Beazer Homes Executive and Alpharetta Resident Michael Rand Indicted in NC for Fraud
As reported in the Charlotte Observer, Michael Rand, former Chief Accounting Officer for Beazer Homes USA and a resident of Alpharetta, Georgia, has been indicted in the U.S. District Court for the Western District of North Carolina on 11 counts, including securities fraud, witness tampering and making false statements. Rand is alleged to have directed a conspiracy to manipulate Beazer's books, achieve earnings targets, and deceive the company's auditors.
Specifically, the indictment alleges that, from 2005 to 2007, Rand entered into an agreement with another company to allow Beazer to get revenue from purported sales of model homes, and that he and others created a false set of books to understate income when business was doing well, and "smoothing" income when business became tighter. Beazer terminated Rand in June of 2007 for allegedly destroying documents during an internal investigation.
Federal authorities began investigating Beazer in 2007 after the Charlotte Observer ran a series that claimed that Beazer arranged larger loans than some customers could afford and violated federal lending rules, leading to high foreclosure rates in certain communities. Prosecutors filed mortgage fraud and accounting fraud charges against Beazer in July of 2009, and the company entered into a deferred prosecution agreement in which it agreed to pay up to $50 million. Beazer was also the defendant in a class action lawsuit over lending practices, which it settled in 2009 for $30.5 million. The company stopped mortgage lending in 2008. Beazer has reported 1,643 home closing in the third quarter of this year, as well as losses of $27.6 million.
A detention hearing for Rand is scheduled for Friday. Rand is also the subject of a lawsuit filed in July of 2009 by the Securities and Exchange Commission in the Northern District of Georgia.
