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Beazer is focus of fraud probe

March 28, 2007|From Times Wire Services

ATLANTA — Beazer Homes USA Inc., which has recently suffered hefty losses amid a downturn in the housing market, now faces a federal investigation of mortgage fraud and other allegations involving the home builder. Beazer shares plunged in after-hours trading Tuesday.

The FBI and the U.S. attorney's office in Charlotte, N.C., along with the Internal Revenue Service and the U.S. Department of Housing and Urban Development, launched an investigation of Atlanta-based Beazer last week, FBI agent Ken Lucas said Tuesday.

Lucas, a spokesman for the FBI's office in Charlotte, said the inquiry involved "fraud in general" and more specifically was related to corporate, mortgage and investment issues.

Asked whether investigators would seek to question corporate officers and subpoena company records, Lucas said he wasn't sure.

"We just started this," Lucas said.

Lucas declined to release more details about the investigation. He also would not say what prompted the inquiry.

The investigation follows a series of articles published by the Charlotte Observer newspaper this month that detailed allegations of abusive lending practices and high foreclosure rates in a number of Beazer developments, BusinessWeek said.

The Observer's investigation alleged that foreclosure rates in several Beazer developments ran at around 20%, compared with the national average of 3%. At the time, Beazer said in a written statement that the high foreclosure rates were an anomaly, BusinessWeek said.

In a written statement, Beazer said it "cannot comment on or verify any investigation. However, we will fully cooperate with any investigation by any government agency."

"Beazer Homes has a long-established commitment to managing and conducting business in an honest, ethical and lawful manner," the statement said.

Beazer shares dropped $4.42, or 14.1%, to $26.99 in after-hours trading, after closing down 91 cents, or 2.8%, at $31.41.

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