Federal investigators have charged Beazer Homes USA with criminal mortgage and accounting fraud, and the homebuilder has admitted to its wrongdoing, agreeing to pay a $50 million settlement, court documents filed today show.
The charges, filed in U.S. District Court in Charlotte, relate to Beazer's alleged participation in a fraudulent scheme designed to increase its mortgage division's profits and sell Beazer homes, as well as an accounting fraud scheme designed to “smooth earnings.”
According to an agreement filed at the same time, the Atlanta homebuilder accepted responsibility for several fraudulent mortgage origination and accounting practices. Company officials could not immediately be reached for comment.
Beazer has agreed to pay $10 million immediately toward restitution for victimized home-buyers, and additional money as the homebuilder recovers financially, up to $50 million, the court documents show.
The $10 million includes a $2.5 million settlement Beazer paid to the North Carolina Commissioner of Banks in May to pay back homebuyers. The rest, as will any additional payments, will be paid into a national restitution fund.
Earlier today, investigators accused the former chief accounting officer of Beazer of running a fraudulent earnings management scheme and misleading outside auditors and internal accountants, court documents filed in federal court in Atlanta show.
In the lawsuit, the Securities and Exchange Commission said Michael Rand fraudulently decreased the Atlanta homebuilder's net income between 2000 and 2005 by recording improper reserves. In 2006, Rand began reversing the reserves to offset Beazer's declining financial performance, the suit says.
Read more at CharlotteObserver.com