Homestore settles dispute with employee over financial statements

Homestore, Inc. (NASDAQ: HOMS), the Westlake Villagebased provider of online real estate services, announced it has reached a settlement with a former company officer over legal costs in a lawsuit relating to Homestore’s restatement of financial results.

The settlement calls for the Homestore to reimburse up to $11 million in attorney’s fees and other defense costs to Stuart Wolff, the company’s former chairman and chief executive officer. Wolff sought the reimbursement of fees and expenses along with two other former Homestore executives in a case involving the company’s restatement of results.

So far, Wolff has incurred over $7.6 million in fees and expenses, the company said. A federal criminal indictment, a Securities and Exchange Commission lawsuit, a shareholder class action and another action remain pending against him.

Homestore’s third quarter 2005 financial results will reflect an increase in legal expenses of at least $4.7 million before taking into account additional legal costs involving the other officers, the company said.