Tuesday, March 24, 2009

Former KB Home CEO Karatz Indicted

raleigh real estateOriginally Posted at Triangle Business Journal

Bruce Karatz, former CEO of KB Home, has been indicted by a federal grand jury in a stock options scheme.

Los Angeles-based KB Home sold homes for a combined total of $263 million in 2007, the last year for which figures are available, according to Triangle Business Journal research. That made the firm the area’s No. 1 residential builder, though it is among a number of builders that have experienced local leadership and structural changes in recent months as the housing market has tanked.

Karatz, 63, is alleged to have backdated stock options over seven years, awarding himself and others millions in stock-based compensation. Karatz resigned from KB Home (NYSE: KBH) in November 2006 under pressure in the wake of an options inquiry. Other top KB executives forced out were Richard B. Hirst, executive vice president and chief legal officer, and Gary A. Ray, the head of human resources.

The SEC began its formal probe in January 2007.

According to the reports, Karatz’s 20-count indictment included seven counts of mail fraud, five counts of wire fraud, three counts of securities fraud, four counts of lying in statements to the U.S. Securities and Exchange Commission and one count of lying to KB Home’s accountants.

If convicted, Karatz, could face a prison sentence of up to 415 years.

No comments: