A former chairman and chief executive of Homestore Inc. has sued the company, demanding about $6.3 million to cover legal fees stemming from investigations and lawsuits that accuse him of helping to inflate revenue.
Stuart Wolff filed the suit July 1 in Delaware Chancery Court, the Westlake Village company said in a Securities and Exchange Commission filing Friday. Homestore, which has the most home listings online, operates Realtor.com, HouseBuilder .com and Homestore.com.
"It is likely that the company will be required to advance a substantial portion of the $6.3 million and any future costs for his defense," Homestore said in the filing.
On Thursday, the company reported second-quarter net income of $3.3 million, or 2 cents a share, reversing a year-earlier loss. The earnings sent Homestore's shares soaring $1.01 to $3.57 on Friday.
A federal grand jury in April indicted Wolff, who ran Homestore from November 1996 until resigning in January 2002, and Peter Tafeen, former executive vice president of business development, charging them with directing a fraud at the company. The SEC brought civil charges.
The SEC has sued 16 people for their alleged participation in the scheme, and prosecutors have brought criminal charges against 11 of them. All except Wolff and Tafeen have settled the civil claims, pleaded guilty to criminal charges and agreed to cooperate with prosecutors.
Homestore paid $4.2 million to Tafeen in July after he filed a similar suit against the company, according to the SEC filing.
PricewaterhouseCoopers in June agreed to pay $17.5 million to settle with a group of investors over its 2000 and 2001 audits.