Another Auditor Settles Over Taylor Bean Fraud

Mortgage News

Mortgage Daily Staff

                                                 February 28, 2018

A second financial auditing firm has reached a settlement that is tied to the failure of Taylor, Bean & Whitaker Mortgage Corp.

In August 2016,
a settlement was announced between the trustee for the Taylor, Bean & Whitaker Plan Trust and PricewaterhouseCoopers LLP.

PwC was the auditor of Colonial Bank, Taylor Bean’s warehouse lender that failed in 2009 as a result of carrying fraudulent Taylor Bean loans on
the warehouse lines.

Ocala, Florida-based Taylor Bean also failed in 2009 as senior executives engaged in long-running scheme that included the purported sale of fictitious or double-pledged loans.

Severe financial distress as result of the scheme wasn’t reflected in Taylor Bean’s financial statement.

Deloitte & Touche LLP, the independent outside auditor of Taylor Bean, knowingly deviated from applicable auditing standards when auditing the company, according to a statement Wednesday from the Department of Justice. As a result, it failed to detect the fraudulent conduct and bogus financial statements.

“By failing to detect TBW’s misconduct, Deloitte’s audit reports allegedly enabled TBW to continue originating FHA-insured mortgage loans until TBW collapsed and declared bankruptcy in 2009,” the Justice Department said.

Deloitte reached a confidential settlement in a lawsuit filed by the bankruptcy trustee in 2013.

Today’s statement from the Justice Department indicated that Deloitte has agreed to pay $150 million
to resolve potential False Claims Act liability.

“HUD relies on auditors to ensure the soundness of participants in HUD programs. When CPA firms and auditors fail to detect fraud, waste or abuse the consequences are significant to federal programs, and, ultimately, to the American taxpayer and must be addressed,” Acting HUD Inspector General Helen M. Albert said in the statement.

Mortgage Daily Staff

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