The former chief accounting officer for Beazer Homes USA has been indicted on 11 criminal counts stemming from a fraudulent accounting scheme.

Michael T. Rand was charged with conspiracy, securities fraud, obstruction, witness tampering, false statements to a financial institution, misleading conduct, and destruction of records, according to an announcement from First Assistant US Attorney David A. Brown of the Western District of North Carolina, and Owen D. Harris, Special Agent in Charge of the FBI in North Carolina.

Most of the counts call for a maximum penalty of 20 years in prison and a $250,000 fine, while two of the counts provide for a maximum of 30 years in prison and a $1 million fine.

In July 2009, Beazer, a homebuilder, admitted to participating in the conspiracy and securities fraud with Rand and, in a deferred prosecution agreement, agreed to pay restitution of up to $50 million.

According to law enforcement officials, from 2000 through 2007 Rand allegedly directed an accounting fraud conspiracy to manipulate Beazer's books and records, deceive Beazer's auditors,  achieve earnings targets, and boost or lower earnings at Beazer.

Rand and others allegedly executed the conspiracy in two main ways.

First, between 2005 and 2006, Rand allegedly 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 recognize revenue from purported "sales" of model homes. This activity was, according to the allegations, in direct contravention of the accounting rules as interpreted by Beazer's auditors, and was hidden from Beazer's auditors.

In addition, Rand is accused of directing and agreeing with others to engage in a scheme to commit securities fraud and create false books and records at Beazer by practicing a form of what is commonly known as "cookie jar accounting," which allowed Rand and others to manipulate Beazer's publicly reported financial statements. Cookie jar accounting is the term used for companies using generous reserves from good years against losses in bad years.

In June 2007, Beazer fired Rand for violating the company's ethics policy. The company said in a regulatory filing at the time the finance executive tried to destroy documents in violation of the company's document retention policy.

Rand joined Beazer in late 1996 as vice president, operational and accounting controls and was promoted to vice president, corporate controller in June of 1998. Rand was promoted to senior vice president and corporate controller in October 2002. Prior to joining Beazer, he was with KPMG Peat Marwick from 1984 to 1996, at which time he served as a senior audit manager.

In February 2007, Beazer fired executive vice president and general counsel Kenneth Gary "for cause," citing a pattern of personal conduct which includes violations of company policies. Then in March of that year, James O'Leary resigned as executive vice president and chief financial officer to become president and chief executive officer of Kaydon, where he had been a member of the board since 2005. Today he serves as Chairman and Chief Executive Officer.