Taylor, Bean Chairman Convicted in $2.9 Billion Fraud Scheme

Lee Bentley Farkas, the former chairman of a private mortgage lending company, Taylor, Bean & Whitaker (TBW), was convictedTuesday for his role in a more than $2.9 billion fraud scheme that contributed to the failures of Colonial Bank, one of the 25 largest banks in the United States in 2009, and TBW, one of the largest privately held mortgage lending companies in the United States in 2009.

 “Today a jury convicted Lee Farkas of orchestrating one of the longest and largest bank fraud schemes in the country,said U.S. Attorney Neil H. MacBride."In 2008, Lee Farkas boasted that he 'could rob a bank with a pencil.’  And he did just that.

“His staggering greed led him to steal nearly $3 billion from Colonial Bank and other investors.   Farkas'mammoth fraud contributed to the toppling of a financial institution and the ripple effects were felt from Wall Street to Main Street.   Now he'sbeing held responsible for the financial ruin he left in his wake,MacBride said.

After a 10-day trial, a federal jury in the Eastern District of Virginia found Farkas guilty of one count of conspiracy to commit bank, wire and securities fraud; six counts of bank fraud; four counts of wire fraud; and three counts of securities fraud.   

At sentencing, scheduled for July 1, 2011, Farkas faces a maximum prison term of 30 years for the conspiracy charge and for each count of bank fraud, 20 years for each count of wire fraud related to TARP, 30 years for each count of wire fraud affecting a financial institution and 25 years for each securities fraud count.

According to court documents and evidence presented at trial, Farkas and his co-conspirators engaged in a scheme that misappropriated more than $1.4 billion from Colonial Bank'sMortgage Warehouse Lending Division in Orlando, Fla., and approximately $1.5 billion from Ocala Funding, a mortgage lending facility controlled by TBW.   Farkas and his co-conspirators misappropriated this money to, among other things, cover TBW'soperating expenses.   The fraud scheme contributed to the failures of Colonial Bank and TBW.  

Six individuals have pleaded guilty for their roles in the fraud scheme, including: Paul Allen, former chief executive officer of TBW; Raymond Bowman, former president of TBW; Desiree Brown, former treasurer of TBW; Catherine Kissick, former senior vice president of Colonial Bank and head of its Mortgage Warehouse Lending Division (MWLD); Teresa Kelly, former operations supervisor for Colonial Bank?MWLD; and Sean Ragland, a former senior financial analyst at TBW.

“Lee Farkas, the former chairman of TBW, masterminded one of the largest bank fraud schemes in history," said Assistant Attorney General Lanny A. Breuer. 'His shockingly brazen scheme poured fuel on the fire of the financial crisis.  It not only led to the downfall of TBW, one of the largest private mortgage lending companies in the United States, but also contributed to the failure of one of the country?largest commercial banks. 

“Mr. Farkas may have thought he could steal nearly $3 billion from investors and taxpayers and sail into the sunset.  But now a jury has told him otherwise, and he must face the severe consequences.”