Homestore Ex-Employee Settles Fraud Cases

Agreements settling the government’s civil and criminal fraud cases against former Homestore Inc. employee Jeffrey M. Kalina were filed in Los Angeles federal court Wednesday, providing new details of his role in a wide-ranging fraud designed to prop up the stock price of the Westlake Village Internet real estate company.

As reported Wednesday in The Times, Kalina’s agreement with federal prosecutors requires him to cooperate with ongoing investigations, plead guilty to securities fraud and repay a profit of $69,802, plus interest, from sales of Homestore stock.

Kalina, 31, of Woodland Hills, who had been a senior financial manager at Homestore, also will be suspended from practicing as an accountant before the Securities and Exchange Commission under his settlement of the SEC’s civil securities fraud case.

He is expected to formally enter his guilty plea Jan. 21 before U.S. District Judge Percy Anderson, his attorney, David Scheper, said Wednesday.

The SEC and the U.S. attorney’s office accused Kalina of deceiving auditors and falsifying records to help senior Homestore executives conceal revenue shortfalls. Specifically, he was charged with implementing “round-trip” advertising deals with AOL Time Warner Inc. and other intermediaries that allowed Homestore to record its own cash as revenue. AOL has denied wrongdoing.

Kalina worked under three other former Homestore executives who previously pleaded guilty to fraud. The SEC accused all four of deceiving auditors from PricewaterhouseCoopers.