Wake up and good morning. That rarest of events -- a successful federal prosection of a financial executive who allegedly scammed the mortgage industry -- is now under fresh attack. Lee Farkas, the Ocala ex-CEO of the Taylor, Bean & Whitaker mortgage corporation and -- I can't believe I'm saying this, the government's biggest criminal conviction of the financial crisis -- wants a retrial.
Not sure whether to laugh or cry. The feds, who seem to have backbones of Jello and the litigation skills of Goofy, may be on the edge of losing just about the only criminal conviction during a period of the most outrageous and rampant financial and mortgage fraud in generations. The difference, it seems, in the feds at least initially nailing someone like Farkas -- north of us here in Tampa Bay way up in that hotbed of Wall Street savvy of Ocala -- is that he was small enough potatoes for the feds to power through a conviction. Others who manhandled the financial system to create great personal wealth and devastate the economy -- Countrywide Financial's Angelo Mozilo or Goldman Sachs come to mind -- have thus far merely paid a hefty fine (penalties Mozilo and Goldman can well afford) and gone on their merry ways.
Now comes Farkas seeking a retrial. Why? His lawyers claim a federal court's "rush to judgment" violated his rights to a fair trial while a federal judge erred by instructing a jury its sole interest was to seek the truth without allowing further definition of "reasonable doubt." Bottom line? Farkas's lawyers say, given the complexity of the case and the trial's location in Virginia rather than Florida, they were rushed from the start of the trial. Read Farkas' 39-page court appeal here.
Farkas was sentenced to 30 years in prison after a jury found him guilty of misappropriating about $3 billion and trying to fraudulently obtain more than $550 million from the government's Troubled Asset Relief Program in a failed effort to prop up Colonial Bank. Colonial, based in Alabama, later failed.
The government's failure to kick more high-end fraudsters into jail is a national disgrace and a major underlying factor in the deep distrust and disgust Americans feel for their federal authorities. Indeed, according to a now-departed Justice Department official who used to be in charge of investigating such matters, the Justice Department has decided that holding top Wall Street executives criminally accountable is just too darn hard to accomplish. Read more from ProPublica here and this December 2011 60 Minutes segment here. Garsh!
-- Robert Trigaux, Business Columnist, Tampa Bay Times