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Former chief financial officer of Taylor, Bean & Whitaker Mortgage (TBW) pleaded guilty Tuesday to making false statements and conspiring to commit bank and wire fraud for his role in a $2.9 billion scheme that contributed to the failures of TBW and Colonial Bank, according to a release from the ""Justice Department"":http://www.justice.gov/.
[IMAGE]Delton de Armas of Carrollton, Texas, faces a maximum penalty of 10 years in prison. He admitted in court that from 2005 through August 2009, he and others schemed to defraud financial institutions that had invested in Ocala Funding - a lending facility that obtained funds for mortgage lending for TBW.
According to court records, shortly after Ocala Funding was established, de Armas knew of a deficiency that grew over time to more than $700 million and learned from the CEO that it was more than $1.5 billion at the time of TBW's collapse.
De Armas admitted he was aware a subordinate who reported to him had falsified Ocala Funding collateral reports and would send those reports to investors of Ocala Funding and other third parties.
[COLUMN_BREAK]De Armas acknowledged that he and the CEO gave investors a false explanation for the deficiency in Ocala Funding.
De Armas also admitted that he told a subordinate to inflate an account receivable balance for loan participations in TBW's financial statements. De Armas acknowledged that he was aware that those statements would go to Ginnie Mae and Freddie Mac to determine if TBW's authority to sell and service securities issued by them should be renewed.
In addition, de Armas admitted in court to reviewing and editing a letter that contained purposeful omissions. The letter was sent by the CEO to HUD, through Ginnie Mae and concerned TBW's audited financial statements for the fiscal year ending on March 31, 2009.
""When Mr. de Armas learned of a hole in Ocala Funding's assets, he used his position as CFO to cover it up and mislead investors,"" said U.S. Attorney Neil H. MacBride in a statement. ""Today's plea is the eighth conviction in one of the nation's largest bank frauds in history.""
The others who were convicted for their part in the scheme include Lee Bentley Farkas, the chairman of TBW, who was sentenced to 30 years in prison and Paul Allen, former CEO, who was sentenced to 40 months in prison.
Raymond Bowman, former president, was sentenced to 30 months in prison; Desiree Brown, former treasurer, was sentenced to six years in prison; Catherine Kissick, former SVP of Colonial Bank, was sentenced to eight years in prison; Teresa Kelly, former operations supervisor for Colonial Bank's Mortgage Warehouse Lending Division, was sentenced to three months in prison; and Sean Ragland, a former senior financial analyst at TBW, was sentenced to three months in prison.
