Beazer Fires Chief Accountant
Amid Probe of Mortgage Unit

Beazer Homes USA Inc., facing a federal investigation into its mortgage-lending practices, said it fired its chief accounting officer for attempting to destroy company documents.

In a filing with the Securities and Exchange Commission, the Atlanta home builder said the actions of accounting chief Michael T. Rand, a senior vice president, were brought to light during an internal investigation. Mr. Rand, a 10-year veteran of the company, couldn't be reached for comment last night.

It is unclear whether the company's allegations against Mr. Rand, 44 years old, would become part of the federal probe being conducted jointly by the Federal Bureau of Investigation and the Department of Housing and Urban Development. HUD said it is examining whether Beazer violated federal regulations in arranging government-insured mortgage loans, while the FBI said it is looking at issues of possible fraud. Beazer has said it is cooperating.

Beazer spokeswoman Leslie Kratcoski said yesterday, "We have informed the U.S. attorney's office and the SEC about this issue." She said the internal investigation by the company's audit committee, which is being assisted by independent legal counsel, is continuing.

The problems at Beazer, one of the nation's largest home builders, come as the mortgage industry faces intense scrutiny over rising defaults and allegations that consumers, especially those with subprime credit, were put into mortgages for which they were ill-suited.

Allegations of improper lending practices by Beazer's in-house mortgage company emerged in the winter, when groups of home buyers in North Carolina alleged that the builder steered them into mortgages they couldn't afford, leading to widespread foreclosures. The allegations also sparked a series of lawsuits from homeowners, who are seeking class-action status.

Beazer has said it hasn't found evidence to support the allegations, but the publicity surrounding the allegations and the federal probe sent the company's shares plummeting. Before Mr. Rand's termination was disclosed, Beazer shares rose 81 cents, or 2.9%, to $28.54 in 4 p.m. composite trading yesterday on the New York Stock Exchange. The stock slipped to $27.99 in after-hours trading. Beazer shares hit a 52-week high of $48.60 in December.

Mr. Rand's departure follows an exodus of top executives from the company in recent months. Former Chief Financial Officer James O'Leary announced his resignation in March, to take a job as chief executive of Kaydon Corp., a designer and manufacturer of engineered products for the aerospace, energy and medical industries. Mr. O'Leary said his decision to leave wasn't related to the alleged problems with Beazer's mortgage business.

In February, Beazer fired its general counsel, Kenneth J. Gary, citing "a pattern of personal conduct which includes violations of company policies." The company has declined to give further details. Mr. Gary's lawyer, Lawrence Ashe, has said the mortgage problems weren't involved in Mr. Gary's termination.

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