US$2.9b mortgage fraudster
By Matthew Barakat |
April 21, 2011, Thursday
|
Print Edition
Print Edition
THE majority owner of what had been one of the United States' largest mortgage companies has been convicted on all 14 counts in a US$2.9 billion fraud trial that officials said was one of the most significant prosecutions to arise from the nation's financial crisis.
Lee Farkas, 58, led a fraud scheme of staggering proportions for roughly eight years as chairman of Florida-based Taylor Bean & Whitaker. The fraud not only caused the company's 2009 collapse and put its 2,000 employees out of work, but also contributed to the collapse of Alabama-based Colonial Bank, the sixth-largest bank failure in United States history.
Colonial and two other major banks - Deutsche Bank and BNP Paribas - were collectively cheated out of nearly US$3 billion, prosecutors estimated.
Farkas and his cohorts - six of whom entered guilty pleas to related charges and testified against him at the two-week trial - also tried to fraudulently obtain more than US$500 million in taxpayer-funded relief from the government's bank bailout program. While the Troubled Asset Relief Program at one point gave conditional approval to a payment of roughly US$550 million, ultimately neither Taylor Bean nor Colonial received any TARP money, and investigators from that office, along with the FBI and other agencies, helped uncover the fraud.
The Justice Department's criminal division chief, Lanny Breuer, said Farkas was "one of the masterminds in one of the largest bank frauds in history" and that his misconduct "poured fuel on the fire of the financial crisis."
Farkas will be sentenced on July 1 and could spend the rest of his life in prison.
Lee Farkas, 58, led a fraud scheme of staggering proportions for roughly eight years as chairman of Florida-based Taylor Bean & Whitaker. The fraud not only caused the company's 2009 collapse and put its 2,000 employees out of work, but also contributed to the collapse of Alabama-based Colonial Bank, the sixth-largest bank failure in United States history.
Colonial and two other major banks - Deutsche Bank and BNP Paribas - were collectively cheated out of nearly US$3 billion, prosecutors estimated.
Farkas and his cohorts - six of whom entered guilty pleas to related charges and testified against him at the two-week trial - also tried to fraudulently obtain more than US$500 million in taxpayer-funded relief from the government's bank bailout program. While the Troubled Asset Relief Program at one point gave conditional approval to a payment of roughly US$550 million, ultimately neither Taylor Bean nor Colonial received any TARP money, and investigators from that office, along with the FBI and other agencies, helped uncover the fraud.
The Justice Department's criminal division chief, Lanny Breuer, said Farkas was "one of the masterminds in one of the largest bank frauds in history" and that his misconduct "poured fuel on the fire of the financial crisis."
Farkas will be sentenced on July 1 and could spend the rest of his life in prison.
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