A federal judge Friday sentenced former Colonial Bank warehouse chief Catherine Kissick to eight years in prison after she pleaded guilty to helping Taylor Bean & Whitaker executives pull off a $2.9 billion fraud scheme that brought down both the bank and the nonbank lender.
Kissick, 50, who is also a mother, was the senior vice president in charge of Colonial's warehouse group and was well known in mortgage circles. She was based in Orlando, Fla. TBW, which failed two years ago, was headquartered in Ocala, Fla.
When Kissick was first charged in the case many of her contemporaries in the warehouse business were surprised at her role in the scheme.
Prosecutors as well as the Securities and Exchange Commission charged that she enabled the sale of fictitious and impaired mortgage loans and securities from the warehouse division to TBW, which also was the bank's biggest mortgage-borrowing customer.
The SEC accused her of falsely characterizing the securities as high-quality, liquid collateral.
In March, Kissick pleaded guilty to conspiring to one count of bank, wire and securities fraud. In total she faced a maximum of 30 years in prison.
"As a senior executive at Colonial Bank, Catherine Kissick helped execute one of the largest bank frauds in history," Assistant Attorney General Lanny Breuer said in a statement. "For years, she used her position within the bank to buy hundreds of millions of dollars in worthless assets from TBW, deceiving shareholders, investors and regulators."
BB&T Corp. later bought Colonial Bank and its warehouse group from the Federal Deposit Insurance Corp. Shortly after the sale Kissick was let go from the bank.
Another former TBW defendant, Teresa Kelly, also was sentenced Friday to three months in prison after she pleaded guilty in March to similar charges. Kelly was an operations supervisor who worked under Kissick.
Former TBW CEO and owner Lee Farkas was convicted of criminal charges in April on 14 counts of fraud. He is scheduled to be sentenced later this month.
