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Mortgage Lawsuits News | Mortgage Litigation Index
Mortgage industry lawsuit news and mortgage litigation coverage. Stories about legal settlements, judgments and mortgage class actions.


Taylor Bean Founder Loses Appeal

Lee Farkas had appealed conviction

June 21, 2012

By MortgageDaily.com staff


An appeal in one of the most high-profile convictions to come out of the mortgage crisis has been shot down by a federal appeals court.

Following a nine-day jury trial in U.S. District Court for the Eastern District of Virginia, Lee Bentley Farkas was convicted in April 2011 of six counts of bank fraud, four counts of wire fraud and three counts of securities fraud. He was accused of running a $2.9 billion secondary fraud scheme at the company he led and founded: Taylor, Bean and Whitaker Mortgage Corp.

Farkas was sentenced in June 2011 to 30 years in prison and ordered to forfeit $38.5 million, an amount that represented the value of the property he derived from his alleged crimes. He was also held jointly and severally liable for $3,507,743,557 in restitution payments.

But Farkas claims that he didn't get a fair trial and filed an appeal with the U.S. Court of Appeals, Fourth Circuit.

He claims that his Sixth Amendment rights were violated because his motion to change venues was denied, his motion for continuance was denied, his counsel was appointed and his right to cross-examine a government witness was limited.

His Fifth Amendment rights were also allegedly violated because the court declined to give an instruction defining "beyond a reasonable doubt" and instructed the jury that its "sole interest is to seek the truth from the evidence."

In addition, Farkas contends that that the district court erred in adjudicating the government's motion for an order of forfeiture.

But after considering Farkas' arguments, the appellate court affirmed the district court's judgment.

Taylor Bean's former chief financial officer, Delton de Armas, was sentenced on June 15 by U.S. District Judge Leonie M. Brinkema to 60 months in prison. de Armas, who in March pled guilty in U.S. District Court for the Eastern District of Virginia, knew of a $1.5 billion "hole" at subsidiary Ocala Funding.

"As CFO, Mr. de Armas could have -- and should have -- put a stop to the massive fraud at TBW the moment he discovered it," said U.S. Attorney Neil H. MacBride in the announcement.


United States v. Lee Bentley Farkas.
(U.S. District Court for the Eastern District of Virginia).

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. LEE BENTLEY FARKAS, Defendant-Appellant.
Case No. 11-4714, argued May 16, 2012, decided June 20, 2012 (U.S. Court of Appeals, Fourth Circuit).


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