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Robert Trigaux

Trial of Lee Farkas, key target in Taylor, Bean conspiracy, starts Monday



leefarkasmugshot.jpgWake up and good morning. Okay. We've watched the warm-up acts in the Taylor, Bean & Whitaker case in which the Ocala-based mortgage company and many of its top executives are charged with defrauding the government and helping to bring about the collapse of Colonial Bank, one of Alabama's biggest banking companies. At least five managers of Taylor Bean and Colonial have plead guilty so far. Prosecutors have charged six people in the conspiracy, which allegedly was masterminded by the company's former chairman (photo, left), Lee Farkas.

Come Monday, it is Farkas' turn. Five people, including two officials from the Colonial Bank, who pleaded guilty so far have agreed to testify against Florida businessman Farkas, whose trial on 16 counts of bank, wire and securities fraud is scheduled to begin April 4 with jury selection in an Alexandria, Va., courtroom. Here's more from Bloomberg and past Venture blog reports here and here.

Neil Barofsky, the special inspector general for the gov­ernment's Troubled Assets Relief Program (TARP), has said the Farkas case "argu­ably represents the most sig­nificant criminal prosecu­tion to date arising out of the financial crisis."

According to the Wall Street Journal, Farkas’s legal team wants to exclude the testimony of several potential government witnesses, among them three senior managers from Freddie Mac and Ginnie Mae. Taylor Bean bundled mortgages into securities and sold them to investors such as Freddie Mac. Many of those mortgages were guaranteed by Ginnie Mae.

The Journal reports that William Cummings, Farkas’s defense lawyer, says the government is attempting to "disguise" these expert witnesses as "lay" witnesses in order to circumvent heightened disclosure standards. In criminal trials, expert witnesses have greater latitude to testify to their opinions on subject areas of their expertise.

Cummings once represented "American Taliban" John Walker Lindh. The lawyer says if the witnesses can testify unchallenged, Farkas will be denied his constitutional right to confrontation, as he will not have the information necessary for an effective cross-examination. Cummings told the Journal he would prefer Farkas not testify during the trial.

-- Robert Trigaux, Business Columnist, St. Petersburg Times


[Last modified: Friday, April 1, 2011 7:44am]


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