It was the third time in as many weeks that a defendant in the Taylor Bean and Whitaker Mortgage Corp. case pled guilty. The latest action turns up the heat on the failed company’s former chief to cop his own plea.
The trio of guilty pleas began last month with the company’s former treasurer. Desiree Brown pled guilty to her role in a scheme that defrauded warehouse lender Colonial Bank out of more than $1 billion and ultimately led to the collapse of both companies.
Less than a week later, Catherine L. Kissick pled guilty for her role in the scheme. Kissick was in charge of Colonial Bank’s mortgage warehouse lending division.
On Monday, the Justice Department announced that former Taylor Bean president Raymond Bowman pled guilty to conspiring to commit bank, wire and securities fraud and lying to federal agents about his role in the scheme. The government claims that the defendant’s actions contributed to the two financial firms’ failures.
The plea was made in U.S. District Court for the Eastern District of Virginia.
Bowman learned in 2002 that Taylor Bean was unable to pay its operating expenses and made up the difference by running overdrafts in its master bank account at Colonial, according to the statement. By the next year, Bowman was part of a scheme to cover up the overdrafts that involved, among other things, fictitious sales of mortgages to Colonial.
He admitted that he artificially inflated the value of mortgage servicing rights by billions of dollars in order to avoid margin calls. In addition, he came clean about hiding a $1.5 billion deficit at Taylor Bean-subsidiary Ocala Funding LLC from Freddie Mac and Colonial.
“Bowman admitted that he knowingly and intentionally participated in a fraud scheme that caused Colonial Bank and Colonial BancGroup to purchase tens of millions of dollars of worthless assets, caused Colonial BancGroup to report false information in its financial statements, and artificially inflated the value of TBW’s mortgage servicing rights,” the news release stated.
Bowman faces up to 10 years in prison when he is sentenced on June 10.
The alleged kingpin in the case, former Taylor Bean chairman Lee Farkas, is scheduled to go to trial in April.
It is not uncommon for defendants who plead guilty to testify against remaining defendants in exchange for a potentially lesser sentence.
Given the three guilty pleas and the potential for damaging testimony from such top former lieutenants, Farkas is feeling pressure to work out a deal with the U.S. Attorney.