Today, federal prosecutors as well as the SEC filed charges against Lee Bentley Farkas, the former chairman of private mortgage lending company Taylor, Bean & Whitaker. The DOJ announced that Farkas was arrested last night and charged in a 16-count indictment for his alleged role in a nearly $2 billion fraud scheme that contributed to the failures of Colonial Bank and TBW. Farkas also allegedly attempted to scam the U.S. Treasury’s Troubled Asset Relief Program (TARP).
TBW was the largest customer of Colonial Bank’s Mortgage Warehouse Lending Division. Among other things, prosecutors allege that beginning in 2002, Farkas and his co-conspirators ran overdrafts in TBW bank accounts at Colonial Bank in order to cover TBW’s cash shortfalls. Farkas and his co-conspirators at TBW and Colonial Bank allegedly transferred money between accounts at Colonial Bank to hide the overdrafts. When these overdrafts grew to tens of millions of dollars, Farkas and his co-conspirators allegedly
