The former chief financial officer of Taylor, Bean & Whitaker on Tuesday pleaded guilty to covering up one of the largest mortgage frauds in U.S. history.
Ex-CFO Delton de Armas, 41, admitted to helping his boss, Lee Farkas, pull off a $3 billion fraud scheme that brought down the nonbank as well as its chief warehouse lender, Colonial BancGroup, Montgomery, Ala.
De Armas, who faces up to 10 years in prison, pleaded guilty to conspiracy charges and making false statements.
To date, he is the eighth person to be convicted in connection with TBW's collapse. Last year TBW founder and CEO Farkas was sentenced to 30 years in prison.
"As CFO, Mr. de Armas could have put a stop to the fraud the moment he discovered it," said U.S. Attorney Neil MacBride. “Instead, the hole in Ocala Funding grew to $1.5 billion on his watch, and as it grew, so did his lies to investors and the government."
From 2005 through August 2009, de Armas helped Farkas and other TBW officials misappropriate more than $1.5 billion from Ocala Funding LLC, a financing vehicle used and controlled by TBW.
De Armas issued false financial reports that masked shortfalls at Ocala Funding in order to keep auditors at bay and investors on board.
Not only was Colonial TBW's largest warehouse provider, but in 2009 the nonbank lender tried to engineer a deal to buy the Alabama-based depository. TBW was headquartered in Ocala, Fla. Both failed in the late summer/early fall of that year.
