And it has Begun – Former Taylor Bean Chief Lee Farkas Charged With 16 Counts of Fraud

June 16 (Bloomberg) — Lee Farkas, the former chairman of Taylor, Bean & Whitaker Mortgage Corp., was accused by the U.S. of helping run a more than $1.9 billion fraud scheme that unsuccessfully attempted to steal money from the government’s Troubled Asset Relief Program.

An indictment unsealed today in federal court in Alexandria, Virginia, alleges that Farkas, 57, sought to deceive financial firms and TARP by covering up shortfalls at his closely held mortgage lending company based in Ocala, Florida.

The scheme contributed to the failures of Colonial Bank, one of the 50 largest U.S. banks in 2009, and closely held Taylor, Bean & Whitaker, once one of the largest privately held mortgage companies in the U.S., the Justice Department said in a statement.

Farkas was arrested yesterday by the Federal Bureau of Investigation in Ocala after he finished a workout at a gym he owns, said Shawn Henry, an assistant FBI director in charge of the Washington field office. Farkas faces the possibility of spending the rest of his life in prison, according to court papers.

“The fraud alleged here is truly stunning in its scale and complexity,” said Lanny Breuer, the assistant U.S. attorney general in charge of the Justice Department’s criminal division, at a news conference in Washington. “This arrest and these charges send a strong message to corporations and corporate executives alike that financial fraud will be found, and it will be prosecuted.”

Unnamed Conspirators

The indictment said Farkas and unnamed conspirators sold Colonial Bank more than $400 million in fake mortgage assets. They also allegedly hid mortgage loans that were losing value, or were valueless, from regulators and auditors in fraudulent transactions to make it look like the loans were being sold onto the secondary mortgage market.

Farkas and his conspirators diverted about $1.5 billion from Ocala Funding, a mortgage lending facility controlled by Taylor, Bean & Whitaker, also known as TBW, to cover TBW’s losses, according to the indictment.

“Mr. Farkas will enter a plea of absolutely not guilty, will vigorously defend against the charges and looks forward to having his day in court to clear his name,” Anthony C. Cochran, an attorney for Farkas with Chilivis, Cochran, Larkins & Bever LLP in Atlanta said in an e-mailed statement.

More here…

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From the Complaint…

UNITED STATES OF AMERICA

v.

LEE BENTLEY FARKAS,
Defendant.

CRIMINAL NO. 1M0-CR-200


Count 1: Conspiracy
(18U.S.C. §1349)

Counts 2-7: Bank Fraud
(18U.S.C. §§1344 and 2)

Counts 8-13: Wire Fraud
(18U.S.C. §§ 1343 and 2)

Counts 14-16: Securities Fraud
(18U.S.C. §§1348 and 2)

Forfeiture Notice
(18 U.S.C. §§981,982)

Be sure to read the entire complaint below…

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4closureFraud.org

UNITED STATES OF AMERICA v. LEE BENTLEY FARKAS, Defendant. CRIMINAL NO. 1M0-CR-200
[scribd id=33175754 key=key-2kh9mpmylb22dm8ggfa5 mode=list]

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