GUILTY! Taylor Bean & Whitaker Chairman

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EDITOR’S NOTE: So now the question is what about the real big boys at BOA, Chase, Citi et al? Anyone with a TB&W originated mortgage probably has their defense to foreclosure already set out for them.

Leader of Big Mortgage Lender Guilty of $2.9 Billion Fraud

By BEN PROTESS

The founder of what was once one of the nation’s largest mortgage lenders was convicted of fraud on Tuesday for masterminding a scheme that cheated investors and the government out of billions of dollars. It is one of the few successful prosecutions to come out of the financial crisis.

After more than a day of deliberations, a federal jury in Virginia found Lee B. Farkas, the former chairman of Taylor, Bean & Whitaker, guilty on 14 counts of securities, bank and wire fraud and conspiracy to commit fraud. Mr. Farkas, 58, faces decades in prison for his role in the $2.9 billion plot, which prosecutors say was one of the largest and longest bank fraud schemes in American history and led to the 2009 collapse of Colonial Bank.

“There’s no question that it is very momentous and a very significant case,” said Lanny Breuer, the assistant attorney general for the criminal division of the Justice Department.

The 10-day trial was a rare win for federal prosecutors in the aftermath of the financial mess. The Justice Department has yet to bring charges against an executive who ran a major Wall Street firm leading up to the disaster. An earlier case against hedge fund managers at Bear Stearns ended in acquittal. Prosecutors dropped their investigation into Angelo R. Mozilo, the former chief of Countrywide Financial, which nearly collapsed under the weight of souring subprime home loans.

Six other Taylor, Bean & Whitaker executives — including its former chief executive and former treasurer — have already pleaded guilty. Some agreed to testify against Mr. Farkas at his trial.

Mr. Farkas took the stand during the trial to defend his actions and deny any wrongdoing. A lawyer for Mr. Farkas did not respond to a request for comment.

The scheme began in 2002, prosecutors say, when Taylor, Bean & Whitaker executives moved to hide the firm’s losses, secretly overdrawing its Colonial Bank accounts, at times by more than $100 million. To cover up the actions, prosecutors said that the lender sold Colonial about $1.5 billion in “worthless” and “fake” mortgages, some of which had already been bought by other institutional investors. The government, in turn, guaranteed those fraudulent home loans.

In a related plot, Mr. Farkas and other executives created a separate mortgage lending operation, called Ocala Funding. The subsidiary sold commercial paper to big financial firms, including Deutsche Bank and BNP Paribas. When Taylor, Bean & Whitaker collapsed, the banks were unable to get all of their money back.

During the course of the fraud, prosecutors said, Mr. Farkas pocketed some $20 million, which he used to buy a private jet, several homes and a collection of vintage cars.  “His shockingly brazen scheme poured fuel on the fire of the financial crisis,” Mr. Breuer said.

With the credit crisis in full swing, Mr. Farkas and other Taylor, Bean & Whitaker executives persuaded Colonial to apply for $570 million in federal bailout funds through the Troubled Asset Relief Program, or TARP.

The Treasury Department approved the rescue funds, on the condition that Colonial was able to raise $300 million in private money. The Taylor, Bean & Whitaker executives falsely led the bank into thinking it had investors lined up. Ultimately, the government did not give any money to Colonial.

Shortly thereafter, in August 2009, Colonial filed for bankruptcy, the same time that Taylor, Bean & Whitaker failed.

“Today’s verdict ensures that Farkas will pay for his crime — an unprecedented scheme to defraud regulators during the height of the financial crisis and to steal over $550 million from the American taxpayers through TARP,” Christy Romero, the acting special inspector general for the TARP program, said in a statement.

37 Responses

  1. I was baffled in August 2009, no word about TBW’s mess and no word about who I would sent payment to on my mortgage. My account # wouldn’t go through and I finally got a message as I surfed TBW’s page and found that Bank of America had my account. By now I was two months behind and the Rep. at BOA said they didn’t have my account information yet but I could send my payments to an address he gave me. I think NOT. When I did finally get “Paperwork” with the information I needed, payments were made. By the end of December I got a letter stating that I owed approximately $1002 + for Escrow. When I contacted BOA and asked if my Insurance and Escrow had also been transferred I was told that approximately $1386.00 show in the account. Then it was no more. I’m guessing the check bounced. STILL NO WORD about my missing Escrow. Does anybody know who, what, when or where to get some answers????

  2. My original Note was signed with TB&W and mortgage with MERS. July 2009 was my last payment to them. I was told I had to be in default to do a modification. So, no August 2009 payment was made. Letter from BOA Home Loans Servicing LP says, we are now the servicer of your loan, along with a bill. I requested proof of ownership of my NOTE & Mortgage. No proof was sent to me.
    A fraudulent mortgage assignment was made by Ted Cassell, notarized by Shannon Montgomery on a parcel of land that was not even part of the original mortgage, then a foreclosure complaint file by BoAHLS April, 2010. After several motions, judge compelled them to produce the docs requested. They showed up after the deadline with an alleged original Note endoresed in blank, but no other docs requested, like chain of ownership, etc. (I wonder who they borrowed that alleged original from to bring to the court). Anyway, to make a very long story short, I removed the case to Federal Court and have a counterclaim and 3rd party complaint against BoA, the attorney firm, the robosigner Ted Cassell, and the notary Shannon Montgomery.
    It seemed that our local judge was “getting it”, but since BoAHLS filed an amended complaint almost a year later, adding my wifes name as the only change, we took that opportunity to remove it to Federal Court. LOL I bet they wish they didn’t file an amended complaint, because without that, time had lapsed for me to remove it to Fed.CT.
    The defendants in my 3rd party complaint all have the same law firm, and they are taggin on the servicer BoAHLS with that law firm. LOL the attorney wrote me a letter asking what my goal was and if there was some way we could work this out. I fired back a specific set of words that basically said something about justice. I would love to keep you all updated on this case. I believe that the Farkas verdict, along with proof of multiple securitizations could help. Oh almost forgot, A very powerful defense…BoA or BoAHLS had no authority to do any assignments of mortgage, because of the bankruptcy status of TB&W. They are so freekin stupid. It’s all FRAUD, and I’m taking them to Federal Court and they are going lose big time.
    Not to mention all the TILA, RESPA, etc. violations, and fines for such. They absolutely did not respond to my QWR at all.

  3. Gregory Bryl, Esq., on April 22, 2011 at 2:04 pm said:
    “That is why I recommend to anyone interested in securitization research to check out materials from this case. For research buffs, the case was in the Eastern District of Virginia, Alexandria Division, case no. 1:2010-cr-00200”
    I saw your post on Living Lies and would like to get the transcripts describing the securitized trusts that you mentioned would be so valuable. Freddie Mac is evicting us. We have state and Federal lawsuits pending. Fannie Mae is also claiming ownership of another loan that was paid off on our property. It shows as active in MERS. I think that they have only scratched the surface in this mess and I have contacted numerous government agencies. I have access to Pacer but I don’t want to pay an arm and a leg to find the transcript so I thought you could give me a little more information about how to find it or specific document numbers I can download. My telephone number is 303-805-0191. My email is marcie.jacobs@yahoo.com.

    Thanks for your help.

  4. Dying Truth,

    Where did I say that renting a movie was the solution to my problem?

    “It is better to be thought a fool than to open your mouth and remove all doubt.”

  5. [youtube=http://www.youtube.com/watch?v=ptID7FfY368&w=640&h=390]

  6. I had the privilege of watching parts of the Farkas trial. Much discussion was devoted to the structuring of financial deals, including securitization of mortgage loans and issuance of mortgage backed securities. Issues addressed included what is a warehouse lender, what is a funding conduit, etc.

    That is why I recommend to anyone interested in securitization research to check out materials from this case. For research buffs, the case was in the Eastern District of Virginia, Alexandria Division, case no. 1:2010-cr-00200.

  7. kickboxer,
    Yeah and I’m sure renting a movie will solve all your problems. No wonder why America is going to hell, because Americans let it.

    P.S. Oh no, wouldn’t want to offend the jewish community, after all THEY DO OWN YOU AND YOUR GOVERNMENT.

  8. Here is a conspiracy movie.

    Zeitgeist Addendum – Economy
    http://video.google.com/videoplay?docid=7065205277695921912#

    Kickboxer I just ordered “inside job”

  9. I just OPT OUT for $ 30.00 :
    CHASE CREDIT CARD SETTLEMENT

    http://www.kardonicksettlement.com/

    Very friendly Judges for CHASE .

  10. Anyone see the documentary “Inside Job?” I finally got to see it today. Rented it from Netflix.

  11. DT,

    This is not about Palestinians or Jews for crying out loud. I do not understand the reason for your comments other than to offend those of the Jewish community. I hope Admin will delete your posts.

    I think your meds may need adjusting.

  12. You guys wanna know some dirt which nobody that would know would state publicly?

    Countrywide’s profits are what funded the arms deal with Saudi Arabia (I personally know this as fact). Israel controls Saudi Arabia. Everything that happens to us is because of Israel. Look at where all the potential Presidents HAVE to go for prior aproval before any election? Israel! This is not rocket science.

  13. Maybe the majority of America deserves the grim fate that awaits them, for enabling the horrors which the Palesinians suffer and refusing to enforce justice for their pain and selfishly only seeing their own.

  14. This is small fray. What happened to Angilo Mozillo? He should have been indicted and jailed. It is amazing. Keep on fighting everybody. Keep on filing those lawsuits. Burmese8@yahoo.com

  15. usedkarguy,
    Israel is not a State it’s a Terrorist organization that invaded the Sovereign Nation of Palestine in 1948. We all want our homes back and so do the Palestinians. Have you ever heard of ‘the Right of Return’ that the Palestinians were promised but have never received? What about Israel’s act of War against the US when they attacked the USS Liberty during their War with Egypt? So many Americans are so ignorant to these facts, it makes me want to puke. Israel is our Enemy Plain & Simple, they publicly state this much and still you all are blind.

  16. Does it not bother anybody else that we’ve gotten absolutely NOWHERE?

    As for “racial” issues, all of everything that zionists do is racially motivated. The rest of us (gentiles as they call us) are their hapless victims. Look at what they did to Russia, that’s what they will do to us. Nobody else can give a better assessment of a realistic outcome from all this corruption.

  17. I wish you all would stop making this a “jewish” issue…Im Jewish and recently lost my home…These Ahole bankers would be AHOLES whether they are Jewish or Christian. Please we are all in the same boat here.. I understand the anger you are all feeling, as I have experienced the same BS for 2 years trying to save my home. Even though Im sad that I lost , the anger doesnt do anything but fester more anger….During this week of passover and Easter we should all pray that we all will get compensation from these BANKER PARASITES PARENTS….

  18. FROM WILX NEWS 10 SOMEWHERE IN MICHIGAN

    comment: “Nice to know someone started looking!”

    Suspected Forged Mortgage Documents Found in Mid-Michigan

    We’re learning more about a statewide investigation into suspected forged mortgage documents. In the last few days, more than 100 of those documents have been discovered in Mid-Michigan and the investigation continues. One homeowner victimized speaks out.
    Reporter: Rachel Thomas
    Email Address: rachel.thomas@wilx.com

    The Bristle family is one of hundreds of thousands in Michigan whose financial set-backs made it impossible to meet their home payments. Even their last chance, mortgage modification payment escalated far above what they can afford, and they had to decline it.

    “They’re not willing to budge on this last modification process we went through, so declining it is leading to foreclosure. It’s almost like they know it’s not possible and so they are just pushing us to foreclosure point,” said Leslie homeowner, Marianne Bristle.

    But the question for Marianne Bristle is who owns their mortgage and who is forclosing on their home.

    “American Home Mortgage Servicing, Inc. is who’s servicing our mortgage. But when we ask who the actual owner of our mortgage is, they tell us they don’t have that information,” said Bristle.

    At the Ingham County Register of Deeds Office, News10 found the “Assignment of Mortgage” document for the Bristle family home. The document says the mortgage is owned by Wells Fargo Bank and was signed over by Linda Green—a name found on documents across the country now suspected to be forged.

    “Anyone who looks at the signatures of the Linda Green ones for example can tell that obviously several people signed them, not just one person committed forgery but several,” said Ingham County’s Register of Deeds Curtis Hertel.

    In the last few days, counties across Michigan have started searching for possible forged mortgage documents. So far, Ingham, Eaton, Clinton, and Hillsdale Counties have found questionable documents signed by Linda Green and others. Jackson County will start it’s search this week.

    “We’re only the tip of the iceberg with this problem. We’re probably going to see across the country the same exact thing going on,” said Hertel.

    Though victims of this fraud are angry, they say they are also relieved to find some hope.

    “For me it gives me a boost to help me get through what we’ve been going through. To know that everything that has happened to us is not completely because we messed up,” said Bristle.
    .
    The register of deeds in several counties say it’s difficult to locate and contact victimized homeowners of this fraud. They recommend going to your county’s register of deeds website and looking at your mortgage assignment document. If you find the company “Docx” or signatures with “Linda Green” or “Tywanna Thomas” on that document— you may be a victim.

    The Michigan Association of Register of Deeds plans to file a criminal complaint with the Michigan Attorney General’s office in two weeks.

    Comment: get outta town! An AG filing charges? I’ll believe it when I see it!

  19. GetThis

    Provide your email if you can — one agency is looking at this- but need more.

    You are not dreaming — this is happening. I have been talking about this for awhile. PRIOR loans were NOT paid off by refinance.

    No one here – except a few — are GETTING THIS.

    Source of huge fraud. Insurance fraud.

  20. Truth: you know I love ya, but, dude, let me ask you a question;

    The State of Isreal has given the Palestinians everything they asked for. They do not want peace, they want war. But they have no mortgages. So, what am I missing?

    Thanks and bye!

  21. Dying Truth why are you picking on me? I havent mentioned your name in who knows how long?

  22. Dying Truth you need professional help. I can’t help you.

    In Regards to the so Called Jewish Criminals I hope they get Double the Punishment. May G-d Erase their memories and names from the face of the Earth.

    Kickboxer I agree with you 100%.

    NEVER AGAIN.

  23. Good effin grief!!! Please let’s not turn this into a racial or religious issue. It’s the wealthy elite vs. middle class Americans. Nothing more, nothing less.

    We cannot afford to have divisions among us.

  24. Take A HARD LOOK at what’s happened to Palestine. That’s what we all have to look forward to, all thanks to the PARASITIC JEWISH SUPREMACY.

  25. THE A MAN,
    Question. How does the fact that Jews are the ones benefitting from all of this make me anti-semetic?
    Even better Question. Recently found out I’m part Jewish, so how would you even justify making such an accusation?

    It would appear that I have had every right to state the things I have stated, for know this I do not hate them for who they are, I hate them for what they do. Were it the other way around (and if I weren’t genetically related), I would be a rascist.

  26. Remember Tim Miller Attorney General of Iowa?
    The guy who was gonna put the banksters in Jail?
    Well this is probably why he has become bankster friendly

    http://stopforeclosurefraud.com/2011/04/21/iowa-attorney-general-tom-miller-campaign-contributions-rise-when-foreclosure-investigation-begins/

    Tom Miller is now the Attorney General of the Banksters not Iowa

  27. @uprooted: Check this out:

    Beth Findsen is a foreclosure defense and consumer lawyer whose been a reader of mine for some time now, and I like her a great deal. Her husband is an ex-Wall Street type… not a banker per se, but more an financial advisor kind of guy I think.

    Beth answered her cell phone when I called, having arrived in Phoenix the night before… and she confirmed that although she couldn’t comment on every aspect of Michelle Reagan’s bill as a result of attorney-client privilege issues, she could confirm my that it had vanished into thin air. It had happened over the weekend just prior to it landing in the House for the vote.

    http://mandelman.ml-implode.com/2011/04/a-funny-thing-happened-on-the-way-to-the-az-house-of-representatives%e2%80%a6-after-passing-the-senate-28-2%e2%80%a6-s-b-1259-completely-disappeared/

  28. I have two loans in MERS that are active. In other words one loan that was supposed to be paid off when we refinanced with TBW with Countrywide and investor Fannie Mae is active the other one has Ocwen as the Servicer but it was for a note endorsed without recourse with TBW that foreclosed and then Freddie Mac is evicting us.
    I have contacted several Federal agencies and they are not doing anything. And because I live in Colorado I have no legal remedies at this time. I thing Fannie and Freddie were guaranteeing the same property for multiple loans that were all bad loans and they are scrambling to cover it up.

    We have both Federal & State lawsuits pending but if we don’t get a fair judge we are going to lose our house.

  29. Thank you uprootedone Will call today

  30. at least Madoff will get his first neighbour.

  31. CALIFORNIA | ACTION ALERT – AB935 FORECLOSURE MITIGATION FEE BILL WOULD PROHIBIT A TRUSTEE’S SALE FROM BEING ACCEPTED UNTIL SERVICER PAYS A FORECLOSURE MITIGATION CHARGE OF $20,000
    Posted by Foreclosure Fraud on April 20, 2011 · 21 Comments

    Today is a statewide call-in day to make the banks pay. With your help, we will make hundreds of calls in support of AB935, the Foreclosure Mitigation Fee.

    AB935 is our chance to get $12 billion back from the banks, which will be used for schools, public safety, vital services and redevelopment. If passed the bill with require the banks to pay a fee of $20,000 for each foreclosure.

    Until now, the Banks caused havoc in our communities and got off with nothing but tax breaks and upper management bonuses. With five days left before the first committee hearing the Wall Street lobbyists are working day and night to kill this bill!

    Will you give five minutes right now to take on the Wall Street lobbyists?
    Call Mike Eng at 888-342-6472 and then call John Perez at 888-342-6441. You’ll hear a brief recording and then you’ll be transferred to their office so you tell them to Make the Banks Pay!

    Tell them: “Hi, my name is ________ and I live at ________. I am calling to leave an important message for (Assembly Member Eng or Speaker Perez). I am urging him to stand up to big banks and protect our communities by supporting Assembly Bill 935, the Foreclosure Mitigation Fee. This will bring in $12 billion in revenue to state which can be spent on things I care about like ______. Thank you for your time.”

    After your call, click here and tell us what happened.
    Remember, the five minutes you take to make these calls are the most important of the day! With only five days to go before the first committee hearing, every call is critical.

    Fight Back!

  32. So they are going after the small fries, Right?

  33. So let me get this straight only the people whom have been illegally foreclosed on are going to be helped. the rest of us wcich have over appraised homes becuase of all this fraud are sh-t out of luck, a day late and a dollar short. i should have allowed my home to go to foreclsoure last year instead of modifying with wells fargo. the people of the united states need help. the economy tanked, we lost our jobs, lower salaries, higher costs, unable to pay our mortgages or sell our hmes we are stuck in a situation. then pop ==== we ask out “lender” fro help and securitization is exposes. our loans have been sold to an investor, the investor combined our loans and sold them off. sliced and diced is what i was told. then the banks gave us all the run around losing our paper work, extending the time so they can collect more and more fee’s then we get approved for a mod. then some of us re default again or the hamp loan is not made permanent and we are foreclosed on. i just this econd had a dealing with wells fargo bank. they are calling me i wanted to recdord the conversation and the person said NO. why is that they will not let us record the conversation but they can record ours??? so we have issues of appraisal fraud , servicer fraud, modification fraud and no one is dealing with these issues for us;

  34. in second paragraph, that’s supposed to read “a powerful argument against MERS”

  35. “To cover up the actions, prosecutors said that the lender sold Colonial about $1.5 billion in “worthless” and “fake” mortgages, some of which had already been bought by other institutional investors. The government, in turn, guaranteed those fraudulent home loans.”

    There you have it. Even “the government” (Fannie, Freddie, Ginnie) apparently did not know (or care to find out) that loans were sold more than once by the same entity. AND soooo… What part did MERS play in TBW’s actions? If the loans were “MERS” loans, then doesn’t this provide a powerful argument for against MERS and in support of restoring the integrity of our county land records for mortgages?

    If MERS wasn’t involved, isn’t it still a powerful argument for recording ALL assignments of mortgages/notes?

  36. YOU GOTTA READ THIS ONE!!!!!!

    A hilarious report has come out courtesy of the National Institute of Money in State Politics, showing that Iowa Attorney General Tom Miller – who is coordinating the investigation into the banks’ improper mortgage dealings – increased his campaign contributions from the finance sector this year by a factor of 88! He has raised $261,445 from finance, insurance and real estate contributors since he announced that he was going to be coordinating the investigation into improper foreclosure practices. That is 88 times as much as they gave him not over last year, but over the previous decade.

    This is about as perfect an example of how American politics works as you’ll ever see. This foreclosure issue is a monstrous story that is somehow escaping national headlines; essentially, all of the largest banks in the country have been engaged in an ongoing fraud and tax evasion scheme that among other things has resulted in many hundreds of billions in investor losses, and hundreds of thousands of improper foreclosures.

    Last week, the 14 largest mortgage lenders a group that includes bailout all-stars like Citigroup, Bank of America and Wells Fargo, managed to negotiate a settlement with the federal government that will mandate some financial relief to homeowners who have been victims of improper foreclosure practices. It’s unclear yet exactly what damages and fines will be involved in the federal settlement, or how many homeowners will be affected. But certainly there are some who believe the federal settlement was a political end-run around the states’ efforts to extract their own deal from the banks.

    Put it this way. If the banks had to pay what they actually owed – from the registration taxes/fees they avoided by using the electronic registry system MERS to the money taken from investors in toxic mortgage-backed securities to the fees and payments stolen from homeowners via predatory loan practices and illegal foreclosures – they would probably all go out of business. That’s how much money is at stake here: the very future of financial giants like Bank of America and Citi and JP Morgan Chase is hanging to a very significant degree on the decisions of politicians like Miller.

    Hence the sudden avalanche of money sent Miller’s way. The numbers are laughable. In 2006, out -of-state donors gave Miller’s campaign $10,508. For the 2010 cycle, that number was $497,357. Three lawyers by themselves – Al Gore’s attorney David Boies, plus Donald Flexner and Robert Silver, all partners in the firm Boies, Schiller and Flexner – gave Miller a total of $60,000.

    Guess who Boies’ firm defended last year, in a suit brought by an Australian hedge fund that claims it was ripped off in a deal involving toxic mortgage-backed CDOs? That’s right: Goldman, Sachs. Goldman hired Boies to represent it in a fight against the now-defunct Basis Yield Alpha Fund, which bought into Goldman’s notorious “Timberwolf” deal – one of the “shitty deals” Senator Carl Levin, in hearings last year, was haranguing Goldman for selling to unsuspecting clients.

    So now we see that Boies and a string of other banker lawyers (including firms that represented Citi, Chase, Wachovia, and others) are throwing tens of thousands of dollars at Miller. Maybe it won’t do much to influence Miller, but who knows? Maybe he won’t plunge the knife in quite so deep now.

    Just something to keep an eye on. It would be interesting to see a similar analysis on the money these same characters have thrown at the Obama administration in the last year.

  37. Nice to see a Ba…whoops, no Banker will ever be “guilty”.

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