DR Horton Sued Over Discount Deals With Lot Developer Forestar

Residential construction giant DR Horton Inc. has wielded its majority stake in Forestar Group Inc. to push it into transactions that shortchanged investors by at least $700 million, according to an unsealed lawsuit.

A pension fund is suing DRH and members of Forestar’s board, saying they’ve been driven by pervasive conflicts of interest to run the residential lot developer almost entirely for the benefit of its controlling stockholder, the leading US homebuilder by volume. The rampant self-dealing—in the form of steep, undisclosed discounts—is reflected in two legal agreements that put DRH loyalists behind the wheel at Forestar, the suit says. ...