Former KB Home CEO Bruce Karatz has huge equity in Bel-Air home

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Former KB Home Chief Executive Bruce Karatz, who is awaiting sentencing on charges related to the backdating of company stock options, has put up his Bel-Air home as collateral so he can remain free on bail.

Karatz, 64, was convicted April 21 on two counts of mail fraud, making false statements in regulatory filings and lying to the company’s accountants. Sentencing is scheduled for Sept. 8 before U.S. District Judge Otis D. Wright II at the federal courthouse in Los Angeles.

After the conviction, Wright increased Karatz’s bail to $2 million.

Karatz is using equity in his home as security for the bail. In a recent court filing, Karatz indicated that his house is worth $8.49 million.


Karatz bought the 7,200-square-foot home on Stone Canyon Road in 2001 for $7.4 million, according to property records. The home is down the road from the Hotel Bel-Air.

Federal prosecutors alleged at the trial that Karatz manipulated KB stock options to make them more valuable to himself and other company executives and failed to account for it in public filings.

The four charges on which he was convicted carry a maximum possible sentence of 80 years in federal prison, a U.S. attorney’s office spokesman said. Legal experts said Karatz probably would face a sentence of anywhere from probation to 10 years in prison.

-- Stuart Pfeifer