sec-litreleases litigation_release 68 KB 5,618 chars

SEC v. Clayton Chan; Gregory Antoniono; and Geoffrey Infeld, No. LR-18880, Central District of California — Press Release

raw: Clayton Chan, Gregory Antoniono and Geoffrey Infeld

Clayton Chan, Gregory Antoniono and Geoffrey Infeld, No. LR-18880

Caption: SEC v. Clayton Chan, et al.

summary

Former Homestore senior vice president Clayton Chan, vendor owner Geoffrey Infeld, and contracts manager Gregory Antoniono fraudulently inflated advertising revenue through round-trip transactions in 2001, leading to criminal guilty pleas by Chan and Infeld and a civil settlement by all three, with repayments totaling over $265,000 and significant penalties and bans.

paragraph

Clayton Chan, Geoffrey Infeld, and Gregory Antoniono were charged in connection with a 2001 fraud scheme at Homestore, Inc., in which round-trip transactions artificially inflated advertising revenue by recycling Homestore’s own cash as income. Chan pleaded guilty to securities fraud and settled SEC civil charges by repaying $179,124 in profits, paying a $50,000 penalty, and accepting a 10-year ban from serving as a public company officer; Infeld pleaded guilty to wire fraud and settled by repaying $17,400, paying a $35,000 penalty; Antoniono settled civil charges by repaying $69,013 and paying a $25,000 penalty, without admitting guilt. All three agreed to cooperate with ongoing federal investigations led by the SEC, U.S. Attorney’s Office, and FBI.

narrative

In 2001, former Homestore senior vice president Clayton Chan, vendor owner Geoffrey Infeld, and contracts manager Gregory Antoniono participated in a fraudulent scheme to inflate Homestore’s online advertising revenue through circular 'round-trip' transactions, in which Homestore falsely recognized its own cash flows as revenue. Chan, as head of Strategic Alliances, and Infeld, who owned intermediary companies, actively orchestrated the transactions, while Antoniono helped conceal them from auditors by manipulating contracts and documentation. The SEC charged all three with violations of federal securities laws, including antifraud, reporting, and record-keeping provisions, with Chan also accused of violating the Securities Act of 1933. Chan pleaded guilty to securities fraud, facing up to ten years in prison, and settled civil charges by repaying $179,124 in profits, paying a $50,000 penalty, and being barred from serving as a public company officer for ten years. Infeld pleaded guilty to wire fraud, facing up to five years, and settled civil charges by repaying $17,400 and paying a $35,000 penalty. Antoniono settled civil charges without admitting guilt, repaying $69,013 in profits and paying a $25,000 penalty. All three agreed to cooperate with the ongoing joint investigation by the SEC, U.S. Attorney’s Office, and FBI, which has resulted in charges against 14 individuals total, nine of whom have been criminally prosecuted.

Enriched metadata

Scheme: accounting-fraud (90%)
Court: Central District of California
Outcome: settled
Civil penalty: $35,000
Entity: Homestore, Inc.
Ticker: HOMS

Classified accounting-fraud(confidence 90%). EDGAR detection: forms 10-K/10-Q/8-K/NT 10-K· recall 80% / precision 48%. detection rule →

Extracted insights

Dollar amounts 6

$179K $179,124 $100K–$1M
$69K $69,013 $10K–$100K
$50K $50,000 $10K–$100K
$35K $35,000 $10K–$100K
$25K $25,000 $10K–$100K
$17K $17,400 $10K–$100K

Entities 1

agency Securities and Exchange Commission

Triples 4

SEC files a settled action against a former Homestore manager for fraudulently assisting in inflating Homestore's advertising revenue
The United States Securities and Exchange Commission, the United States Attorney's Office for the Central District of California, and the Federal Bureau of Investigation announced that a former senior vice president of Homestore, Inc. and the owner of several Homestore vendors have agreed to plead guilty to criminal charges and to settle civil fraud charges
a former senior vice president of Homestore, Inc. and the owner of several Homestore vendors agreed to plead guilty to criminal charges
a former senior vice president of Homestore, Inc. and the owner of several Homestore vendors agreed to settle civil fraud charges

View original SEC litigation releasesec.gov

Extracted body text (5,618c)

SEC additionally files a settled action against a former Homestore manager for fraudulently assisting in inflating Homestore's advertising revenue The United States Securities and Exchange Commission, the United States Attorney's Office for the Central District of California, and the Federal Bureau of Investigation announced yesterday that a former senior vice president of Homestore, Inc. and the owner of several Homestore vendors have agreed to plead guilty to criminal charges and to settle civil fraud charges for their roles in Homestore's scheme to inflate advertising revenues through fraudulent round-trip transactions in 2001. The SEC also charged a former manager of Homestore for assisting in the fraudulent scheme. Homestore, Inc. is a Westlake Village, Calif. company that provides real estate listings and related services on the Internet. With these charges, the SEC has sued a total of 14 individuals for their roles in the scheme, nine of whom have been criminally charged by the United States Attorney in Los Angeles. The SEC's civil complaint and the United States Attorney's criminal informations, filed yesterday in United States District Court in Los Angeles, charge the following two defendants. Clayton Chan, 39, of San Francisco, California, was the vice president of Homestore's Strategic Alliances Group (SAG) from January 2001 until July 2001 and was later promoted to senior vice president of SAG. Geoffrey Infeld, 36, of Thousand Oaks, California, is currently an officer and part-owner of Cyberhorse, Inc., a private sales and marketing company involved in the fraudulent transactions. He was formerly a SAG salesperson at Homestore. Infeld owned or controlled several private Internet companies that he used to assist Homestore in its fraud. In addition, the SEC's civil complaint also charges the following defendant, who is not named in the criminal case: Gregory Antoniono, 42, of Thousand Oaks, California, was the contracts manager at Homestore during 2001. He later became Homestore's director of contracts. The civil and criminal actions allege that the defendants participated in or assisted in negotiating, implementing and executing the fraudulent "round-trip" transactions. The purpose of these transactions was to artificially inflate Homestore's on-line advertising revenues. All of the defendants knew that the essence of these transactions was a circular flow of money by which Homestore recognized its own cash as revenue. Chan and Antoniono took steps to conceal the round-trip nature of the transactions from Homestore's auditors. Infeld used his companies as intermediaries in the round-trip transactions, knowing that Homestore's revenues would be inflated as a result. The SEC charged Chan with violating numerous provisions of the federal securities laws, including the antifraud provisions, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; reporting provisions, Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder; record-keeping provisions, Section 13(b)(2)(A) of the Exchange Act and Rule 13b2-1 thereunder; internal controls provisions, Section 13(b)(5) of the Exchange Act; and lying to the auditors provisions, Rule 13b2-2 under the Exchange Act. Antoniono and Infeld were charged with aiding and abetting Homestore or Homestore management's violations of the above provisions. Additionally, the SEC alleged that Chan violated Section 17(a) of the Securities Act of 1933. The United States Attorney's Office's criminal action, based upon a joint investigation by the SEC, United States Attorney's Office and FBI, charges Clayton Chan with one count of securities fraud in violation of Title 15, United States Code, Sections 78j(b) and 78ff, and Title 17, Code of Federal Regulations, Section 240.10b-5 and Geoffrey Infeld with one count of wire fraud in violation of Title 18, United States Code, Section 1343. The Settlements and Guilty Pleas Chan and Infeld have agreed to settle the SEC's lawsuit, to plead guilty to the criminal charges, and to cooperate with the government in its ongoing investigations. Antoniono has agreed to settle the SEC's lawsuit. All three defendants settled the SEC lawsuit without admitting or denying the allegations, simultaneously with the filing of the complaint. In the SEC case, Chan will be enjoined from committing future violations of the charged federal securities laws, will repay $179,124 in profits from his exercise of Homestore stock options and commissions he earned during the fraud, plus interest, and will pay a $50,000 civil penalty. Chan will also be barred from serving as an officer or director of a public company for a period of ten years. In the criminal action, Chan will plead guilty to securities fraud, carrying a maximum sentence of ten years. In the SEC case, Infeld will be enjoined from committing future violations of the charged federal securities laws, will repay $17,400 representing profits from the fraudulent transaction with Homestore, plus interest, and will pay a civil penalty of $35,000. In the criminal case, Infeld has agreed to plead guilty to one count of wire fraud and faces up to five years in prison. As part of his SEC settlement, Antoniono will be enjoined from committing future violations of the charged federal securities laws, will repay $69,013 in profits from his exercise of Homestore stock options, plus interest, and will pay a civil penalty of $25,000. The civil case is the product of an ongoing investigation by the SEC. The criminal investigation by the Federal Bureau of Investigation is also ongoing.

OCR text (5,618c · plain-text · 99% conf)