TBW Exec Gets 30 Years, More to Come: NO REMORSE, 14 Fraud Counts — GUILTY


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“We’re going to pursue financial institutions when we believe we can prove those cases,” Lanny A. Breuer, the assistant attorney general, said in an interview on Thursday. “These can be very complicated cases that take a long period of time.”


EDITOR’S NOTE: While we all wonder why criminal prosecutions have not occurred, in doing so we give law enforcement too little credit. It takes times to build a case so that you can win it whether it is a criminal case, a defensive case against fraudulent or wrongful foreclosure, damages for appraisal and other frauds, etc. It isn’t possible that the top executive of the major banks did not know what was going on — that the mortgage origination process was laced with fraud, that the foreclosure process was completely bogus, that the auction sales were done in complete disregards for the requirements of law, that documents were filed that in most states constitute a felony, and that the real creditor hung back, abandoning the homeowner claim and allowing third parties to steal and keep homes masquerading as creditors in a foreclosure claim.

It isn’t possible because they did know of all the measures taken to create layers between each party and each transactions, in an effort to create plausible deniability. Law enforcement must crack this deniability of intent to defraud with real facts and real evidence. Maybe now we will start seeing the indictments start. The investigators are out there doing their work. If politics doesn’t get in the way, the charges will come and so will the convictions and prison sentences. SO might wrongful death actions in the suicides and murders that occurred as a direct result of the great securitization fraud — an illusion that even today many people think is real.

Mortgage Executive Receives 30-Year Sentence

A federal agent escorted Lee B. Farkas, a former mortgage industry executive, after a court appearance in June 2010 in Ocala, Fla.Bruce Ackerman/Ocala Star-BannerA federal agent escorted Lee B. Farkas, a former mortgage industry executive, after a court appearance in June 2010 in Ocala, Fla.

8:40 p.m. | Updated

A federal judge on Thursday sentenced Lee B. Farkas, a former mortgage industry executive accused of masterminding one of the largest bank fraud schemes in history, to 30 years in prison.

The case against Mr. Farkas, the former chairman of the mortgage firm Taylor, Bean & Whitaker, stands as the single-biggest prosecution stemming from the financial crisis. Prosecutors had asked for a sentence of as much as 385 years.

“I do not detect one bit of actual remorse,” Judge Leonie M. Brinkema told Mr. Farkas in a federal courtroom in Alexandria, Va., on Thursday. “You regret getting caught.”

Mr. Farkas, 58 years old, wearing a green prison jumpsuit, read from a statement that said he “strived to be a good person.”

As chairman of Taylor Bean, Mr. Farkas orchestrated a plot that caused the demise of Colonial Bank and cheated investors and the government out of billions of dollars, prosecutors say.

Still, Taylor Bean was a minor financial firm based in Florida, and the crimes of Mr. Farkas began well before the crisis struck. So while the case is a defining moment for the government, its relative obscurity also highlights the continued struggle to prosecute financial fraud in the wake of the crisis.

Other than Mr. Farkas and a string of smaller mortgage fraud prosecutions, no senior financial executives have been convicted of crimes. Even now, federal prosecutors have yet to bring charges against an executive who ran a large Wall Street institution leading up to the crisis.

A 2009 case against two hedge fund managers at Bear Stearns ended in acquittals. Prosecutors also recently dropped an investigation into Angelo R. Mozilo, the former head of the subprime lending giant Countrywide Financial.

“We’re going to pursue financial institutions when we believe we can prove those cases,” Lanny A. Breuer, the assistant attorney general, said in an interview on Thursday. “These can be very complicated cases that take a long period of time.”

The government, aiming to send a message to the financial industry, asked Judge Brinkema to impose up to the maximum 385-year sentence on Mr. Farkas. As an alternative, the government recommended a penalty of at least 50 years to ensure that he will “spend the remainder of his life in prison.”

Richard L. Scheff, a former federal prosecutor who is now a criminal defense lawyer and chairman of Montgomery, McCracken, Walker & Rhoads, called the government’s request “completely over the top.”

“Under any stretch of the imagination, 30 years is very significant; it’s tantamount to a life sentence,” he said.

Mr. Farkas, who also was ordered to turn over roughly $38.5 million in gains, had asked for a 15-year sentence. His lawyers argued that his actions were intended to keep Taylor Bean and Colonial Bank in business.

His sentence, while steep, falls short of the 150 years given to Bernard L. Madoff for running a huge Ponzi scheme.

Mr. Farkas’s fellow Taylor Bean executives fared far better. The firm’s former chief executive and treasurer, among others, pleaded guilty and cooperated in the case against Mr. Farkas. The executives received sentences ranging from three months to eight years.

In recent letters to the court, friends and supporters of Mr. Farkas painted him as a kind-hearted humanitarian, someone who always “displayed integrity.” Mr. Farkas once paid a stranger’s medical bills, often donated to the local Salvation Army’s Christmas fund-raiser and even offered his private jet to take a mother and her baby to New York for cancer treatment, they said.

Mr. Farkas took the stand during the trial to defend this reputation and deny any wrongdoing.

But a federal jury in Virginia was unmoved. In April, after a 10-day trial and little more than a day of deliberations, the jurors found Mr. Farkas guilty on 14 counts of securities, bank and wire fraud and conspiracy to commit fraud.

Mr. Farkas’s $2.9 billion scheme began in 2002, prosecutors say, when Taylor Bean was facing mounting losses. To hide the losses, Taylor Bean executives secretly overdrew the firm’s accounts with Colonial Bank. The lender, aiming to cover up the overdrafts, sold Colonial about $1.5 billion in “worthless” and “fake” mortgages. The government, in turn, guaranteed the bogus loans.

When Colonial started to struggle, Mr. Farkas helped convince the bank to apply for more than $550 million in taxpayer bailout funds. The Treasury Department initially approved the rescue loan, but ultimately withdrew the offer.

Colonial filed for bankruptcy in August 2009, making it the sixth-largest bank failure in history.

Mr. Farkas, meanwhile, diverted more than $40 million from Taylor Bean and Colonial to “finance his lifestyle,” prosecutors said. He used the money, according to the government, to buy a private jet, vacation homes and a collection of vintage cars.

“He did this to live like a king, and now justice has come to bear,” Mr. Breuer said.

30 Responses

  1. He was selling the same Notes multiple times in different MBS to different investors. Classic Ponzi. He was not alone in this but he got caught.

  2. The Allonge- Billions of Dollars in Commerce Hangs on A Single Scrap of Paper
    July 2nd, 2011 · Foreclosure http://www.mattweidnerlaw.com/blog
    Forget about The Constitution, forget about The Bill of Rights, a far more important document exists in this country and it’s called….The Allonge!
    Those other old and forgotten documents are just, well, old and forgotten. Relics. Memories. Pesky annoyances that get in the way of the real thing of today and that is…The Efficient Flow of Commerce. The allonge is actually an old, old thing…older in fact than those other two old things that we should all stop talking so much about. The allonge sat around in an abandoned neighborhood at the intersection of law and commerce, forgotten and unused, never spoken of by judges and scarcely mentioned in any statute or the Uniform Commercial Code anywhere in the country until some brilliant mind in the Department of Commerce, Division of Securitization decided to drive through the rough section of town, past the whinos and blown out buildings and pick up that cast off old man called Allonge and take him for a ride.

    And one hell of a ride it’s been.

    The one widely circulated bit of scholarship on the subject Getting Attached Do your legal search and research high and low, all across the country and the above document is about all you’re gonna find. Not many opinions and those that do exist all head back to the same place…Black’s Law Dictionary…and the definition of allonge.

    The key part, the essential element of the magical power of the allonge is that it was only ‘sposed to be used when there was no space on the note to make an endorsement….but that has not stopped the Sorcerers of Securitization from just totally ignoring this essential element of the Allonge and conjuring up one page hanging allonges and just dropping them in court files all over this country.

    By now we all know what’s going on. At first the Dark Side didn’t even bother with getting the original promissory notes…..any old Affidavit of Lost Note would do….never mind that most of these Affidavits did not comply with the essential factual requirements of an Affidavit of Lost Note…namely personal knowledge that the affiant lost the note…most affidavits merely state, “The note is lost” and then some add for good measure, “Whoopsie!”

    Then some pesky attorneys started asking questions about these affidavits and where the notes were and things started changing….First, foreclosures just ground to a halt….all across the country. Maybe part of it has to do with the inexplicable comments made by the Florida Mortgage Banker’s Association when they admitted the industry went about destroying original notes. Huh? You did what? You Destroyed Original Notes? What a Hoot! What a Gas….Read More Here!

    On and then there’s all those admissions in cases like Kemp v. Countrywide describing how the Big Shot Banks just ignored all the fundamental law and rules on original notes.

    But back to the Allonge. Oh the powerful and mighty Allonge.

    But what’s really the point of all this? What do it matter? Does it Really Matter? Well, yeah, it really does.

    These ain’t just technicalities that don’t mean ‘nuttin. The purpose behind original notes and chain of custody and endorsements is to protect against fraud and abuse and to ensure that the financial services industry is not cheating….(They couldn’t possibly be cheating or lying…could they?) We can trust Goldman…and BofA….and JPMorgan….can’t we?

    The Den of Thieves commonly known as Wall Street would not possibly pledge the same original notes into multiple trusts, thereby increasing the value of each pledge many times over…would they? They wouldn’t do this even if they knew they were totally unregulated and it would be nearly impossible to catch for years and years down the road….would they?

    Remember that the Rules of Evidence (used ever so occasionally in the context of foreclosure) and the Uniform Commercial Code are fundamentally intended to protect against fraud and to protect all parties in commercial transactions. “All parties” in the context of such a big part of our entire economy includes not just the homeowner and lender in a foreclosure transaction…no siree…it includes the entire world which should be able to depend on an accurate and trustworthy financial system….do you think we have an accurate and trustworthy financial system?

    Finally, consider all of that in the context of a case where these issues are being expertly litigated. Very, very good stuff here….





  3. Neil,

    Any information you have on these “Corrective Assignment of DOTs” would be helpful. Thank you.

  4. @cube2k my son is always singing own u tube video and spread the word. you can do it anonymously have your dog or cat in the video with you talking. be creative and put a catching phrase. so some one would find in a search good luck. lets us all know if you do ot.

  5. How helpful is this government intervention?

    When does this law begin?

    The new law takes effect July 5, 2009 – 45 days after it was enacted into law.

    Is this a permanent change in Michigan’s foreclosure law?

    No. The law expires July 5, 2011 – 2 years after the effective date.

    What happens if the borrower is eligible for a loan modification?

    If the results of the calculation are that the borrower is eligible for a loan modification, the mortgage holder or servicer cannot foreclose by advertisement but may foreclose by bringing a court action.

    What happens if the borrower is not eligible for a loan modification?

    If the calculations show that the borrower is not eligible for the modification the mortgage holder or servicer may foreclose by advertisement.

    Can the mortgage holder or servicer foreclose by advertisement even when the borrower is eligible for a loan modification?


    What happens if the mortgage holder or servicer does not comply with the new law?

    If the mortgage holder or servicer begins to foreclose by advertisement in violation of the law, the borrower may file an action in circuit court to convert the foreclosure proceedings to a judicial foreclosure.
    If a borrower files an action and the court determines that the borrower participated in the process, a modification agreement was not reached, the borrower is eligible for modification, and the borrower timely executed and returned the modification agreement, the court must enjoin the foreclosure by advertisement and order that the foreclosure proceed judicially.

    How will the borrower know who owns the loan?
    The law requires that the written notice to the borrower provide the name, address and telephone number of the mortgage holder or an agent designated by the mortgage holder.

  6. I wish there was a way to make a youtube video and ask all Americans to make a sacrifice and not pay on their mortgage and credit card bill for let’s say some determined month, like Oct 2011. Have it go viral, and maybe a bunch will not pay for the month. Their sacrifice is of course a ding on their credit score, a late payment fee. But, if they plan ahead, and save for the fee and do not use the extra payment for some BS thing, why if enough did this, that would create a stink.

    And if it did create a stink, why we do it again and demand principle reduction and the same interest rates banks get from the Federal Reserve for everybody, what are they gonna do? What will happen?

  7. Judge Monaco and the Fantastic Floating Allonges

    by Mike Wasylik – http://floridaforeclosurefraud.com/
    Some foreclosure plaintiffs are trying to cash someone else’s checks.
    Some foreclosure plaintiffs are trying to cash checks that don’t belong to them, and forging evidence along the way to help them do it. And here’s the sneaky trick they use to get it done.

    Without it, the banking industry couldn’t exist: the Uniform Commercial Code, the law that tells banks how to handle checks and who gets to cash them. Before you cash your next check, take a look at the front. That part that says “Pay to the order of:” is pretty clear—it means that person, hopefully you, has the right to get money in exchange for that check. But that’s not the only important part.

    Flip it over and write your name.
    Somewhere on that check, usually the back, you signed that check, too. Maybe you just put your name, maybe you wrote “For deposit only.” Maybe you wrote “Pay to the order of…” and someone else’s name. All those markings are known as “indorsements” (sometimes spelled “endorsements”) and they instruct the person you give that check to, what they need to do with it. Just a signature? They can give you cash. Deposit only? Cash into your bank account. Pay to the order of someone else? Only that person now has the right to cash it.

    But the check doesn’t stop there. Unless you’ve presented that check to the bank it was drawn on—where the original maker of the check has an account—the bank or person you present it to has to then cash it themselves. Your indorsement to them, or if to no one, “in blank,” allows them to go ahead and present it to the next bank up the line. But they have to indorse it, too. Eventually the check makes its way back to the bank on which its drawn, gets paid off and canceled. And if the check runs out of room for the indorsements necessary to get there, you can attach a separate piece of paper to provide room for more. This additional paper is called an “allonge,” and it’s the way a lot of foreclosure plaintiffs are trying to cash checks made out to someone else.

    Your home loan is the biggest check you’ve ever written.
    Most people don’t realize, when they borrow money for a home, that they’re writing the biggest check they might ever see in their lives. Because the promissory note that gives the terms of the loan is just like a check—it’s a promise, signed by you, to pay a specific named party a specific amount of money. And unless there’s an indorsement on the note that says otherwise, only the bank named in the note can demand payment.

    A recent case out of Collier County, Florida, along with another case I witnessed just a month later, shows that these huge checks borrowers wrote on their home loans are getting cashed illegally by many banks. In the Faulk case, reported by Professor Adam Levitin, and by Yves Smith, the mysterious “fourth page” of the note, containing the indorsement, hadn’t been filed with the court, but instead has floating around separate from the note and in possession of plaintiff’s counsel. And this apparently was just fine with Collier County Judge Monaco, who signed off on an order essentially approving that state of affairs..
    Full story at http://floridaforeclosurefraud.com/

  8. Transcript of the recent hearing on the Brian W. Davies Case,
    ( with Psychic “art” adaptions..

    The Court:
    Right, I an going to deny the motion to strike that and the Court will take judicial notice of that also.

    Ms. Beal” Thank YOU Your Honor!

    The Court: So WE don’t need to worry about THAT!

    Ms. Beal: Now, what I would like to do is Make a little bit of oral argument.

    The Court: All the time YOU need!

    Americans. Stand by us fighters. Stand up!

    Fight for Today! or there will be NO tommorrow!

  9. http://www.scribd.com/doc/59162837

    another 9th circuit appeal whereby onewest is the agent for deutsche bank. same law firm in both cases. there is a third case in san diego where onewest is called into focus for false filing documents. same law firm represent them. Allen Matkins leck Gamble Mallory & Natsis LLP 515 S, Figueroa St 9th Floor Los Angeles, Ca. There seems to be a problem from the pleadings and honesty.

  10. Here is the transcript of my May 3 2011 hearing after Onewest and Onewest as agent for Deutsche Bank had failed motions for relief from stay by Honorable Judge “Donovan” and the new Judge who this was his first case gave judgment on the pleadings to deutsche bank. This is now on appeal.


  11. It’s about time they finally prosecuted someone! Unfortunately it’s not one of the top 5 that we’d like to see! Maybe given some more time, we’ll see it. I hope we do, in my life time.

  12. This is exactly what I’m talking about—“Mr. RealtyTrac senior vice president” seemingly OBLIVIOUS to the REAL REASONS behind the foreclosure stagnation…he is merely equating it to “processing delays”.


    also from the article:

    “For homeowners in foreclosure, the nationwide backlog isn’t necessarily a bad thing. The New York Times recently reported that evictions and repossessions have slowed down, giving many foreclosed homeowners a chance to save money and fight the cases against them.”


    In the FDIC v. K. Hovnanian suit- (just hush settled) The FDIC claimed KHAM made all these “Bad KHAM loans.” In the evidence, Dan Klinger PRESIDENT of KHAM, in e-mails, blatantly participates in a scam to “add a notary aknowledgement” to a Deed of Trust, after the deal CLOSED.

    Wow! They also FORCED the buyer to go through with a deal, after he told them, “I can’t AFFORD it” This “FORCED” word is what the FDIC claimed!

    The then foreclosed- who’da known? and this guy owes a whopper of a MILLION DOLLARS on a default judgement – that had FALSIFIED AKNOWLEDGEMENTS “added : – I allege…

    No Notary? No Problem! At K.Fraud, OUR deal gets done!

    They, also in the e-mails. INCREASE THE SALES PRICE –again AFTER the deal was over (or so the poor sucker/buyer thought) Blatant illegal activities that the PRESIDENT of the “underwater” (what an ironic term) company- DEBT>ASSETS!

    And the FDIC is what part of this Government, protecting WHO?

  14. enough already
    Excellent questions. Criminal charges and jailing bankers has little financial impact on borrowers, you are right.
    The fines are paid into a trough and you are not invited to the feast.

    The only time borrowers will see a financial benefit is when someone starts to mandate that judges learn complex business and finance matters from neutral people and not biased bankers. Only then can they fairly and knowledgeably apply the law as it stands.

    If they believe in something they do not understand, they are practicing superstition and not law!

    That’s all there is to it.

    Wouldn’t financially knowledgeable judges be an appropriate Independence Day gift?

    Happy July 4th!

  15. 400!!??? They put 1000 away in the Savings and Loan fiasco.

    Luckily they get to go to federal prison.

  16. RIGHT ON!! at last some action is being taken against these criminals!! if it was any ordinary citizen, we would have been thrown under the jail!! I will do my part to make sure justice is done!!

    It is because of the utter disregard of the American people, our laws and land, that we are in the worse economic crisis in our history! I don’t begrudge anybody making money, but when making money comes at the expense of destroying our country and an average person’s ability to survive and make a meager living, then “Houston, we got a problem!!”

  17. Well, when we see 80 of these guys go to jail, we will be seeing something.

  18. Terrorism does not pay

  19. A question about loans being sold multiple times. How is this done, and then discovered? How can one check to see if their loan has been sold multiple times into multiple trusts or pools?

  20. waiting for answers please to my questions tired of lawyers scamming us out of our houses for their gains

  21. Too big to fail. Too big to prosecute Homeowners interests are not going to be vindicated. Only the investors losses will be of any interest to prosecutors.

  22. “When you go back to the basics, the Constitution, the rule of law, ‘You don’t lie, cheat, or steal nor tolerate anyone who does.
    The courts need to understand the concept and stop the cover up.
    Time to go after the COE’s working for Wells Fargo, US Bank, and BofA.

  23. Waiting for the BIG BANKS TO GET IT …….ALL of them….WHEN?????????? Now if a perfect time… then we can start to repair their damage to US the USA and the world

  24. “here were 4,084,557 mortgages in the United States 90 or more days delinquent or in foreclosure as of the end of May, according to Lender Processing Services (LPS).”


  25. what i do not understand and please fill me in when does this all trickle down to the homeowners????? we have been frauded. for heaven sake tailor bean was in ocala i live near tampa not to far. alot of mortgages around here. property values rose daily. so if he got 30 yr jail sentence for mortgage fraud why are not all the mortgages his company underwrote null and void as well as the qppraisals that were accepted and not verified????????????????????????????????????????????????????????// i am definitely missing something here

    i wrote pam bondis office today i left out wells fargos name because i am tired of them sending my info to them. i asked 3 questions

    1 why did buiilders mortgage brokers get away with approving mortgages
    that did not include the taxes and insurance and are still aloud to build in florida after getting away with this scam and causing people to have to move, reinvest and lose everything we own??????

    2. i asked if an entity does not loan you their own money but on a contract does not include the real entity who loaned the money, and because they did not loan their own money, no skin in the game because it is not their money so they do not care whether a person can pay back the laon or not does that not constitute mortgage fraud and null and void the said contract. shouldnt the true lender be listed on the contract??

    3. i asked her if someone signs a contract with an entity and that entity tells you not to pay. doesnt that null and void the contract?

    the problem with all this mortgage fraud we are all individuals alone in our homes struggling with this info. even though everyone we speak to on the internet has had the same issues time again how do we get this to the judges , to the courts to our lawyers. being told to stop paying to qualify for a hamp loan should null and void a contract . not including the true lender on our mortgage notes should null and void the contract. hence all the run away robo signing. help we are being scammed every other contract has to be the truth or it is null and void accept the most important one we have makes no sense to me. please ex[plain

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