Michael T. Rand, 52, Sandy Springs, Georgia, was sentenced by U.S. District Judge Robert J. Conrad, Jr. to 120 months in prison and to three years of supervised release on conspiracy and obstruction of justice charges in connection with federal investigation into a seven-year accounting/sales fraud conspiracy at Beazer Homes USA, Inc.
In July 2014, a federal jury convicted Rand of the charges following a two-week retrial. Rand, who was the former Chief Accounting Officer for Beazer, was previously found guilty in October 2011, however that verdict was later vacated due to juror misconduct, which prompted the presiding judge to order Rand’s retrial.
The charges against Rand arise from a government investigation involving Beazer and its employees that began in March 2007. In July 2009, Beazer was charged with, among other things, participation in the conspiracy and securities fraud with Rand. Beazer accepted responsibility for those charges and, in a deferred prosecution agreement, agreed to pay restitution of $50 million. Rand was indicted by a federal grand jury in August 2010.
A federal jury found that, while serving as Beazer’s Chief Account Officer, Rand directed an accounting fraud conspiracy to falsify reported profits at Beazer by lying to Beazer’s auditors, fraudulently achieving earnings targets, falsifying Beazer’s books and records, and deceiving the public by boosting and lowering company earnings. Rand was convicted of conspiracy to commit securities fraud, to make false and misleading statements to auditors and accountants, to circumvent Beazer’s internal accounting controls, and to falsify the books, records, and accounts of Beazer. He was also convicted of engaging in wire fraud conspiracy.
According to court documents and evidence presented at Rand’s second trial, Rand executed the conspiracy in two main ways: Between 2005 and 2006, Rand entered into a hidden oral side agreement with another company through one of its employees, which was designed to allow Beazer to obtain cash and to improperly report revenue from purported “sales” of model
homes. This activity was in direct contravention of the accounting rules and hidden from Beazer’s auditors. Between 2000 and 2007, Rand directed a scheme to commit securities fraud and create false books and records at Beazer by practicing “cookie jar accounting,” which allowed Rand and others to falsely report profits in Beazer’s publicly reported financial statements.
The jury also convicted Rand of obstruction of justice in relation to a federal grand jury investigation. Trial evidence showed that after being notified of the federal grand jury’s investigation of Beazer in March 2007, Rand deleted nearly 6,000 emails, obstructing the grand jury investigation then focused on the separate investigation into mortgage fraud at Beazer.
Finally, the jury convicted Rand of lying to hinder an investigation by making numerous false statements to investigators on behalf of the Audit Committee of Beazer’s Board of Directors, after learning that such false statements would be reported to the FBI and the U.S. Attorney’s Office.
In announcing the sentence, Judge Conrad described the defendant’s conduct as Chief Accounting Officer at Beazer as “criminal, dishonest and corrupt,” with “repeated acts to cook the books,” and as a result, “illegality became a norm” at Beazer. The Court emphasized that its sentence was intended to deter others because our “markets depend on the integrity of accounting officers.”
Following the sentencing hearing Rand was released on bond. He will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina made the announcement.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division joins Acting U.S. Attorney Rose in making the announcement.
Acting U.S. Attorney Rose credited FBI special agents for the investigation leading to the sentence. She also thanked the U.S. Securities & Exchange Commission for their invaluable assistance throughout the investigation.
Assistant U.S. Attorneys Kurt W. Meyers and Maria K. Vento of the U.S. Attorney’s Office in Charlotte prosecuted the case.
“As the Chief Accounting Officer of a publicly-traded company, Rand had an obligation to Beazer’s investors and the public to abide by accounting rules and maintain proper books and records that accurately reflected the company’s financial status. Corporate corruption erodes the public’s trust in our financial system which can have an adverse effect on our economy. Rand’s
sentence reflects the seriousness of his offense and underscores my office’s commitment to protecting Americans from executives that engage in corporate fraud,” said Acting U.S. Attorney Rose.
“As evidenced by the significant efforts of the investigative and prosecutive team, the FBI remains committed to holding corporate executives responsible for any and all malfeasance which affects America’s financial markets. The ordinary investor should have confidence in the accuracy of corporate accounting requirements and rest assured that executives who place their
personal interests above all others will be held responsible. The two juries who heard the complicated testimony in this matter clearly agreed with this position,” stated John A. Strong, Special Agent in Charge for the Charlotte Division of the FBI.