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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.


Kingpin Sentenced in Mortgage Crime of the Century

Lee Farkas sentenced to 30 years in prison

June 30, 2011

By MortgageDaily.com staff


The central figure in what has turned out to be the biggest criminal case of the mortgage meltdown is headed for jail and won't emerge until he is 88 years old.

Lee Bentley Farkas was sentenced to 30 years of hard time by U.S. District Judge Leonie M. Brinkema, the U.S. Department of Justice for the Eastern District of Virginia announced. He was also ordered to forfeit $38.5 million.

Farkas was the founder and chairman of Taylor, Bean and Whitaker Mortgage Corp., which collapsed in 2009.

Farkas, 58, was found guilty in April of six counts of bank fraud, four counts of wire fraud and three counts of securities fraud. More than $2.9 billion was involved in the fraudulent secondary scheme.

Under his direction, Colonial Bank financed fake mortgages and covered capital shortfalls using an overdraft scheme.

The defendants allegedly misappropriated more than $1.4 billion from Colonial Bank's mortgage warehouse lending division and approximately $1.5 billion from Ocala Funding. The fraud scheme, which began in 2001 and continued for eight years, led to the collapse of Taylor Bean and Whitaker and the failure of Colonial Bank at a cost of $4.2 billion to the Federal Deposit Insurance Corp.

"Mr. Farkas orchestrated a fraud of staggering proportions, the effects of which are still being felt by the thousands of former employees of Taylor Bean and Whitaker and Colonial Bank, and shareholders of Colonial BancGroup," Assistant Attorney General Breuer said in the news release. "From a $28 million private jet and vacation homes in Maine and Key West, to expensive antique cars and restaurants, Mr. Farkas plundered his company and Colonial Bank to prop up his failing business and to feed his ostentatious lifestyle"

In all, seven defendants have been sentenced in the case.

Other recent activity in the case:
  • Former Taylor Bean CEO Paul Allen sentenced to 40 months in prison

  • Former Taylor Bean president Raymond Bowman sentenced in June to two-and-a-half years in prison.

  • Former Taylor Bean treasurer Desiree Brown sentenced to six years in prison.

  • Former Colonial Bank operations supervisor Teresa Kelly pled guilty in March.

  • Former Colonial Bank senior vice president Catherine Kissick sentenced this month to eight years in prison.

  • Former Taylor Bean financial analyst Sean Ragland sentenced to three months in jail.


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

United States of America v. Paul Allen.
(U.S. District Court for the Eastern District of Virginia).

United States of America v. Sean Ragland.
(U.S. District Court for the Eastern District of Virginia).


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