LOS ANGELES/SAN FRANCISCO, April 8 (Reuters) – Bruce Karatz sought to boost his pay by illegally backdating stock options, prosecutors argued on Thursday at the close of their case against the former head of KB Home <KBH.N>, as defense attorneys portrayed him as a victim of prosecutorial zeal.

Karatz’s attorney, addressing jurors during closing arguments of a trial against the once high-flying corporate chieftain on charges of securities fraud, denied Karatz intended to defraud and emphasized his “wonderful legacy.”

Karatz, 64, served as the chief executive of KB Home for 20 years, becoming one of America’s highest-paid executives before stepping down in 2006 amid a backdating scandal. That issue embroiled nearly 200 companies midway through the decade as the government targeted the possible manipulation of stock-option grant dates.

The month-long trial in Los Angeles federal court is seen as a test of those efforts to crack down on illegal stock option backdating, where stock options are retroactively dated to boost gains to employees but not properly accounted for in financial documents.

Karatz failed to tell KB Home’s chief financial officer, its legal team or compensation committee that he was engaged in hindsight pricing and repeatedly lied to internal auditors, Assistant U.S. Attorney Paul Stern told jurors.

“Mr. Karatz knew all along that what he was doing was wrong, that he was committing a fraud on the company, on investors,” Stern said in remarks to the jury that lasted nearly four hours.

The fraud Karatz committed, which allegedly began in 1999, was tantamount to “giving himself extra pay,” said Stern.

LOS ANGELES/SAN FRANCISCO, April 8 (Reuters) – Bruce Karatz, the former head of KB Home <KBH.N>, sought to boost his stock by illegally backdating stock options while repeatedly denying he was “engaged in a a scheme to defraud,” a prosecutor argued on Thursday.

Karatz, once one of America’s highest-paid executives, failed to inform KB Home’s chief financial officer or other top executives that he was engaged in hindsight pricing and repeatedly lied to internal auditors, Assistant U.S. Attorney Paul Stern said during closing remarks in Karatz’s trial on securities fraud charges.

“The question you have to answer is why wasn’t Mr. Karatz more forthcoming?” Stern asked the jury in the trial in federal court in Los Angeles. “Mr. Karatz knew all along that what he was doing was wrong, that he was committing a fraud on the company, on investors. That’s why in 2006 he blatantly denied what he was doing.”

“Mr. Karatz called all the shots. … He was the one who was reaping the most benefit,” Stern said, adding that it took a long time to discover the illegal activity because “Mr. Karatz was trying to hide it.”

Stern told jurors the fraud committed by Karatz, which allegedly began in 1999, was tantamount to “giving himself extra pay.”

The month-long trial is seen as a test of government efforts to crack down on the financial crime of illegal stock option backdating, where stock options are retroactively dated to boost gains to employees but not disclosed to shareholders.

Karatz, 64, sat quietly between his attorneys at the defense table, wearing in a blue suit and striped tie, his hands folded and looking straight ahead, occasionally glancing at the prosecutor.

LOS ANGELES/SAN FRANCISCO (Reuters) – Bruce Karatz, the former head of KB Home, sought to boost his stock by illegally backdating stock options while repeatedly denying he was “engaged in a scheme to defraud,” a prosecutor argued on Thursday.

Karatz, once one of America’s highest-paid executives, failed to inform KB Home’s chief financial officer or other top executives that he was engaged in hindsight pricing and repeatedly lied to internal auditors, Assistant U.S. Attorney Paul Stern said during closing remarks in Karatz’s trial on securities fraud charges.

“The question you have to answer is why wasn’t Mr. Karatz more forthcoming?” Stern asked the jury in the trial in federal court in Los Angeles. “Mr. Karatz knew all along that what he was doing was wrong, that he was committing a fraud on the company, on investors. That’s why in 2006 he blatantly denied what he was doing.”

“Mr. Karatz called all the shots. … He was the one who was reaping the most benefit,” Stern said, adding that it took a long time to discover the illegal activity because “Mr. Karatz was trying to hide it.”

Stern told jurors the fraud committed by Karatz, which allegedly began in 1999, was tantamount to “giving himself extra pay.”

The month-long trial is seen as a test of government efforts to crack down on the financial crime of illegal stock option backdating, where stock options are retroactively dated to boost gains to employees but not disclosed to shareholders.

Karatz, 64, sat quietly between his attorneys at the defense table, wearing in a blue suit and striped tie, his hands folded and looking straight ahead, occasionally glancing at the prosecutor.

LOS ANGELES/SAN FRANCISCO, March 11 (Reuters) – Prosecutors accused the once high-flying head of KB Home <KBH.N> Bruce sageKaratz of succumbing to greed and lining his pockets through securities fraud, in the first salvo of a trial that will test government efforts to crack down on financial crime.

Karatz appeared in federal court in Los Angeles on Thursday as prosecutors began their latest case against illegal stock option backdating, or the practice of retroactively dating options awarded to employees.

Prosecutors are hoping for a high-profile victory after a case against telecommunications company Broadcom Corp <BRCM.O> was dismissed in December for prosecutorial misconduct.

The brash, motorcycle-driving Karatz sat silently beside his attorneys, hands folded on a table.

Karatz rode the U.S. housing boom for two decades as chief executive of KB Home, becoming one of the highest-paid executives in the United States.

“He stole $6 million without shareholders knowing it. He padded his pay between 1999 and 2005. When asked about it, he lied,” Assistant U.S. Attorney Alex Bustamante said in opening remarks.

He said Karatz had created a “false report” to cover up his crime and quashed an internal investigation at KB Home.

LOS ANGELES/SAN FRANCISCO, March 11 (Reuters) – Prosecutors accused once high-flying head of KB Home <KBH.N> Bruce Karatz of succumbing to greed and lining his pockets via securities fraud, firing the opening salvo in a courtroom battle that will test government efforts to crack down on financial crime.

Karatz appeared in federal court in Los Angeles on Thursday as prosecutors began their latest case against illegal stock option backdating, or the practice of retroactively dating options awarded to employees.

Prosecutors hope for a high-profile victory after the latest government-led attempt to punish executives for backdating — a case against telecoms firm Broadcom that was dismissed for prosecutorial misconduct — fizzled.

The brash, motorcycle-driving Karatz, who rode the boom in U.S. housing for two decades at the helm of the homebuilder to become one of the nation’s highest-paid executives, sat silently beside his attorneys, hands folded on a table.

“He stole $6 million without shareholders knowing it. He padded his pay between 1999 and 2005. When asked about it, he lied,” Assistant U.S. Attorney Alex Bustamante said during opening statements.

Karatz created a “false report” to cover up his crime and quashed an internal investigation at the company, the prosecutor told the jury.

“You need to find him accountable for his greed and convict him on all charges,” Bustamante said.

LOS ANGELES (Reuters) – A New York pension fund can try again to sue Apple Inc Chief Executive Steve Jobs and other officers and directors over a stock options plan that allegedly led to stock losses, a U.S. court ruled on Thursday.

A federal court dismissed a lawsuit led by the New York City Employees’ Retirement System, finding among other things, that investors had not shown a link between stock dilution caused by the plan and their losses, the opinion said.

The 9th U.S. Circuit Court of Appeals upheld that finding but determined the lower court had erred in denying investors the chance to amend their lawsuit to include a potentially viable claim asserted in an earlier version of the suit.

An Apple spokesman could not be reached for comment.

The plaintiffs’ lawyer, Michael Barry, said his clients plan to reassert a claim for securities fraud in place of the proxy violation claim that was dismissed.

“We are very pleased with the result at the 9th Circuit,” Barry said. “Obviously, I would have liked it if they had agreed with us on the economic loss causation.

The lawsuit was prompted by Apple’s $105 million restatement of financial results to account for thousands of backdated stock options grants between 1997 and 2002.

LOS ANGELES (Reuters) – Six years after pulling the plug on a U.K. rental service to beat back competition at home, Netflix Inc offered a few clues on Wednesday about its resurgent ambitions to enter an unnamed international market later this year.

Netflix said last quarter that it would launch a small, streaming-only operation in one country in the second half of 2010, and learn from it before moving into other markets.

“We are focused on entering one country and seeing how we do. Because we are launching in the second half of the year I don’t think we could do a second country this year,” Chief Executive Reed Hastings told Reuters.

Hastings declined to identify the market but hinted at how a roll-out might happen.

“The big market for Hollywood content (after the U.S.) is Europe…Third is Asia. Fourth is the rest of the world,” Hastings told Reuters. “Canada is and was an option. It’s sort of international-lite.”

Since launching its U.S. streaming service in 2007, Netflix has focused on piggybacking on devices with a large installed bases — Blu-ray DVD players, gaming consoles, PCs — and the international service will start the same way, he said.

“The biggest installed base is laptops. They are pretty ubiquitous,” Hastings said when asked what user population the new service targets. And video game consoles, if you are talking about the most advanced countries, he said.

LOS ANGELES (Reuters) – A U.S. judge on Tuesday approved the sale of real estate owned by corporations controlled by alleged swindler Allen Stanford.

Receiver Ralph Janvey, who is charged with recovering assets for Stanford investors, had asked the court to allow CB Richard Ellis to publicly auction the dozens of parcels of properties in the continental United States and U.S. Virgin Islands “in an efficient and cost-effective manner.”

“Marketing efforts will begin immediately,” Janvey said in a statement. “However, the timing of any sale will necessarily depend on … relevant market conditions and debt obligations associated with each property.”

U.S. District Judge David Godbey approved Janvey’s plan but ordered him to notify the Stanford Condominium Owner’s Association if he tries to sell property owned by the Stanford Development Corp, and give residents a chance to object.

Stanford, his former chief investment officer Laura Holt and former accounting executives Gilbert Lopez and Mark Kuhrt and an Antiguan regulator, face criminal and civil charges for defrauding investors in a $7 billion Ponzi scheme involving certificates of deposit.

Stanford, 59, is in jail awaiting a January 2011 trial. Stanford, Holt, Kuhrt and Lopez have denied any wrongdoing.

Although Stanford has yet to be tried, the court “has found good cause to believe that defendants violated federal securities laws,” according to court documents.

LOS ANGELES, Jan 25 (Reuters) – The California Supreme Court on Monday dismissed felony charges against five former trustees in the City of San Diego pension debacle but upheld a conflict of interest charge against one former trustee.

The findings in the case involving the $3.7 billion fund have broad implications for other public pension funds that appoint trustees from among the beneficiaries, said attorney Nick Hanna, who represented trustee Cathy Lexin.

“The interpretation of the district attorney of San Diego was such that if they voted on anything that impacted their own benefits under the system, then they were committing a felony,” Hanna, of Gibson Dunn & Crutcher in San Francisco, said.

“What the Supreme Court said was, so long as those benefits that they are voting on are not unique to them … there is no conflict and there is no crime,” he said.

San Diego County District Attorney Bonnie Dumanis said in a statement that her office would “continue to aggressively pursue conflict of interest matters within our community, as honest and open government are essential qualities which must be vigilantly maintained.”

The six trustees were charged in 2005 with violating the state conflict of interest laws after the city misrepresented its obligations to the fund in bond issues in 2002 and 2003.

The multiyear scandal prompted state and federal investigations, class-action lawsuits and the suspension of the city’s credit rating.

LOS ANGELES (Reuters) – Wells Fargo & Co, shareholders on Thursday sued officers and directors of the fourth-largest U.S. bank, accusing them of embroiling the company in dubious tax shelters that led to millions of dollars in penalties and legal fees when back taxes came due.

The lawsuit was filed in San Francisco Superior Court, two weeks after Wells lost its own court bid against the U.S. Internal Revenue Service to claim $115 million in deductions related to “sale in/lease out,” or SILO, shelters.

Wells has a related lawsuit pending in Minnesota federal court to seek SILO-related tax refunds, the complaint said.

A Wells Fargo spokeswoman declined to comment, saying the San Francisco-based bank had not finished reviewing the latest lawsuit.

According to the lawsuit, Wells managers sought to take advantage of the tax shelters in 2002 despite knowing they were about to be outlawed, and then rejected a chance to settle with the IRS during a 2008 amnesty period.

Wells accumulated $1.6 billion in SILO-related assets even after IRS audits in 2002 and 2003 disallowed $162 million in deductions and fined the bank $8 million, the lawsuit said.

“Even when it was known that Congress and the IRS were challenging these aggressive tax shelters, and then formally disallowed them, Wells Fargo was allowed to continue seeking millions of dollars in tax deduction, at great cost and waste of corporate and judicial assets,” according to the complaint filed by Wells investor Robert Marshall.