Convicted Of Largest Bank Fraud
Posted on 21 April 2011 by LynThomas in Uncategorized
A jury convicted the majority owner of what had become one of the nation’s largest mortgage companies. Lee Farkas was convicted on all 14 counts of securities and wire fraud, as well as conspiracy to commit fraud, in a $3 billion fraud trial that officials have said is one of the most significant prosecutions to arise from the nation’s housing market crash.
The jury took more than a full day of deliberations to reach its verdict that Farkas was guilty of masterminding one of the largest bank frauds ever.
As ex-chairman of Florida-based Taylor Bean & Whitaker Lee Farkas led a fraud scheme of staggering proportions. The fraud not only caused the company to collapse in 2009 and the loss of jobs for its 2,000 workers, but also contributed to the collapse of Alabama-based Colonial Bank, the sixth-largest bank failure in U.S. history.
Assistant Attorney General Lanny Breuer told reporters Farkas masterminded the multibillion-dollar, 10-year fraud scheme that led to TBW’s downfall and the collapse of the Colonial Bank. Both the bank and TBW filed for bankruptcy in August 2009.
Farkas was charged with trying to cover up massive losses at TBW by moving funds around between accounts at Colonial Bank and also selling mortgage loans that either did not exist, were worthless or had already been sold.
He and his co-conspirators were accused of misappropriating money from one of its own funding vehicles, which had two major investors: Deutsche Bank AG, which had agreed to buy up to $1.25 billion in commercial paper and BNP Paribas SA, which had agreed to buy up to $500 million. More than $1 billion in phony mortgages were eventually sold to Colonial, which listed them on its books and on its quarterly reports as legitimate assets.
It is estimated that the Deutsche Bank and BNP Paribas were cheated out of $3 billion.
Six of Farkas’s coconspirators entered guilty pleas to related charges and testified against Farkas in the two-week trial.
Farkas testified in his own defense at the trial and claimed he had done nothing wrong. He claimed he was unfamiliar with details or knowledge of many aspects of the various fraud schemes. He faces between 20 – 30 years imprisonment.
Farkas is reported to have made the comment to a colleague concerning leverage, “If I owe you $100, I have a problem. If I owe you $1 million, you have a problem.”
Farkas’ lawyer plans to lodge an appeal.
This conviction follows the prosecution of Bernard Madoff in June 2009, who was convicted on 11 federal felonies, in the largest ever Ponzi scheme. Court-appointed trustee estimated actual losses to investors of $18 billion. Madoff received a maximum 150 year sentence, with a release date of November 2139.
Maddoff has since been treated for facial fractures, broken ribs and a collapsed lung. He signed an affidavit on December 2009 stating that he had not been assaulted.
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[...] Lee Farkas, the majority owner of what had become one of the nation’s largest mortgage companies, was convicted by a jury and found guilty of all charges. Lee Farkas was convicted on all 14 counts of securities and wire fraud, as well as conspiracy to commit fraud, in a $3 billion fraud trial that officials have said is one of the most significant prosecutions to arise from the nation’s housing market crash. Read more… [...]