Former Beazer Homes executive guilty of fraud, jury finds

The former chief accounting officer for Beazer Homes was convicted of fraud Friday.

Michael T. Rand, 48, of Alpharetta, Georgia, was found guilty by a federal jury of seven crimes relating to a seven year accounting fraud conspiracy at Beazer, according to a news release from the U.S. District Attorney's office for the Western District of North Carolina.

The charges arise from an ongoing government investigation involving Beazer and its employees that began back in March of 2007.

Beazer accepted responsibility for the charges and, in a deferred prosecution agreement, agreed to pay restitution of $ 50 million, according to the release.

Rand was convicted of directing an accounting fraud conspiracy to falsify reported profits at Beazer by lying to Beazer's auditors, fraudulently achieving earnings targets, falsifying Beazer's books and records, and deceiving the public by boosting and lowering earnings at Beazer.

Rand was indicted by a federal grand jury in August 2010.

According to the evidence at trial, Rand executed the conspiracy in two main ways: Between 2005 and 2006, Rand entered into a hidden oral side agreement with another company through one of its employees, which was designed to allow Beazer to obtain cash and to improperly report revenue from purported "sales" of model homes, according to the District Attorney's Office.

This activity was in direct contravention of the accounting rules and hidden from Beazer's auditors. Between 2000 and 2007, Rand directed a scheme to commit securities fraud and create false books and records at Beazer by practicing "cookie jar accounting," which allowed Rand and others to falsely report profits in Beazer's publicly reported financial statements.

Rand was convicted of conspiracy to commit securities fraud, to make false and misleading statements to auditors and accountants, to circumvent Beazer's internal accounting controls, and to falsify the books, records, and accounts of Beazer. Rand was also convicted of engaging in a wire fraud conspiracy, and securities fraud upon Beazer investors and others in connection with the sale of Beazer's common stock.

The jury also convicted Rand of two charges of obstruction of a Federal Grand Jury investigation and a charge of destroying documents in violation of the Sarbanes-Oxley Act (also known as the Public Company Accounting Reform and Investor Protection Act) .

The evidence at trial showed that after being notified of the Federal Grand Jury's investigation of Beazer in March 2007, Rand deleted nearly ten thousand emails, including emails containing evidence of his accounting fraud as well as the mortgage fraud occurring at Beazer Mortgage Corporation, an entity shut down by Beazer as a result of this investigation.

Finally, the jury convicted Rand of lying to hinder an investigation by the FBI Office in Charlotte, North Carolina, and the U.S. Attorney's Office in the Western District of North Carolina, by making numerous false statements to investigators on behalf of the Audit Committee of Beazer's Board of Directors, after learning that such false statements would be reported to the FBI and U.S. Attorney's Office.

A sentencing date for Rand, who is released on bond, has not been set yet. Rand faces maximum statutory penalties totaling 125 years in prison based on the charges of conviction.

However, the sentence will be determined by the District Court, and will be influenced by the Federal Sentencing Guidelines, which the Court consults in order to determine a defendant's actual sentence.

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