Lee Farkas, former chairman of Taylor, Bean & Whitaker Mortgage Corp., was found guilty of 14 counts of securities, bank and wire fraud and conspiracy to commit fraud for masterminding a scheme that prosecutors said cheated investors and the government out of $3 billion and led to the 2009 collapse of his company and Colonial Bank.
Farkas was convicted after a day of deliberations by a federal jury in Virginia for what prosecutors said was one of the largest and longest bank fraud schemes in American history.
Farkas, 58, faces a maximum sentence of 30 years for the conspiracy and bank-fraud charges and a minimum of 20 years for the wire-fraud and securities-fraud charges.
His conviction is one of few that have come out of the financial crisis.
Six other Taylor, Bean & Whitaker executives have pleaded guilty for their role in the scheme, which prosecutors said began in 2002 when executives moved to hide the firm’s losses by secretly overdrawing its Colonial Bank accounts, then covering it up by selling the bank $1.5 billion in “worthless” and “fake” mortgages.
Executives later persuaded Colonial to apply for $570 million in federal bailout funds through the Troubled Asset Relief Program, but were not granted the money after executives were unable to satisfy the condition of raising $300 million in private funds.
Taylor, Bean & Whitaker failed and Colonial filed for bankruptcy in 2009.
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