On Tuesday, the former chief financial officer of Taylor Bean entered a guilty plea in U.S. District Court. He was charged with conspiracy to commit fraud and making false statements for his role in the roughly $3 billion dollar mortgage fraud scheme. Last year, the founder and chairman of Taylor Bean, Lee Farkas, was given a 30 year sentence in federal prison. Six other people have also been convicted, with the CFO becoming the 8th person convicted from Taylor Bean. The crimes he pleaded guilty to carry a maximum penalty of 10 years in prison.
Prosecutors argued that, as the chief financial officer, he had the ability to put a stop to Taylor Bean’s illegal activities. Billions of dollars in debts were hidden from financial statements over a period of several years, including a discrepancy involving one subsidiary that grew to more than $1 billion. To obscure that fact the CFO was naturally forced to sign misleading financial documents and pass incorrect information to investors and government officials.
Prior cases have depicted Mr. Farkas as an aggressive and domineering figure who convinced a string of other executives and employees at Taylor Bean to engage in fraudulent acts. Prosecutors have been equally aggressive in pursuing criminal fraud cases against figures in the mortgage industry. The financial collapse has spurred federal officials to expend significant resources in prosecuting anyone connected to the fraudulent practices that contributed to the downturn.
More than 1,000 people were convicted of mortgage fraud last year, according to the FBI. Lenders are still reeling from the fallout and prosecutors suggest that many more cases will be forthcoming as convicted parties give evidence in exchange for lighter sentences. Taylor Bean and other companies implicated in fraudulent statements will certainly face further criminal actions in the following months and years.
Source: USA Today, “Ex-Taylor Bean CFA Pleads guilty in $3B mortgage fraud,” 20 March 2012