The former chairman and majority owner of the now-defunct mortgage lender ""Taylor Bean & Whitaker"":http://dsnews.comarticles/taylor-bean-forced-to-shutter-2009-08-06 was arrested Tuesday night in Ocala, Florida.
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Lee Bentley Farkas has been charged in a 16-count indictment for his alleged role in a $1.9 billion fraud scheme that the Department of Justice says contributed to the 2009 failures of both ""Taylor Bean"":http://dsnews.comarticles/its-official-taylor-bean-files-for-bankruptcy-protection-2009-08-25, once the nation's largest non-depository mortgage lending company, and ""Colonial Bank"":http://dsnews.comarticles/new-bank-failures-raise-questions-about-securities-fallout-fdic-solvency-2009-08-21, which at the time of its collapse was one of the 50 largest banks in the United States.
The charges against Farkas include one count of conspiracy to commit bank, wire, and securities fraud; six counts of bank fraud; six counts of wire fraud; and three counts of securities fraud. Federal prosecutors are also seeking approximately $22 million in forfeiture from Farkas.
[COLUMN_BREAK]According to court documents, Farkas and his co-conspirators allegedly engaged in a scheme that began in 2002, to misappropriate more than $400 million from Colonial Bank’s mortgage warehouse lending division in Orlando, Florida, and approximately $1.5 billion from Ocala Funding, a mortgage lending facility controlled by Taylor Bean.
Farkas and his co-conspirators allegedly misappropriated this money to cover Taylor Bean’s operating losses, leading to the ultimate failure of the company, as well as Colonial Bank, according to the Justice Department.
The indictment further alleges that Farkas and others committed wire and securities fraud in connection with their attempt to convince the federal government to provide Colonial Bank with approximately $553 million through the Troubled Asset Relief Program (TARP).
Court documents also allege that through a series of “sham transactions,†Farkas and his co-conspirators hid impaired-value mortgage loans that Taylor Bean was unable to sell on Colonial Bank’s books -- for a period of years in some cases, prosecutors say.
In a related action, the U.S. Securities and Exchange Commission (SEC) has filed an enforcement action against Farkas.