Online marketer sues over iPlace deal
MemberWorks is suing online real estate company Homestore.com just six months after selling the company its iPlace subsidiary.
MemberWorks sued Homestore on Friday in the U.S. District Court for Connecticut, MemberWorks spokesman George Thomas said. MemberWorks has not asked for a specific amount in damages, Thomas said.
In its suit, MemberWorks accused Homestore of securities fraud, unfair trade practices and negligent misrepresentation, MemberWorks said. The company is seeking a temporary restraining order against Homestore.
The suit stems from the sale of iPlace. Homestore paid MemberWorks $50 million in cash and 1.6 million shares of stock for its 58 percent stake in iPlace, which provides consumer credit information.
Since the transaction, Homestore shares have plunged more than 94 percent. Meanwhile, Homestore has not followed through with an agreement to file a registration statement with the Securities and Exchange Commission that would allow MemberWorks to sell a portion of its shares, MemberWorks charged.
Thomas declined to comment on the suit. Homestore spokesman Dan Wool, saying he hadn't seen the suit, declined to comment.
Homestore's purchase of iPlace, last August, seemed to cement its status as one of the few successful dot-coms. Since then, the company has been reeling, with declining revenue, two rounds of layoffs and a management shake-up.
Last month, the Westlake Village, Calif.-based company acknowledged that it overstated its 2000 revenue by at least 17 percent. Homestore also said it overstated its revenue in the first nine months of 2001 by about $113 million, about $18 million more than it previously had estimated.
Homestore has yet to report its fourth-quarter earnings for 2001.
MemberWorks is only the latest company and Homestore shareholder to be caught up in the online realtor's fall from grace. Last month, real estate giant Cendant took a $285 million charge as a result of the decline in value of its Homestore shares. Cendant acquired the shares when it sold its Move.com unit to Homestore last year.
Meanwhile, other shareholders have filed a rash of lawsuits as a result of the company's plummeting stock price and its financial misstatements.
As part of its suit, MemberWorks is seeking an injunction that would prevent Homestore from selling iPlace or any of iPlace's assets.