(Source: Business Wire)
Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) ("the Company") announced that it has resolved several previously-disclosed governmental investigations. The Company has entered into a deferred prosecution agreement ("DPA") with the U.S. Attorney's Office for the Western District of North Carolina ("the U.S. Attorney") and a settlement agreement with the U.S. Department of Housing and Urban Development ("HUD") and the civil division of the Department of Justice. In addition, certain of the Company's subsidiaries have entered into a settlement agreement with the North Carolina Real Estate Commission ("NCREC").
Since issues involving the Company's mortgage origination business and financial reporting irregularities came to light, the Company has fully cooperated with the investigations by governmental authorities. In addition, the Company's Audit Committee conducted an independent investigation into these matters. In February 2008, the Company voluntarily exited the mortgage origination business and in May 2008, the Company completed the restatement of certain prior period financial statements and implemented changes in its internal controls over financial reporting.
"We deeply regret these matters and have used what we have learned to strengthen our control and compliance culture and reinforce our absolute commitment to act according to the highest standards of ethical conduct throughout our organization. We are pleased that the governmental authorities recognized our cooperation and remedial measures," said Ian J. McCarthy, president and chief executive officer.
These settlements enable the Company to close an unfortunate chapter in its history and focus its efforts on executing the Company's financial and operating business plan for the benefit of the Company's shareholders, employees, and customers.
Deferred Prosecution Agreement with the U.S. Attorney
Under the DPA, the U.S. Attorney has agreed not to prosecute the Company in connection with the matters that were the subject of the Audit Committee investigation and are set forth in a Bill of Information filed with the United States District Court for the Western District of North Carolina, provided that the Company satisfies its obligations under the DPA over the next 60 months. The term of the DPA may be less than 60 months in the event certain conditions, as described more fully in the DPA, are met. The DPA recognizes the cooperation of the Company, its voluntary disclosure and its adoption of remedial measures.
Under the terms of the DPA, in fiscal year 2009, the Company will contribute $7.5 million to a restitution fund established to compensate those Beazer customers who can demonstrate that they were injured by certain of the practices identified in the Bill of Information. For fiscal year 2010 the Company will contribute to the restitution fund the greater of $1.0 million or an amount equal to 4% of the Company's fiscal 2010 adjusted EBITDA as defined in the DPA.
