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U.S. Securities and Exchange Commission


Litigation Release No. 19904 / November 8, 2006

Accounting and Auditing Enforcement
Release No. 2512 / November 8, 2006

SEC v. Stuart Wolff and Peter Tafeen, (U.S. District Court for the Central District of California, Civil Action No. CV 05 3132 GAF (RZx)

Former Executive Vice President of Homestore Agrees to Pay Over $2.6 Million and to be Barred as Officer or Director of a Public Company

The Securities and Exchange Commission today announced that Peter B. Tafeen, a former top executive of Homestore.com, Inc., now known as Move, Inc., agreed to a settlement by which he will pay over $2.6 million to resolve SEC charges that he defrauded Homestore shareholders by inflating the company's on-line advertising revenues in 2001. During the period of the misconduct, Tafeen, age 37, of Parkland, Fla., was the executive vice president for business development of Homestore.com.

In addition to paying over $2.6 million as disgorgement of ill-gotten gains and interest, Tafeen will be permanently barred from serving as an officer or director of a public company. He also agreed to be permanently enjoined from future violations of numerous provisions of the federal securities laws, including the antifraud, reporting, record-keeping, internal controls, and false statements to the auditors provisions.

In addition to the civil charges, Tafeen was indicted in April 2005 for his role in the scheme at Homestore. In March 2006, he pleaded guilty to one count of securities fraud and was sentenced yesterday by United States District Judge Percy Anderson to thirty months in federal prison and ordered to pay $240,000 in restitution to harmed Homestore investors.

The Commission's complaint, filed in April 2005, alleged that Tafeen orchestrated the fraud scheme, and participated in executing fraudulent "round-trip" transactions to artificially inflate Homestore's revenue in order to exceed Wall Street analysts' expectations. Tafeen knew that the transactions were a circular flow of money in which Homestore recognized its own cash as revenue, and he concealed the scheme from the company's auditors.

The Commission has sued a total of 16 individuals for their roles in the Homestore scheme. All of these defendants have settled the SEC charges and agreed to cooperate with the government, with the exception of Stuart Wolff, Homestore's former chief executive officer, who was also charged by the SEC in April 2005. Wolff was also indicted in April 2005. On June 22, 2006, a federal court jury returned a guilty verdict against Wolff in his criminal trial on 18 counts, including conspiracy, insider trading, filing false reports with the SEC, falsifying corporate records, and lying to the auditors. On Oct. 12, 2006, Wolff was sentenced by Judge Anderson to 15 years in federal prison and ordered to pay a $5 million fine. On Nov. 13, 2006, Judge Anderson will determine whether Wolff will pay restitution in the criminal matter.

The final judgment against Tafeen, which is subject to approval by United States District Judge Stephen Wilson for the Central District of California, permanently enjoins him from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5, 13b2-1, and 13b2-2 thereunder and aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20 and 13a-13. Tafeen consented to the final judgment without admitting or denying the allegations in the Commission's complaint.

The SEC will seek to have the monies paid by Tafeen included in a fund established for harmed shareholders of Homestore pursuant to the Fair Funds provision of the Sarbanes-Oxley Act of 2002. The fund also includes payments from previous SEC settlements with former Homestore executives.



Modified: 11/08/2006