The Atlanta based homebuilding business, Breazer Homes, has been the target of an ongoing investigation into allegations of accounting and mortgage fraud. Now the former Chief Financial Officer has agreed to repay $1.4 million in bonuses and profits from stock sales.
The agreement does not require the CFO to admit or deny any allegations The Securities and Exchange Commission has indicated it will close the case and investigation against him. The money to be repaid was all received during the time period in which investigators allege the company was committing accounting fraud. The CFO has agreed to repay the money within 30 days of the court’s approval of the settlement.
The CFO had not been personally charged with misconduct, but according to a report in the Atlanta Journal Constitution, the SEC charges that he certified fraudulent financial reports in 2006.
The SEC says that those allegedly fraudulent financial reports were the work of one of the former vice presidents of the company. The investigation into the actions of that vice president remains ongoing.
In a deal similar to the one accepted by the CFO last March, the company’s Chief Executive Officer agreed to repay $6.4 million in profits and bonuses. The company terminated the CEO in June. While he was still CEO, another federal investigation for mortgage fraud was resolved when the company agreed to pay restitution of $55 million. The legal investigations, along with the depression in the housing market in the last few years have resulted in a steep drop in value and business for the homebuilder.
When top level executives are involved in alleged malfeasance, lower level employees are at risk to become involved without even realizing that there is anything improper going on. As each individual sees only their small role, the scope or existence of a scheme may only be visible to those at the top.
Source: Atlanta Journal Constitution, “Former exec gives back $1.4 million in Beazer Homes fraud suit,” Christopher Quinn, Aug. 30, 2011