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From guterman@mediaunspun.imakenews.net  Thu Sep 26 16:40:18 2002

Another three bite the dust. Three former executives from real
estate dot-com Homestore have agreed to plead guilty to criminal
charges and repay $4.6 million in stock gains. What's more
interesting is that they'll cooperate with an investigation into
AOL's role in the dubious dealing. This is the most real estate
drama you'll get this week without renting "Glengarry Glen
Homestore's former COO was charged with wire fraud and
conspiracy to commit securities fraud (up to 10 years in jail),
the former CFO with just the conspiracy charge (up to five
years), and an ex-VP with insider trading (less time, but
unknown). The big accusation here is "round tripping," in which
Homestore would buy goods from a company as long as the company
then spent most of the money on AOL ads. Then AOL would
supposedly spend the same amount of money at Homestore, "thus
allowing Homestore effectively to 'buy' revenue using its own
cash," explained the Wall Street Journal.
Homestore has become a cause celebre for Attorney General John
Ashcroft, who held a press conference to emphasize that the Bush
administration really means it about this corporate clean-up
thing. Neither Ashcroft, the Justice Department, nor the SEC
named names, referring only to Homestore's relationship with "a
major media company." Nice try for anonymity, but AOL Time
Warner was the only major media company Homestore dealt with,
observed the New York Times. Now the heat's on AOL while
investigators try and figure out how much of AOL's revenue was
inflated like a Thanksgiving Day Parade float.
The L.A. Times' sources said AOL execs pointed the finger at
former company dealmaker Eric Keller. The Journal led with, and
expanded on, this info. It seems two of the three busted
Homestore execs are expected to say Keller helped Homestore do
its round-tripping, and that some AOL ad revenue that looked
legit on paper really came from Homestore. Keller has already
been pink-slipped for shady deals with Homestore and another
company; his boss got booted last month for possible
So where's the perp walk? The umbrella stand? The theatrics that
make the corporate crime beat great? We're kidding (mostly), but
that could be why overseas outlets barely noticed this
comparatively tame example of American excess. The Journal had
one amusing tidbit, though: After Keller got fired, AOL vice
chairman Ted Leonsis hired him as a consultant for the hockey
team the Washington Capitals, of which Leonsis is the majority
owner. Leonsis said he let Keller go after finding out why he
lost his AOL job, but Keller still picked up his Capitals phone
as of Wednesday. As outrageous severance packages go, it's no
Jack Welsh/GE $9 million annual pension, but it'll have to do. -
Homestore Executives Agree to Guilty Pleas
Homestore, AOL Ad Deals Yield Guilty Pleas (USA Today)
Homestore's Ex-Execs to Aid Investigators
Probe of Homestore Turns To an Ex-AOL Executive
What does Vivendi want to be when it grows up? The media can't
figure it out. Can CEO Jean-Rene Fourtou? His fuzziness at
yesterday's board meeting got reporters to wondering. If he
can't explain his vision, does that mean he's lacking the 20/20
clarity that observers on two continents were banking on? For
Fourtou, worse than the Monsieur Magoo accusations are the
comparisons, starting to bubble through media accounts, that he
resembles -- wait, we're rubbing our eyes -- the vilified
Media watchers can rate reporters' confusion over Fourtou's
latest pronouncements by tallying the amount of space outlets
devoted to their coverage of the mess. The New York Times ran 24
paragraphs on the board meeting -- and then filed another 19 in
an analysis that sought to examine what the latest moves meant.
The Financial Times posted two articles on the meeting and still
had more to say, lambasting Fourtou in Lex, the peach paper's
influential column. Lex called the exec's update "more like a
rambling fireside chat ... than a strategy presentation."
There's little that's clear about what's ahead for Vivendi. The
company now says that it will dispose of 12 billion euros worth
of assets over the next 18 months. Here's how reporters
examining the tea leaves read the current plan: Out are Telepiu,
an Italian pay-TV operation, and Canal Plus Technologies, a
maker of set-top boxes. On the way out are Vivendi's publishing
properties, which include Houghton Mifflin, and a minority stake
in a PC gamemaker. That leaves Vivendi's stake in telecom, via
its Cegetel investment, and its Universal entertainment
properties, and -- hey, wait a minute, wasn't that Messier's
plan, the New York Times wondered by way of an analyst's quote.
To confuse matters further, News Corp., the alleged partner in
the done deal for Telepiu, says no deal is in place, according
to the Financial Times. As for Cegetel, Fourtou said he'd
consider selling Vivendi's 44% stake; then again, maybe he'll
increase it. And that was all in one post-meeting telephone
The only decision by Vivendi in which Fourtou seemed sure was
his claim that the company won't pay any severance to Messier.
"He enjoyed making deals too much and overpaid," the Guardian
quoted Fourtou as saying, and then adding, "This all went to his
With heads other than Messier's now in question, is Vivendi's
viability again in doubt? Outlets today report that Enron's
logo, the oversize capital "E" that stood outside its
headquarters, sold at auction for $44,000. How many euros might
Vivendi Will Move Quickly to Sell Many Assets
What's New at Vivendi? Depends Who's Talking
Vivendi in Move to Sell Raft of Assets (Financial Times)
Vivendi Board to Deny Messier Severance Pay (Financial Times)
Lex: Vivendi Universal (Financial Times)
News Corp Counters Report of Telepiu Sale (Financial Times)
Vivendi Aims to Realise Eu12bn from Asset Sales (Daily
Vivendi Shakes Up Board, Denies Messier's Severance
Enron Auctions Off Furniture and Famous 'E'
Former WorldCom Controller To Plead Guilty To Two counts (Wall
Tyco Rewarded an Executive During a Grand Jury Inquiry
Bell Labs Researcher Falsified Experiments (AP)
Resources Dry Up As Joblessness Drags On (USA Today)
Merrill Aide to Plead Guilty (Wall Street Journal)