Beazer Homes Faces FBI Investigation
Feds Looking Into Fraud Allegations Involving Homebuilder Beazer; Stock Plunges
ATLANTA (AP) -- Beazer Homes USA Inc., which has recently suffered hefty losses amid a downturn in the housing market, now faces a federal investigation of mortgage fraud and other allegations involving the homebuilder. Beazer shares plunged 15 percent in after-hours trading Tuesday.
The FBI and the U.S. attorney's office in Charlotte, N.C., along with the Internal Revenue Service and the U.S. Department of Housing and Urban Development, launched an investigation of Beazer Homes last week, FBI agent Ken Lucas said Tuesday.
Lucas, a spokesman for the FBI's Charlotte field office, said the inquiry involves "fraud in general" and more specifically is related to corporate, mortgage and investment issues.
Asked whether investigators would seek to question corporate officers and subpoena company records, Lucas said he wasn't sure.
"We just started this," Lucas said.
Lucas declined to release more details about the investigation. He also would not say what prompted the inquiry.
In a written statement, Beazer said it "can not comment on or verify any investigation. However, we will fully cooperate with any investigation by any government agency."
"Beazer Homes has a long established commitment to managing and conducting business in an honest, ethical and lawful manner," the statement said.
The Charlotte Observer reported last week that the company had an unusually high rate of foreclosures in many developments around North Carolina's largest city. The paper reported that of the 2,900 Beazer homes built in Mecklenburg County between 1997 and 2006, at least 388 have foreclosed -- a rate above 13 percent.
Nationally, fewer than 3 percent of buyers lose homes to foreclosure, the paper said. In its series, The Observer documented four examples where the income and debts of borrowers were misstated on their applications for government-insured loans.
Beazer shares dropped $4.72 to $26.69 in aftermarket electronic trading after closing down 91 cents, or 2.8 percent, at $31.41 on the New York Stock Exchange.
Last week, Beazer Homes said that its chief financial officer, James O'Leary, was stepping down after four years with the homebuilder to become president and chief executive of Kaydon Corp.
Beazer has suffered from the housing downturn. Weak demand for new homes, sales at steep discounts and the need for inventory writedowns have taken a toll on the company's results.
Losses for the first quarter ended Dec. 31 totaled $59 million, compared with a profit of $89.9 million in the same period a year earlier, while revenue slid to $806.4 million from $1.1 billion in the year-ago period.
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