Bank exec convicted in mortgage fraud case

ALEXANDRIA, Virginia – A jury on Tuesday convicted the majority owner of what had been one of America’s largest mortgage companies on all 14 counts in a US$3 billion fraud trial that officials have said is one of the most significant prosecutions to arise from the US financial crisis.

Prosecutors said Lee Farkas led a fraud scheme of staggering proportions as chairman of Florida-based Taylor Bean & Whitaker. The fraud not only caused the company’s 2009 collapse and the loss of jobs for its 2 000 workers, but also contributed to the collapse of Alabama-based Colonial Bank, the sixth-largest bank failure in US history.The jury returned its verdict late Tuesday after more than a day of deliberations.Colonial and two other major banks – Deutsche Bank and BNP Paribas – were cheated out of nearly US$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 US District Court – also tried to fraudulently obtain more than US$500 million in taxpayer-funded relief from the government’s bank bailout programme, the Troubled Assets Relief Programme (TARP).While TARP at one point gave conditional approval to a payment of roughly US$550 million, ultimately neither Taylor Bean nor Colonial received any TARP money, and investigators from that office, along with the FBI and other agencies, helped uncover the fraud.Farkas testified in his own defence at the trial and claimed he did nothing wrong. He claimed he was unfamiliar with details or knowledge of many aspects of the various fraud schemes.In closing arguments, Farkas’ lawyer Bruce Rogow, said the six executives at Colonial and Taylor Bean who struck plea deals skewed their testimony to bolster the government’s case in the hope of receiving lighter prison sentences for their cooperation. Rogow said Farkas and everyone else at Taylor Bean was working honestly and ethically to get control of its finances and perhaps could have done the job if the government hadn’t essentially shut the company down when it raided company headquarters in 2009.-Nampa-AP

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