Former KB Home CEO Bruce Karatz Escapes Jail Sentence

Bruce Karatz, former CEO of KB Home (KBH), was fined $1 million and given five years of probation for hiding backdated stock options from auditors and regulators.

Karatz will face no jail time but will serve eight months of home detention with electronic monitoring and perform 2,000 hours of community services, Bloomberg News said. U.S. District Judge Otis D. Wright II said the sentence was in keeping with federal guidelines and his own past record of not doling out prison time to defendants with no criminal record or history of violence.

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Wright said he "lost a lot of sleep over the right thing to do in this case."

Karatz, 65, was convicted of two counts of mail fraud and two counts of making a false statements. The charges related to his actions during an internal investigation of backdated options in 2006.

In court papers filed Oct. 14, prosecutors said that sentencing Karatz to home detention in his 24-room house in California would imply that there is a two tier-justice system that lets wealthy, well-connected executives break the law with virtual impunity.
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