The former president of Taylor, Bean and Whitaker Mortgage Corp. has pleaded guilty to bank fraud in a $1.9 billion repo conspiracy that contributed to the collapse in 2009 of Colonial Bank, based in Montgomery, Alabama.
Raymond Bowman of Atlanta is the third and highest ranking executive to plead guilty to the scheme. Taylor, Bean’s CEO, Lee Farkas, is expected to go to trial on fraud charges next month in Virgina, according to the Ocala Star-Banner in Ocala, Fla., where Taylor, Bean was headquartered. Bowman has agree to cooperate with the prosecution, reported Bloomberg News.
From the Star-Banner:
In his guilty plea Monday in federal court in Alexandria, Va., Bowman admitted he and others allowed Taylor Bean to sell hundreds of millions of dollars in worthless mortgages to Colonial to try and keep Taylor Bean afloat.
Criminal fraud charges were filed against Farkas in the U.S. District Court in Alexandria, Virginia, June 15. The following day the U.S. Securities and Exchange Commission hit Farkas with a civil complaint.
Taylor, Bean & Whitaker is accused of pledging fake home loans and fake mortgage-backed securities as collateral for repo loans from Colonial Bank.
Taylor, Bean & Whitaker also sold the same fake securities to an off-the-books business it created, which then sold them to Fannie Mae, Freddie Mac and two major European banks, according to prosecutors who claim the complexity of the securities made the fraud difficult to detect.
The Ocala Star-Banner and Bloomberg News did not mention the repurchase market.