Jury convicts executive in $3 billion mortgage fraud case

[Rage for Order]

It's a start...

http://news.yahoo.com/s/ap/20110419/ap_on_bi_ge/us_tarp_case_trial

A jury on Tuesday convicted the majority owner of what had been one of the nation's largest mortgage companies on all 14 counts in a $2.9 billion fraud trial that officials have said is one of the most significant prosecutions to arise from the nation's financial crisis. Prosecutors said Lee Farkas 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 U.S. history.

Colonial and two other major banks — Deutsche Bank and BNP Paribas — were collectively cheated out of nearly $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 in U.S. District Court — also tried to fraudulently obtain more than $500 million in taxpayer-funded relief from the government's bank bailout program, the Troubled Asset Relief Program (TARP).

According to prosecutors, the fraud began in 2002, when Taylor Bean overdrew its main account with Colonial by several million dollars. Mid-level executives at Colonial agreed to transfer money into Taylor Bean's accounts at the end of each day to avoid generating overdraft notices, a process known as "sweeping." As the hole grew to well over $100 million, Taylor Bean and a handful of Colonial executives concocted a scheme in which Taylor Bean sold hundreds of millions in worthless mortgages to Colonial, mortgages that had already been sold to other investors. More than $1 billion in such phony mortgages were eventually sold to Colonial, which listed them on its books and on its quarterly reports as legitimate assets, prosecutors alleged.

In a related scheme, Taylor Bean created a subsidiary called Ocala Funding that sold commercial paper — essentially glorified IOUs — to banks including Deutsche Bank and BNP Paribas. But prosecutors said the collateral that supposedly backed that commercial paper was worthless, and when Taylor Bean collapsed in 2009, the two banks lost roughly $1.5 billion.


More at the link

:toast:

[sakabatou]

1. We need more of this

[Rage for Order]

2. This guy lived like a king. From the article:

Prosecutors said Farkas was motivated by greed and a lavish lifestyle that included a private jet, a seaplane, numerous houses including a home on Key West that he paid servants to hand wash with a sponge to prevent salt damage, a collection of several dozen classic cars and an executive dining room at company headquarters that served pheasant and caviar.


I hope he enjoyed it while it lasted, because his life is going to be decidedly less pleasant for the foreseeable future.

:)

[notadmblnd]

4. I hope he eats a lot of balogna sandwiches

[PDJane]

3. This is a good thing........

I hope he has a lot of time to reconsider his crimes. And I hope it will prompt others to do so as well.

[grahamhgreen]

5. To the top!

[Snoutport]

6. k & r

[dkf]

7. Geez is this how bad it needs to be to convict?

[DCKit]

9. Yeah. Except he screwed other banks, not people. THAT's what it takes. nt

[franzia99]

8. Amen I hope they lock him up and throw away the key. Good riddance to this worthless scumbag.

[truedelphi]

10. How is this criminal scheme of Lee Farkas any different than most of

The activities of every major firm on Wall Street?

It would be so nice if this is just the beginning...