United States Attorney Anne M. Tompkins
Western District of North Carolina
FORMER CHIEF ACCOUNTING OFFICER FOR BEAZER HOMES USA, INC. CONVICTED OF CORPORATE ACCOUNTING FRAUD CHARLOTTE, N.C. - Michael T. Rand, 48, of Alpharetta, Georgia, and former Chief Accounting Officer for Beazer Homes USA, Inc. (“Beazer”), has been convicted by a federal jury of seven crimes relating to a seven year accounting fraud conspiracy at Beazer, as well as document destruction and obstruction of justice. The charges arise from an ongoing government investigation involving Beazer and its employees that began in March 2007. In July 2009, a federal bill of information was filed in U.S. District Court charging Beazer with, among other things, participation in the conspiracy and securities fraud with Rand. Beazer accepted responsibility for those charges and, in a deferred prosecution agreement, agreed to pay restitution of $50 million. Rand was indicted in August 2010.
Today’s verdict is announced by Attorney for the United States David A. Brown of the Western District of North Carolina, and Chris Briese, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division. Rand’s jury trial commenced in federal court in Charlotte before Chief U.S. District Judge Robert J. Conrad, Jr., on October 11, 2011. “This was an important case. Our free markets are dependent on the honesty and integrity of the people who manage our publicly traded corporations. When senior executives like Rand put personal gain ahead of their responsibility to investors, they jeopardize the very foundations of our economy. Our Office is proud to be a part of the effort to root out corporate corruption,” Brown stated. “Michael Rand selfishly profited while so many others were suffering in the struggling housing industry. Today’s verdict is a stark reminder that the FBI partners with many law enforcement agencies to expose these type of criminal schemes and bring those offenders to justice,” said Special Agent in Charge Briese.
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. 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. 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.
Brown credits the FBI with leading the difficult and resource intensive investigation and prosecution that resulted in these convictions. The Government was represented in this matter by Assistant U.S. Attorneys Kurt W. Meyers and Maria K. Vento of the U.S. Attorney’s Criminal Division in Charlotte, as well as former Assistant U.S. Attorney Matthew T. Martens.