How a Fraud’s Value Affects Prison Time

By , November 9, 2010 7:10 pm

LOS ANGELES—When Bruce Karatz was running KB Home, the giant home builder pulled in billions of dollars a year in revenue. But now, a mere $11 million could help determine whether Mr. Karatz spends more than a half decade in prison.

On Wednesday, the former chief executive is scheduled to be sentenced in federal court here for his April conviction for fraud and making false statements in connection with an options-backdating scandal. Mr. Karatz, who the government alleges tried to make nearly $11 million from backdating, has denied wrongdoing and plans to appeal his conviction.

The U.S. Probation Office, an arm of the courts, has recommended that Judge Otis Wright give Mr. Karatz probation and eight months of home confinement. The U.S. Attorney’s office here wants a 6.5-year prison sentence. In a filing, the prosecutors argue that confining Mr. Karatz in his “24-room Bel-Air mansion,” would suggest “a two-tiered criminal justice system, one for the affluent….and a second for ordinary citizens.”

via How a Fraud’s Value Affects Prison Time – WSJ.com.

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