Several federal agencies have settled a two-year investigation against Beazer Homes USA, agreeing not to prosecute the company for criminal mortgage and securities fraud if it meets certain conditions and pays between $48 and $50 million in restitution over the next 60 months.

For two years Beazer has been under investigation for fraudulent mortgage practices designed to both sell houses and increase the profit margin for its mortgage subsidiary as well as for accounting practices designed to “smooth earnings" through "cookie jar accounting,” the Department of Justice said Wednesday, July 1.

Beazer’s cooperation in the investigation, its admissions of guilt after its own internal investigation discovered the improprieties, the closing of its mortgage subsidiary, and the adoption of remedial measures including the firing of executives and employees it identified as responsible were factors that netted the company leniency, investigators said.

And, the government felt a bit sorry for Beazer because of its financial situation, it seems. It recognized "that the imposition of additional criminal penalties or the requirement of additional payment at this time would jeopardize the solvency of Beazer and put at risk the employment of approximately 15,000 employees and full-time contractors not involved in the criminal wrongdoing,” the Department of Justice release said.

Beazer also apologized again for its transgressions.

“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,” said Ian J. McCarthy, Beazer’s president and chief executive officer in a statement issued late Wednesday. “We are pleased that the governmental authorities recognized our cooperation and remedial measures.”

Under the settlement, Beazer has agreed to pay $10 million immediately as restitution for victimized home buyers and additional money, up to $50 million, as the company “recovers financially,” the Department of Justice release said. The $10 million includes $2.5 million Beazer recently paid to the North Carolina Commissioner of Banks as restitution for North Carolina home buyers. The rest will be paid to a national restitution fund established to compensate Beazer customers who can demonstrate they were injured by some of Beazer’s mortgage practices.

In fiscal year 2010 Beazer will contribute either $1 million or 4% of the company’s 2010 adjusted earnings before EBITDA. For the years thereafter, through part of 2014, the company will continue to pay 4% of EBIDTA up to $50 million.

If the company hasn’t put $48 million into the restitution fund by the end of 60 months, it will be required to keep contributing 4% of EBITDA until it has contributed that amount.

Under the agreement, Beazer is also required to pay $4 million to the U.S. Department of Housing and Urban Development to resolve civil and administrative investigations by that agency. A year later, it is required to make another $1 million payment to HUD.

McCarthy and the company’s COO Michael Furlow will contribute the after-tax proceeds of their 2008 bonuses into the fund to help defray the impact on the company’s balance sheet.

The attendee list at the settlement announcement revealed just how many government agencies were involved in the investigation. In addition to the acting U.S. Attorney of the Western District of North Carolina, attendees included HUD Secretary Shaun Donovan, high-level officials from the FBI, IRS, U.S. Postal Inspection Service, Office of the Inspector General of HUD, the Commissioner of Banks North Carolina, and the North Carolina Real Estate Commission.

Five of the attendees submitted stern statements praising the settlement for restoring money to the victims and making it clear that they will crack down on those who violate the law and hold the guilty accountable.

Learn more about markets featured in this article: Charlotte, NC, Atlanta, GA.