THE former head of the now bankrupt mortgage lender Taylor, Bean & Whitaker Mortgage Corp (TBW) has been charged in a fraud scheme that led to multi-billion-dollar losses and targeted the 2008 federal bank bailout programme, US prosecutors said yesterday.
Lee Farkas, 57, served as chairman of TBW, one of the largest privately held US mortgage lenders, and was charged with 16 counts including conspiracy, securities fraud and bank fraud, according to an indictment unsealed in the US District Court for the Eastern District of Virginia.
Prosecutors accused Farkas and unnamed co-conspirators of orchestrating an eight-year scheme that also contributed to the downfall of Colonial Bank, a unit of now-bankrupt Colonial BancGroup, one of the 50 largest banks at the time.
Farkas was arrested by the FBI as he left a gym he owned in Florida, which is where the firm was based. The Securities and Exchange Commission also filed its own charges against Farkas for his alleged role in the scheme.
“The fraud alleged here is truly stunning in its scale and complexity,” said Lanny Breuer, assistant attorney general for the Justice Department.