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Organizing your community to bring public attention to builder’s bad deeds and seeking assistance from local, state and federal elected officials has proven to be more effective and much quicker for thousands of families. You do have choices and alternatives.  Janet Ahmad

Beazer Homes Fraud Comes with a Price but No Criminal Prosecution
Sunday, 05 July 2009

Beazer To Pay Up To $53 Million To End Mtge Fraud Charges
Beazer Homes USA Inc. (BZH) will pay up to $53 million to settle mortgage fraud charges related to federally insured mortgage loans the company made to buyers of its homes, the Justice Department announced Wednesday. The department said Beazer will pay $5 million to the federal government and up to $48 million to victimized homeowners.  The settlement is tied to an agreement with federal prosecutors in North Carolina that will allow the Atlanta-based company to avoid criminal prosecution on the mortgage-fraud charges, and on other accounting-fraud charges related to the manipulation of company earnings.

Beazer To Pay Up To $53 Million To End Mtge Fraud Charges
By Brent Kendall and Sarah N. Lynch Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- Beazer Homes USA Inc. (BZH) will pay up to $53 million to settle mortgage fraud charges related to federally insured mortgage loans the company made to buyers of its homes, the Justice Department announced Wednesday.

The department said Beazer will pay $5 million to the federal government and up to $48 million to victimized homeowners.

The settlement is tied to an agreement with federal prosecutors in North Carolina that will allow the Atlanta-based company to avoid criminal prosecution on the mortgage-fraud charges, and on other accounting-fraud charges related to the manipulation of company earnings.

In a separate action, the Securities and Exchange Commission filed civil charges Wednesday against Beazer's former chief accounting officer, accusing him of conducting a fraudulent earnings scheme and hiding his wrongdoing from outside auditors and other company accountants.

In the mortgage fraud case, prosecutors said Beazer ignored income requirements in making loans to unqualified buyers, and sought to hide from the Federal Housing Administration that some company branches had excessive default rates on their loans.

Prosecutors also said Beazer charged home buyers interest "discount points" at closing but kept the money and didn't reduce interest rates on the loans. They added that the home builder provided buyers with cash gifts so they could come up with minimum down payments, only to add the gift price onto the purchase price of the house.

Beazer said in a statement that it has fully cooperated with governmental authorities since irregularities in its mortgage origination business and its financial reporting came to light. The settlements, it said, would "enable the company to close an unfortunate chapter in its history."

"We deeply regret these matters and have used what we have learned to strengthen our control and compliance culture and reinforce our absolute commitment to act according to the highest standards of ethical conduct throughout our organization," said Beazer Chief Executive Ian J. McCarthy.

In the SEC's accounting fraud case, the agency said Beazer's former chief accountant, Michael T. Rand, wrongfully understated the company's income between 2000 and 2005 by setting aside a reserve or rainy-day fund for land development and house construction costs. When home sales slowed in 2006, Beazer tapped into those reserves and improperly boosted its slumping earnings, the agency said.The motive behind this move, the SEC said, was to maximize the payout of bonuses.

In the end, the SEC said, Beazer understated the company's income in SEC filings by $63 million between fiscal years 2000 through 2005 and overstated its income and understated its losses by a total of $47 million in fiscal year 2006 and the first two quarters of fiscal year 2007.

Rand's lawyer did not return a call for comment.

- By Brent Kendall, Dow Jones Newswires; 202-862-9222; brent.kendall@ dowjones.com

- By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634; sarah.lynch@ dowjones.com
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=200907011846dowjonesdjonline000763&title=2nd-updatebeazer-to-pay-up-to-53-million-to-end-mtge-fraud-charges

 
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