to assist Homestore in the fraud.

In addition, the SEC’s civil complaint charges Gregory Antoniono, 42, who was the contracts manager at Homestore during 2001. He later became Homestore’s director of contracts. Antoniono, who is not criminally charged, agreed to settle the SEC charges.

Westlake Village, Calif.-based Homestore provides real estate listing and advertising services on the Internet. With these charges, the SEC has sued a total of 14 individuals for their roles in the fraudulent round-trip transaction scheme in 2001. Nine of those individuals have been criminally charged by the U.S. Attorney in Los Angeles.

Chan will have to pay a $50,000 civil penalty and $179,124 in profits he earned in the fraud, plus interest. Chan also will be barred from serving as an officer or director of a public company for 10 years. In the criminal case, Chan could face up to 10 years in prison.

Infeld will have to pay a $35,000 civil penalty and $17,400 in profits he earned in the fraud, plus interest. In the criminal case, Infeld could face up to five years in prison.

Antoniono will have to pay a civil penalty of $25,000 and repay $69,013 in profits he earned in the fraud, plus interest.

Previously in this matter, Homestore’s former COO John Giesecke, former CFO Joseph Shew, former VP of Transactions John DeSimone and former finance department manager Jeffrey Kalina pleaded guilty to criminal charges brought by the Department of Justice and settled SEC actions.

 

In addition, in September 2003, the SEC filed a civil complaint that charged Thomas Vo, 29, of Westwood, Calif., who was a manager in Homestore’s strategic alliances group from January 2001 until January 2002, Sailesh Patel, 36, of Los Angeles, Calif., who was director of business development at Homestore from August 2000 until October 2001, and Jessica McLellan, 29, of San Francisco, who was a manager in Homestore’s strategic alliances group from January 2001 through April 2002.

 

The civil complaint also charged Sophia M. Kabler, 37, of Mill Valley, Calif., who was Homestore’s SVP of advertising sales throughout 2001, Adam S. Richards, 34, of Oak Park, Calif., who was Homestore’s manager of financial planning from February 2001 through January 2002, David Slayton, 34, of Waunakee, Wis., who was the CFO and a director of NameProtect, and Brian Wiegand, 34, of Waunakee, Wis., who was the CEO and is a director of NameProtect. NameProtect is a private company headquartered in Madison, Wis., that provides trademark research, brand protection and brand monitoring services. NameProtect was one of the vendors that participated in the round-trip transactions, according to the SEC’s complaint.

 

In that complaint, the SEC charged the defendants variously with violating or aiding and abetting violations of numerous provisions of the federal securities laws, including antifraud, record-keeping, internal controls and lying to auditors provisions of federal law.

 

Vo, Patel and McLellan agreed to settle the SEC’s lawsuit, to plead guilty to the criminal charges and to cooperate with the government in its ongoing investigations. Kabler, Richards, Slayton and Weigand, who were not charged in the criminal case, have also agreed to settle the SEC’s lawsuit. All seven individuals settled the SEC lawsuit without admitting or denying the allegations, simultaneously with the filing of the complaint.

 

***

Send tips or a Letter to the Editor to jessica@inman.com or call (510) 658-9252, ext. 133.

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