Virginia Court Rejects Mortgage Executive's Appeal of Fraud Charges
Just last year Lee B. Farkas, owner and CEO of the now defunct Taylor, Bean and Whitaker Mortgage Corporation, was convicted on 14 charges of fraud and conspiracy for hiding over $3 billion in fake loans. Farkas was sentenced to 30 years in prison.
Farkas' track record started in 2002, when his company attempted to sell eight faulty mortgages to Fannie Mae. All of these mortgages had defaulted without a single payment being made, and all were originated to Farkas as the borrower. Fannie Mae stopped doing business with the firm, which nearly folded.
At his trial, Farkas, who has a very interesting perspective of legal mortgage practices, argued that applying for fake loans from a bank is a typical way for a mortgage company to drum up some extra cash. He swore that he was planning on paying it back, and was certainly never intending to sell the mortgage loans. Farkas claimed that a misinformed colleague accidentally slipped the loans into the batch that was to be sold off to Fannie Mae.
It wasn't until the mortgage crisis really hit the fan in 2008, when authorities started probing into the dealings of Colonial Bank, that the Justice Department started connecting the dots to Farkas and his company. Deceived by one of their own, Catherine Kissick, who managed the deals with Taylor, Bean and Whitaker, and actually conceived the plan to mislead her employer. According to Kissick, she was operating under the understanding that Farkas would find the money to make the situation right.
As Colonial started to crumble, Farkas came up with the idea of selling off securities and assets owned by his firm to push money into Colonial so the bank could qualify for $553 million in bailout money, which then would be used to trim the debt. When Farkas failed to provide $150 million he promised to collect from investors, both companies were doomed. Both Colonial Bank and Taylor, Bean and Whitaker closed in early August of 2012.
In all, six TBW and two Colonial executives were prosecuted in the case. On June 20th, 2012, a three-judge panel of the U.S. Court of Appeals for the Fourth Circuit in Virginia denied Farkas' plea for an appeal case.
By: Javi Calderon
