Ex-TBW Employee Faces 30 Years

Treasurer Pleads Guilty; Farkas Trial Begins Tracy Kitten (FraudBlogger) • April 8, 2011

Desiree Brown, former treasurer of Taylor, Bean & Whitaker, the mortgage lender allegedly behind the August 2009 collapse of Colonial Bank, pleaded guilty in March to conspiring to commit bank, wire and securities fraud. Federal investigators linked TBW to a $1.9 billion scheme that defrauded the Federal Housing Administration, private investors and the Troubled Asset Relief Program. Montgomery, Ala.-based Colonial Bank ($25 billion in assets) was TBW's biggest lender.

Brown, 45, of Hernando, Fla., could face up to 30 years in prison when she is sentenced June 10 by a U.S. District Court in Virginia. And more charges are expected from a separate enforcement action filed by the U.S. Securities and Exchange Commission against Brown.

The fate of Lee Farkas, once at the helm of TBW, remains to be determined. Farkas' criminal trial began April 4 in Virginia. Farkas has pleaded not guilty to the 14 counts of conspiracy, bank fraud, wire fraud and securities fraud brought against him last year for his connection to TBW scheme. [See, Farkas is Tip of Mortgage Fraud Iceberg.]

Background

In 2009, just before the fall of Colonial, the biggest bank failure of 2009, prosecutors say Farkas attempted to defraud the U.S. government to bail out the institution with $553 million in TARP funds. Farkas and others associated with TBW alleged tried to pump $300 million into TBW before the Colonial collapse, making it eligible for bailout funds.

When Colonial Bank and TBW were unable to get regulatory approval for the bailout, TBW filed for bankruptcy protection. Regulators subsequently froze TBW's accounts and suspended its ability make insured loans after an internal audit uncovered evidence of massive fraud.