Suevon Lee has done a great job covering this story. They basically just "made up" 300 million or so of loans. Made up didnt exist ghost loans. More indictments coming.....
Farkas guilty on all 14 counts
Published: Tuesday, April 19, 2011 at 5:15 p.m.
Last Modified: Tuesday, April 19, 2011 at 5:15 p.m.
Last Modified: Tuesday, April 19, 2011 at 5:15 p.m.
Alexandria, Va. - A jury on Tuesday found Lee Bentley Farkas, the former chairman and majority shareholder of Ocala's Taylor, Bean & Whitaker Mortgage Corp., guilty on 14 counts of bank, wire and securities fraud for his role in a two billion-dollar fraud scheme that toppled the mortgage company and a major bank.
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Lee Farkas
Sentencing for Farkas, 58, will be July 1 at the federal courthouse here before U.S. District Judge Leonie M. Brinkema. The defendant, who was taken into custody, will be held at a local jail pending a bond hearing ahead of sentencing. He faces 20 years or more in prison on each count, which includes fraud and conspiracy to commit fraud.
The 12-member jury took just a day and a half to arrive at guilty verdicts on all counts included in the indictment against Farkas following a 10-day trial that began April 4. The government's case featured testimony from 23 witnesses, including six co-conspirators, Freddie Mac and Ginnie Mae representatives and officials from major financial institutions that once invested in Taylor Bean.
In a conference call with reporters late Tuesday afternoon, Assistant Attorney General Lanny A. Breuer, of the Department of Justice's Criminal Division, praised the jury for its work, calling the seven-year fraud scheme "shockingly brazen."
"The financial crisis has many faces, and today Lee Farkas' is one of them," he said. "Mr. Farkas thought he could steal nearly $3 billion from investors and taxpayers and sail into the sunset. I think he thought and hoped that, but now a jury has told him otherwise and he must face the consequences of his act."
In what the government has called "one of the largest and longest-running fraud schemes in the country," Farkas, with the help of co-conspirators, was accused of selling fake loan assets to Colonial Bank to the tune of $1.4 billion while diverting up to $1.5 billion in funds from financing vehicle Ocala Funding LLC to help cover the company's operating expenses.
Prosecutors said the scheme, which ran from December 2003 to August 2009, evolved to target federal bailout money when Taylor Bean led a failed effort to raise $300 million in capital so Colonial BancGroup Inc. could receive $553 million in Troubled Assets Relief Program (TARP) funds. As the deal unraveled over accounting irregularities, Taylor Bean's Ocala headquarters and Colonial's Mortgage Warehouse Lending Division in Orlando were raided by federal agents. Both institutions filed for bankruptcy in August 2009.
Farkas was arrested outside a gym in Ocala on June 15, 2010, almost a year after his company — which he purchased in 1991 and turned into one of the largest home mortgage lenders in the country — was forced to close its doors and lay off 2,400 employees nationwide.
He was the only person tied to the downfall of Taylor Bean and Colonial who has gone to trial. Six co-conspirators — Taylor Bean's former CEO Paul R. Allen, president Ray Bowman, treasurer Desiree Brown, senior financial analyst Sean Ragland, and Colonial Bank's MWLD supervisor Cathie Kissick, along with her deputy, Teresa Kelly — entered guilty pleas shortly before Farkas' trial began and will be sentenced by Brinkema in June. They face penalties ranging from five up to 30 years in prison on fraud-related charges.
Each offered testimony at trial identifying Farkas as the one driving the decisions behind different elements of the scheme, which began with a sweeping of funds averaging tens of millions of dollars at Colonial Bank to cover Taylor Bean overdrafts. The scheme grew to incorporate selling fake or impaired loans to Colonial, once one of the 50 largest banks in the country before it was seized by regulators and placed into receivership.
Farkas took the stand as the defense's fourth and final witness last week, claiming he had no participation in the sweeping of funds, no direct management over Ocala Funding and no knowledge of the sale of fake mortgage loans to Colonial. He said any mistakes, which he called unintentional, were the result of his company's too-rapid growth.
Bruce Rogow, Farkas' defense attorney, said Tuesday he was disappointed with the verdict.
"We had hoped the jury would have accepted what was the truth: that the six people pled guilty not because they were guilty but because they were seeking to minimize the sentences the government threatened them with," he said.
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http://www.ocala.com/article/20110419/articles/110419692?tc=ar
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