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Taylor Bean executives sentenced to prison in fraud

A worker takes her belongings out of Taylor Bean & Whitaker Mortgage Corp. in Ocala on the day it stopped making loans. 

Associated Press (2009)

A worker takes her belongings out of Taylor Bean & Whitaker Mortgage Corp. in Ocala on the day it stopped making loans. 

ALEXANDRIA, Va. — Two executives at what had been the nation's largest private mortgage lender were sentenced to six and 2 1/2 years for their roles in a $3 billion fraud that officials have called the biggest criminal case to develop out of the housing and financial crises.

Prosecutors had sought slightly longer terms of eight and five years, respectively, for Desiree Brown, 45, treasurer at Ocala-based Taylor, Bean & Whitaker, and Raymond Bowman, also 45, the company's president. At the same time, though, prosecutors gave both credit for their cooperation in helping to unravel a series of complex financial frauds and deliver a guilty conviction against Taylor Bean's owner and chairman, Lee Farkas, who is expected to receive a significantly longer term when he is sentenced later this month.

Taylor Bean cheated three banks, including Alabama-based Colonial Bank, out of nearly $3 billion over nearly a decade before the scheme unraveled in 2009, resulting in the collapse of Taylor Bean and the loss of jobs for its 2,000 workers, as well as the collapse of Colonial, which had been one of the 25 largest banks in America.

In large part, Taylor Bean concealed its fraud by selling or using as collateral mortgages that had already been sold to other investors. Midlevel executives at Colonial participated in the scheme and helped conceal the massive hole in Taylor Bean's account, at first to preserve their relationship with Taylor Bean and later because they were complicit and felt they had no choice but to continue.

The scheme also included a failed attempt to use the cooked books at Colonial and Taylor Bean to try to get more than $500 million in emergency funding from the government's Troubled Asset Relief Program, or TARP.

Neil Barofsky, the former special inspector general at TARP whose office helped uncover the fraud, has called the Farkas case "the most significant criminal prosecution to date rising out of the financial crisis."

Taylor Bean executives sentenced to prison in fraud 06/10/11 [Last modified: Friday, June 10, 2011 10:23pm]
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