Real Estate

Former KB Home CEO Convicted in Backdating Trial

The former head of construction giant KB Home has been convicted of four felony counts in a stock backdating scam.

KB Homes
Matt York

A federal jury on Wednesday found Bruce Karatz guilty of two counts of mail fraud, one count of lying to company accountants and one count of making false statements in reports to the Securities and Exchange Commission.

He was found not guilty of 16 other counts.

Prosecutors alleged the former CEO failed to disclose to investors that his KB Home stock options were retroactively granted on dates when the price was low. That allowed him to sell the shares later at a higher profit.

Karatz and two other executives were forced out of the Los Angeles-based company in 2006 after the backdating was discovered. Karatz agreed to pay some $7 million last year to settle civil charges.