Home builder Beazer Homes USA Inc. (NYSE: BZH) this week announced that Michael T. Rand, the company’s chief accounting officer and senior vice president, has been terminated for “attempts to destroy documents in violation of the company’s document retention policy.”
That announcement follows earlier disclosures about a U.S. Securities and Exchange Commission inquiry, a grand jury investigation and a series of class-action lawsuits.
The company reported that it “recently became aware of Mr. Rand’s actions” during an internal investigation conducted by the company’s audit committee. The audit committee is investigating the company’s mortgage origination business “and related matters,” according to the company’s Wednesday SEC filing.
The U.S. Attorney’s Office for the Western District of North Carolina in March issued a grand jury subpoena to Beazer seeking documents focusing on the company’s mortgage origination services. That office launched its investigation following a series of articles that appeared in the Charlotte Observer newspaper questioning the role of Beazer’s mortgage lending subsidiary in financing company-built homes.
The newspaper had reported in March that at least 388 of the 2,900 homes built by Beazer in Mecklenburg County, N.C., between 1997 and 2006 have foreclosed. The newspaper articles alleged that some of the company’s practices violated federal lending rules.
One of the class-action lawsuits, filed April 30 on behalf of Beazer’s current and former participants and beneficiaries in Beazer’s employer-sponsored retirement plan, alleges that company officials breached their fiduciary duties by not providing “timely, accurate and complete information” about the company in the investment of retirement money. Other class-action lawsuits have been filed against Beazer by homeowners and shareholders, including an April 16 lawsuit which charges that the company committed SEC violations and breached fiduciary duties “based on matters related to the company’s mortgage origination business.”
On April 26, Beazer Homes reported a net loss of $43.1 million for the quarter ending March 31. The company had total revenues of $826.3 million for the quarter, compared with $1.27 billion for the same quarter of 2006. The company reported 4,085 new orders for homes during the quarter, compared with 4,224 in prior year’s quarter. The company’s 29 percent cancellation rate for the quarter was down from 33 percent in the same quarter last year.
Beazer’s stock was trading at $26.20 per share as of 11:15 a.m. ET today, down $2.34 cents from the previous day’s closing price of $28.54 and down $1.15 from today’s opening price of $27.35. The share price was $31.41 on March 27 — the day that Beazer reported the U.S. Attorney’s Office investigation.
