Yesterday Lee Bentley Farkas, former chairman of Taylor, Bean & Whitaker, was convicted in a Virginia federal court of “conspiracy to commit bank, wire and securities fraud”. Farkas appropriated more than $1.4 billion from Colonial Bank and $1.5 billion from Ocala Funding, thereby contributing to the collapse of both banks during the housing meltdown. Assistant attorney general Lanny Breuer called Farkas the mastermind behind “one of the largest bank fraud schemes in history” and accused him of “pouring fuel on the fire of the financial crisis.” The scheme originated when Farkas and co-conspirators transferred money between accounts at Colonial Bank to hide overdrafts indicative of Taylor, Bean & Whitaker shortfalls. Colonial Bank also ultimately purchased “more than $1.5 billion in what amounted to worthless mortgage loan assets.” Similar assets were sold by Ocala Funding to institution investors at home and abroad.
Farkas faces a maximum prison term of 30 years each for conspiracy and bank fraud and 20 years for each count of wire fraud. Wire fraud affecting a financial institution could cost him 30 years per charge, and each securities fraud count carries a maximum prison term of 25 years.
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