Ex-Beazer official convicted of fraud

A federal jury on Friday convicted the former chief accounting officer for Beazer Homes USA on charges related to a seven-year fraud conspiracy at the troubled company.

Michael Rand of Alpharetta, Ga., faces up to 125 years in prison, the U.S. attorney's office for the Western District of North Carolina said.

Rand was convicted of leading a conspiracy that involved falsifying reported profits, books and records at Beazer; lying to the homebuilders' auditors; and deceiving the public about earnings.

Rand, 48, and lead attorney Edward T.M. Garland of Atlanta could not be reached for comment Friday. Rand is out on bond until sentencing. A date has not been set.

"Our free markets are dependent on the honesty and integrity of the people who manage our publicly traded corporations," David Brown, first assistant U.S. attorney in the Western District, said in a statement.

"When senior executives like Rand put personal gain ahead of their responsibility to investors, they jeopardize the very foundations of our economy."

Rand was convicted of entering into a hidden oral agreement with another company to allow Beazer to get cash and recognize revenue from purported "sales" of model homes.

Also, between 2000 and 2007, Rand and others created a false set of books and engaged in "cookie jar accounting" - understating income when business was booming and then using those reserves to falsely report profits during lean times.

Rand also was convicted of engaging in wire fraud conspiracy, securities fraud against Beazer investors and obstructing a federal grand jury investigation by deleting nearly 10,000 emails. Those emails included ones containing evidence of his accounting fraud, the U.S. attorney's office said.

The conviction is the latest in a string of civil and criminal actions against the Atlanta homebuilder, which pulled out of the Charlotte market in 2008. The investigations followed a 2007 Observer series showing Beazer, then a major Charlotte-area homebuilder, arranged larger loans than some customers could afford and violated federal lending rules.

In September, a former loan officer, Janette Parker of Mint Hill, agreed to plead guilty to criminal fraud charges in federal court. Her sentencing hasn't been scheduled.

Parker oversaw Beazer Mortgage Corp. branches in the Carolinas and Tennessee. Court documents say Parker inflated the price of Beazer homes to account for buyers' down-payment assistance, justifying the increases through false "upgrades" and revised sales contracts. That caused the properties to be overvalued when submitted to the Federal Housing Administration for insurance.

In July 2009, Beazer entered into a deferred prosecution agreement where it admitted it fraudulently informed some homebuyers they were receiving a "gift" from a charity to cover their down payment. The price of the home was actually increased to offset the "gift." Beazer accepted responsibility and agreed to pay $ 5 million to compensate the U.S. government for losses on FHA loans.

In a civil action in August, former chief financial officer James O'Leary agreed to reimburse the company for more than $ 1.4 million he received after Beazer filed fraudulent financial statements, according to the Securities and Exchange Commission. Earlier this year, former chief executive Ian McCarthy agreed to return $ 6.5 million in bonus and stock-based pay.

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