Beazer Homes USA

Beazer Homes USA (NYSE|BZH) is a Fortune 500 American homebuilding company based in Atlanta, Georgia. The company builds and sells primarily single-family homes in twenty states of the continental United States. It also offers home mortgage services through its subsidiary, Beazer Mortgage Corporation.In 2006 and 2007 Beazer Homes USA won awards across the country in various Parade of Homes events.

2007 investigations and litigation

In March 2007, Beazer received a grand jury subpoena from the U.S. Attorney's Office in the United States District Court for the Western District of North Carolina seeking documents related to its mortgage origination services. Media reports have indicated that the company is under federal investigation for alleged mortgage fraud, a charge the company denies. Beazer has said the U.S. Attorney's Office has "made no allegations of wrongdoing by Beazer Homes at this time and that the statements made by an Federal Bureau of Investigation spokesperson about the fact of an investigation and the scope of the investigation were unauthorized, and should not have been made."

Beazer reported in a Securities and Exchange Commission (SEC) filing on May 3 2007 that the SEC has launched an informal investigation of the company. The company said that the inquiry will determine whether any person or entity related to Beazer Homes has violated federal securities laws. [cite news |title= SEC conducting informal inquiry into Beazer |url= http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-05-03T221901Z_01_N03433110_RTRIDST_0_BEAZER-UPDATE-2.XML |publisher=Reuters | first= Ilaina |last=Jonas|date= May 3 2007] Beazer also has been named as a defendant in a putative securities class action lawsuit and a putative homeowner class action lawsuit. And it has recently learned a second putative homeowner class action lawsuit has been filed in South Carolina and that it has been named as a nominal defendant in a shareholder derivative complaint filed against some of its current and former executive officers and directors claiming violations and breaches of fiduciary duty related to the company's mortgage origination business. The company said it is cooperating with the U.S. Attorney and the document production request and intends to vigorously defend each of the lawsuits.Fact|date=June 2007

Beazer says its audit committee has begun an internal review of the company's mortgage origination business and related matters and has retained independent legal counsel and an independent financial consultant to assist with the review.Fact|date=June 2007

In June 2007, on the heels of probes into its mortgage practices, Beazer Homes announced in regulatory filings that it had fired its chief accounting officer for attempting to destroy documents. [ [http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a6fOumplBPfM "Beazer Accountant Fired in Document Destruction Try"] Bloomberg online, June 27 2007] In initial reports, "Bloomberg" reported that Beazer, government officials and Rand, 44 and a 10-year Beazer veteran, could not be reached for comment, but Beazer spokesman Leslie Kratcoski later told the Wall Street Journal "We have informed the U.S. attorney's office and the SEC about this issue" and that an internal investigation by the company's audit committee, assisted by independent legal counsel, continues.Fact|date=June 2007

On July 4 2007, it was reported that a lawsuit has been filed by 10 homebuyers against Beazer Homes USA, Beazer Mortgage Corporation, and a Beazer sales agent, Roderick D. Williams, in Mecklenburg County Superior Court. The lawsuit alleges that fraudulent tactics were so pervasive in a Beazer Homes housing development in Charlotte that corporate management must have participated or condoned the approach, according to a lawsuit filed against the Atlanta-based company. "This is an abuse-of-trust case," said Charlotte lawyer Ken Davies, whose firm represents the plaintiffs, most of whom bought their first homes in Beazer's Oak Hill development. "Our clients all say, 'I should never have bought this house, but I was told I could afford it and I could qualify for a loan....' They had a right to rely on the professionals to guide them appropriately." The homebuyers are seeking compensation for homebuyers' losses and punitive damages from Beazer. An analysis by The Charlotte Observer shows that at least 14 of 140 homes in Oak Hill have fallen into foreclosure, a 10 percent foreclosure rate. Nationally, less than 3 percent of home purchases end in foreclosure. The newspaper's analysis also found that 10 of Beazer's subdivisions in Charlotte had rates of 20 percent or higher. The lawsuit said Williams, the sales agent, falsified documents to help buyers get loans for Beazer homes. Among the allegations are that assets and debts were misrepresented on loan applications and important information concealed. The lawsuit says one buyer lost her home in foreclosure and another filed for bankruptcy. Meanwhile, property values have declined because of the foreclosures, the lawsuit says. At least three other homeowner lawsuits — two in the Charlotte area — target Beazer's sales and mortgage practices. [ [http://www.ajc.com/business/content/business/stories/2007/07/04/0705bizbeazer.html "Beazer lawsuit alleges fraud in N.C. sales"] The Atlanta Journal-Constitution, July 4 2007]

On July 23 2007, Beazer Homes USA Inc. reported that it received a formal order of private investigation issued by the SEC on July 20 2007. Beazer was placed under an informal investigation in May 2007. [ [http://atlanta.bizjournals.com/atlanta/stories/2007/07/23/daily13.html?surround=lfn "SEC Formalizes Beazer Investigation"] Atlanta Business Chronicle, July 23 2007]

Federal Settlement: On October 30, 2007, six home builders, including Beazer Homes USA Inc., agreed to pay $1.4 million to settle federal allegations that they illegally established title insurance companies that took payments for a portion of the insurance risk. Under the settlement announced by the U.S. Department of Housing and Urban Development, Beazer Homes, TOUSA, Pulte Homes, KB Home, Meritage Homes Corp. and Ryland Group denied any wrongdoing, but said they settled the civil cases to avoid legal expenses. The companies agreed to six separate settlements. Beazer Homes and its captive title reinsurance company Security Title Insurance Co. agreed to pay a $261,000 settlement. HUD alleged that the builders were illegally using their own "captive" title insurance companies to receive payments for a portion of the insurance risk, when no such arrangement is necessary in the single-family home market. [ [http://atlanta.bizjournals.com/atlanta/stories/2007/10/29/daily16.html?surround=lfn "Beazer Homes, other builders agree to $1.4M HUD settlement"] Atlanta Business Chronicle, October 30 2007]

References

External links

* [http://money.cnn.com/magazines/fortune/fortune500/2007/snapshots/184.html CNN Money profile]
* [http://www.beazer.com/ Official website]
* [http://www.beazerhomereview.com/ Beazer Home Review]