Two top executives at the now defunct Taylor, Bean & Whitaker were sentenced late last week for their involvement in a $2.9 billion fraud scheme that brought down the top ranked nonbank lender, and its chief warehouse backer, Colonial Bank.
Desiree Brown, TBW’s former treasurer, and Raymond Bowman, the former president, were sentenced to 72 months and 30 months in prison, respectively.
According to court documents and evidence presented at trial, former CEO Lee Farkas and his co-conspirators (including Brown and Bowman) engaged in a scheme that began in 2002 and lasted through August 2009 to misappropriate more than $1.4 billion from Colonial Bank’s warehouse division, and $1.5 billion from Ocala Funding, a mortgage lending facility controlled by TBW.
Farkas – who will be sentenced later this month – and his co-conspirators misappropriated the money to cover TBW’s operating expenses. The group transferred money between bank accounts to hide overdrafts, which grew to more than $100 million.
According to court documents, the overdrafts and operating losses were covered up by having the bank purchase from TBW more than $1.5 billion in what was later revealed to be worthless mortgage assets, including loans that TBW had already sold to other investors. Also, the bank purchased fake pools of loans that were supposedly being formed into MBS.
In February, Brown pleaded guilty to one count of conspiracy to commit bank, wire and securities fraud, while Bowman pleaded guilty in March to one count of conspiracy to commit bank, wire and securities fraud and one count of making false statements to federal agents related to the crime.
Farkas was convicted in April on 14 counts of wire fraud for being the mastermind of the scheme. He faces a possible life sentence.
Other defendants in the case, including Paul Allen, Catherine Kissick, Teresa Kelly and Sean Ragland, have already pleaded guilty for their role in the scheme and await sentencing.
“These TBW executives helped pull off one of the largest, longest-running bank fraud schemes in history that led to the collapse of Colonial Bank and TBW,” said Neil MacBride, U.S. attorney for the Eastern District of Virginia. “They knew that without their fraud scheme, TBW would fail. They helped Lee Farkas do what they knew was wrong, and now they will pay for their crimes. At the same time, these defendants agreed to cooperate with the government and that cooperation was clearly taken into account in the sentences imposed.”
TBW was based in Ocala, Fla., Colonial in Montgomery, Ala. The bank’s warehouse unit was in Orlando, Fla.
