Tuesday, October 21, 2014
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Bruce Karatz, in the eye of the storm, continues to do good

As a 30-year veteran of KB Homes, Karatz's work in the community has always benefited and paralleled his success in business.

By Yussuf J. Simmonds
Sentinel Managing Editor

Bruce Karatz was described as a 'man on a mission' when he launched a major building initiative in hurricane-ravaged New Orleans after the devastation of Hurricane Katrina. But whether motorcycling (he is a motorcycling enthusiast) or wearing a hard hat on a Kaufman & Broad (KB) job site, Karatz brings honesty that people around him notice and appreciate. In the rough-and-tumble world of business, he is bold, innovative and unconventional, but a fair-and- minded honest broker.

Now 64, Karatz is in the twilight of his career, having guided KB Home into an internationally-recognized company and sustained its growth since he started as its in-house general counsel when he was just 29 years old. As a trained lawyer, his openness in dealing with the media and others is diametrically opposite to the allegations that are presently leveled against him. To fully understand the reason for this misguided barrage of charges against Karatz, it is necessary to first look at the hostile economic climate that presently exists and compares it against the backdrop of Karatz's life's work and comments from his associates.

Lori Gay is the president and CEO of Los Angeles Neighborhood Housing Services (NHS) a leading community based non-profit organization that focuses on assisting families threatened with home foreclosure. NHS has benefited greatly through the work of Karatz. She said, "From our vantage point, we've had a number of experiences with him as a contributor to the community; he sees the impact of the work we are doing that the foreclosure crisis having in our community, and he cares about that. He has been involved for the past two years and adding his voice to our work--and I think that's important, because it makes our work more legitimate--because he has influence and he knows that."

Not only has Karatz invested his company's resources, but he has also spent his own money in an effort to help others who are in crises. His non-profit foundation, Keep Your Home Foundation, partners with NHS, and focuses on providing resources and assistance to families before they enter the foreclosure danger zone. "Along with our organization, he cross trains people within our industry segment about how to rebuild neighborhoods," Gay continued, "and working with the market and that's a huge encouragement."

Working in the non-profit sector of the community is always a challenge and locating much-needed resources is sometimes like traversing an obstacle course so when a benefactor shows up--'to whom much is given, much is usually required'--he becomes a lifeline for continued existence. Karatz was that kind of an individual. "He added his voice and his own money to the effort of helping those who are less fortunate know that this free service is available to help them." Gay concluded, " I have no problem speaking on his behalf because despite his personal crisis, he's continuing to reach out, care, spending his own money and adding his voice to the issues."

Former Speaker of the California State Assembly, Robert "Bob" Hertzberg, has known Karatz for years, personally and professionally, and he explained, "I don't know what the facts are about these allegations, but I've been in politics a long time and when it came to fixing the school issue which built tens of billions of schools in California, Bruce Karatz stuck his neck out in a very big way; all the home builders had their own opinions and he was very dynamic leading the way. When I was running for mayor (of Los Angeles), he was the co-chair of my campaign. Most leaders of big companies always play the angles; they are risk adverse, but this guy (Katatz) was willing to stick his neck out because he said it was the right thing to do, and it was extremely unique."

When asked about the character of the man, Hertzberg came back thus, "He's an honest straight-up guy; I don't know what happened and why it happened, but I never had any reason to believe anything other than--he's one of the rare leaders in Los Angeles that stuck his neck out for what he believed in and it was nice to see. And it wasn't because it made him money.... he took those risks because he understood the common good and I have always held him in the highest regard because of it."

Under Karatz's leadership, KB Home was the first and only major homebuilder to make a significant investment in New Orleans in the wake of Hurricane Katrina and start construction of affordable housing. In fact, he assigned Steve Davis, a former regional president of KB Home Arizona and also a former division president of KB New Orleans, to the ravaged hurricane region. Commenting on Karatz, Davis said "He was the CEO of KB Homes when I worked there and the working relationship that I had with him was a good one. He gave me an opportunity to run a division and two different regions for the company. I am only a little bit familiar about his community work in L.A. but I can speak to involvement as far as the Hurricane Katrina. Bruce asked me to go to New Orleans and open up a region there to assist in housing. It was his idea after he saw the devastation of the hurricane; he knew that there'll be a need for housing."

Trish Hanchette, the former president of KB Home, North Carolina Division was instrumental in setting up the KB Home/Martha Stewart community remembered her experiences working with Karatz. She said, "I love working with Bruce, he's a very charismatic leader with a lot of creativity and he has kept us all at the leading edge of our world. He was always mindful of how we did our jobs and it was just a pleasure for me. My experiences with Bruce was that he had a tremendously amount of integrity, was helpful and a good mentor to the folks that worked with him."

John W. Keker is the counsel for Karatz, and he sees his client as the victim of a set of misguided circumstances that can happen to someone in charge of a large company, and not tantamount to any criminal wrongdoing. According to Keker's statement, "The recent decisions in the backdating trials show just how misguided the criminal prosecution of these option pricing cases is. The accounting rules made little sense. Company after company applied those rules in good faith, in a way the government now says was wrong."

                Furthermore, in defense of his client, he added, "During his tenure at KB Home, Bruce created more than 5000 jobs, built middle class homes all across the country, engaged the company in worthy philanthropic efforts such as seeking to re-build New Orleans after Katrina and created significant shareholder value (1476% increase in the Company's market cap, a 575% growth in revenue, a 400% rise in dividends and the creation of more than 5,000 new jobs)--all resulting in KB Home being ranked the #1 homebuilder in Fortune Magazine's 2006 list of America's Most Admired Companies."

                Karatz has received numerous awards including the Ellis Island Medal of Honor, National Ethnic Coalition of Organizations award; the Spirit of Life, City of Hope National Medical Center award; Jack Webb LA Police Historical Society award; and the Humanitarian of the Year, National Association of Christians and Jews award. He is a member of the Los Angeles World Council Affairs; the Los Angeles Sports and Entertainment Center; Southern California Committee for the Olympic Games; and Children's Institute International (director).

                Fortune magazine has written the following about him: "It's not often you hear a CEO express goals in humanitarian, not bottom-line terms, especially when its shareholder money with which he's 'do-gooding.'

                Karatz is a family man--married; he has three children and four grandchildren.

Category: National




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