Two executives were sentenced to several years in prison for their involvement in a massive fraud ring — estimated at $3 billion — that led to the collapse of one of the country’s largest privately held mortgage lending companies, as well as a bank.
Taylor, Bean & Whitaker Mortgage Corp.’s former president Raymond Bowman and its former treasurer Desiree Brown were convicted for their part in trying to cover up major losses by the company in moving money between accounts at Colonial Bank and selling mortgage loans that never existed or that had previously been sold. TBW’s former chairman Lee Farkas, who prosecutors have called the ring leader of the fraud, is set to be sentenced June 27.
Bowman was sentence to 30 months in prison while Brown was sentenced to six years in prison.
"It was never my intent to commit a crime," Brown told the court. "It was always my intent to fix the problem."
Prosecutors say the mortgage fraud at TBW lasted more than seven years up until August 2009, which ultimately led to the collapse of TBW and Colonial BancGroup Inc.’s Colonial Bank. Prior to its collapse, TBW was one of the nation’s largest privately held mortgage lenders with some $20 billion in mortgage sales a year. Meanwhile, Colonial Bank — before regulators took it over — was once one of the top 50 U.S. banks.
Prosecutors say the case marks one of the few since the aftermath of the global financial crisis where charges have been brought up against executives at major firms. Usually prosecutions, up to this point, have involved lower-level employees or smaller firms.
Source: “Former Executives Get Prison Time for Mortgage Fraud,” Reuters (June 10, 2011)