Fraud & Investigations

Chief of Beazer Homes Settles a Fraud Claim for $6.5 Million

Posted on Thursday, March 17, 2011

The chief executive of Beazer Homes, Ian J. McCarthy, agreed to return $6.5 million in compensation that he had received while the company was accused of accounting fraud, the Securities and Exchange Commission said on Thursday.
Mr. McCarthy, 58, had not reimbursed Beazer for bonuses and other incentive-based pay during the 12 months after it filed fraudulent financial statements for 2006, the S.E.C. said in a complaint filed in federal court in Atlanta. His settlement, which includes $772,232 in profit from stock sales, and more than 78,000 shares of restricted stock, represents his entire 2006 bonus, the commission said.
The Sarbanes-Oxley Act of 2002 gave the commission authority to seize bonuses and stock-sale profits from chief executives and finance chiefs at companies that restate earnings because of misconduct even if they had not been involved in the violations. Mr. McCarthy, who was not accused of fraud, settled with the commission without admitting or denying wrongdoing, it said.
Beazer, which is based in Atlanta, was forced to restate financial results for the fiscal year that ended Sept. 30, 2006, after the commission accused it of manipulating land development and house cost-to-complete accounts and improperly recording model home financing transactions as sales to increase income, the complaint said.
The company resolved the commission’s accounting fraud claims in September 2008 without paying financial penalties.
A call to Samuel J. Winer, Mr. McCarthy’s lawyer at Foley & Lardner, was not returned.
By BLOOMBERG NEWS



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