June 16, 2010. The former chief executive of Taylor Bean & Whitaker has been indicted with orchestrating a massive equity and MBS fraud scheme tied to TBW's borrowings from Colonial Bank, a depository it tried to take control of last summer using TARP money. The indictment alleges that Lee Bentley Farkas and co-conspirators "tried to steal $553 million" through the TARP program. According to court documents, Farkas also personally misappropriated more than $20 million from TWB and Colonial Bank.
Read more: Orlando Business Journal
The Securities and Exchange Commission filed a related case against Farkas alleging that he sold more than $1.5 billion in fabricated or impaired mortgage loans and securities to Colonial Bank. The SEC’s complaint charges Farkas with violations of the antifraud, reporting, books and records and internal controls provisions of federal securities laws.
According the SEC's statement, through Taylor Bean & Whitaker Mortgage Corp. Farkas sold more than $1.5 billion worth of fabricated or impaired mortgage loans and securities to Colonial Bank.
Those loans and securities were falsely reported to the investing public as high-quality, liquid assets. Farkas also was responsible for a bogus equity investment that caused Colonial Bank to misrepresent that it had satisfied a prerequisite necessary to qualify for TARP funds. When Colonial Bank's parent company — Colonial BancGroup, Inc. — issued a press release announcing it had obtained preliminary approval to receive $550 million in TARP funds, its stock price jumped 54 percent in the remaining two hours of trading, representing its largest one-day price increase since 1983.
Read more: Businessweek.com (Former Taylor Bean Chief Farkas Charged With Fraud)
