ATLANTA — Federal prosecutors in North Carolina filed criminal fraud-conspiracy charges against Beazer Homes USA on Wednesday, but they agreed to dismiss the case if the company complies with an agreement accepting responsibility for certain wrongdoing and pays millions to victims.
In the deferred-prosecution agreement, the company accepted responsibility for fraudulent mortgage originations and accounting practices and agreed to pay $10 million immediately toward restitution to victims.
Beazer, which pulled out of Colorado a year ago, also agreed to pay up to $50 million as the company, which has been battered by the housing downturn, recovers financially, according to prosecutors and court records.
The deferred-prosecution agreement is in effect for five years.
Beazer said Wednesday that it also reached a settlement agreement with the Department of Housing and Urban Development and the civil division of the Department of Justice. The company also said several of its subsidiaries have entered into a settlement agreement with the North Carolina Real Estate Commission.
Under terms of the settlement with HUD and the Department of Justice, the company said it will make an immediate payment of $4 million to HUD to resolve civil and administrative investigations. In addition, on the first anniversary of the agreement, the company will make a $1 million payment to HUD.
In federal court in Charlotte, N.C., on Wednesday, prosecutors accused the company of accounting-fraud conspiracy and mortgage-fraud conspiracy.
One of the issues was Beazer’s use of discount points on mortgage loans. Borrowers have the option to pay these points upfront to lower the interest rate. Beazer Mortgage, however, and its co-conspirators entered into a scheme between 2000 and 2006 to charge discount points without giving the borrower a reduction on the interest rate, according to prosecutors.
