The Securities and Exchange Commission (SEC) today charged two former executives at American Home Mortgage Investment Corporation with accounting fraud. The charges against the heads of the now-bankrupt former Alt-A lender out of New York stem from their alleged engagement in a pattern of false and misleading claims that concealed financial losses from investors. The SEC alleges that former chairman and CEO Michael Strauss and former CFO Stephen Hozie fraudulently understated American Home Mortgage Q107 loan loss reserves by tens of millions of dollars, in a way to convert the company’s loss into a fictional profit. Strauss and Hozie also misled investors about the financial condition of the company, including the riskiness of the mortgages originated and held by American Home Mortgage, the SEC maintains. American Home Mortgage internal analysis at the time showed the company needed at least $38m in additional reserves. Furthermore, the analysis also showed that the company’s losses on its delinquent second liens were mounting quickly and that American Home Mortgage would lose at least 72% of the value of these loans after the properties went through foreclosure. Strauss is settling his charges by paying $2.45m in penalties to the SEC. He can not own or operate another company for five years under the deal, and will neither admit or deny the allegations. Write to Jacob Gaffney at