PricewaterhouseCoopers Settles $5.5 Billion Crisis Era Lawsuit
Bankruptcy trustee sued accounting firm over failure to catch fraud at Taylor Bean
Accounting giant PricewaterhouseCoopers LLP has settled a $5.5 billion lawsuit in the middle of a weekslong trial over its alleged failure to catch the massive fraud that led to one of the most expensive bank failures in U.S. history.
Steven Thomas, a lawyer for the bankruptcy trustee overseeing the remains of failed mortgage lender Taylor Bean & Whitaker Mortgage Corp., announced the settlement at a hearing Friday morning in Miami. Mr. Thomas and PwC each said the settlement terms were confidential but that the lawsuit has been resolved “to the mutual satisfaction of the parties.”
Taylor Bean was a Florida mortgage lender that collapsed seven years ago, when a multibillion-dollar mortgage fraud orchestrated by the company’s leader, Florida businessman Lee Farkas, unraveled. Its collapse also brought down Colonial Bank, one of the largest bank failures in U.S. history.
The bankruptcy trustee for Taylor Bean, once one of the nation’s biggest privately held mortgage companies, sued PwC in 2013, seeking $5.5 billion in damages. At issue in the case, one of the few allegations of wrongdoing during the financial crisis that has reached a courtroom, was a fundamental question in accounting: How much responsibility do auditors have for catching fraud?