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| 2002 News and Press Releases |
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HEADLINE ARCHIVED:
Homestore Insurer Seeks To Void Directors And Officers Policy
By: Joyzelle Davis and Robert Burgess
Bloomberg News. October 3, 2002
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EXCERPT: Homestore Inc.'s insurer sued to void the online home-listings company's liability policy for officers and directors after three former executives last week agreed to plead guilty to securities fraud. Genesis Insurance Co. claims the policy is invalid because former Chief Officer Joseph Shew failed to provide "complete and correct information" when he signed the policy in August 2001. Shew has admitted to inflating the company's revenue last year. If Genesis wins its claim, it would leave Homestore officials without insurance for shareholder claims. The California State Teachers' Retirement System is the lead plaintiff in the securities fraud suit that claims the company falsified financial statements. "Had Genesis known the truth regarding the matters misrepresented," the insurer wouldn't have agreed to issue the policy, according to the 20-page suit filed in U.S. District Court in Los Angeles. A call to Westlake Village, California-based Homestore's public relations firm of PondelWilkinson MS&L wasn't returned Thursday night. Homestore has more than 90 percent of the home-sale listings on the Internet and manages the realtor.com Web site for the National Association of Realtors. Shew last week agreed to plead guilty to conspiracy to commit wire fraud; former Chief Operating Officer John Giesecke agreed will plead guilty to conspiracy to commit securities fraud and wire fraud; and John DeSimone, former director of finance department relations, will plead to insider trading. Prosecutors claim that Homestore used an arrangement with a major media company to create sham accounting of advertising transactions.
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