3 Former Officials at Mortgage Firm Charged With Fraud
The Securities and Exchange Commission yesterday charged former top executives at one of the big beneficiaries of the housing boom, American Home Mortgage Investment Corp., with accounting fraud and making false disclosures at the start of the mortgage crisis in early 2007.
The SEC alleged that American Home Mortgage chairman and chief executive Michael Strauss and chief financial officer Stephen Hozie told investors the company had made a profit in the first quarter of 2007, when it in fact had turned a loss. The SEC claimed that the company concealed its financial struggles as the mortgage market began to collapse. The SEC also said Strauss and Hozie misled investors about the risk of mortgages that the company invested in.
Strauss agreed to pay $2.45 million in penalties and not serve as an officer or director of a public company for five years under an SEC settlement, in which he did not admit or deny the allegations. Complaints against Hozie and the company's former controller, Robert Bernstein, are ongoing. Lawyers for the three men declined to comment or could not be reached.
-- Zachary A. Goldfarb