Mortgage News
Former US mortgage boss jailed for $2.9bn fraud
The former chairman of bankrupt US mortgage lender Taylor Bean & Whitaker, Lee Farkas, has been sentenced to 30 years in prison for orchestrating a $2.9bn (£1.8bn) mortgage fraud that helped cause the failure of another bank.
According to the Financial Times, Farkas is the highest ranking executive to be sent to jail for illegal activities during the credit crunch.
Farkas was found guilty in April 2011 of 14 counts of conspiracy and bank, wire and securities fraud, which included embezzling more than $1.4bn (£870m) from Alabama-based lender Colonial Bank’s mortgage warehouse division in order to prop up Taylor Bean & Whitaker.
The fraud, involving selling fake mortgage loans, began in 2002 and helped cause the collapse of Colonial Bank in 2009.
At the time of Farkas’ arrest in June 2010, assistant attorney-general Lanny Brauer called the mortgage fraud “stunning in its scale and its complexity”.
Farkas has also been ordered to pay $38.5m (£24m).
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