James Quinn, Telegraph,
Former mortgage boss Lee Farkas accused of intent to defraud US Treasury
Lee Farkas, the former chairman of now bankrupt mortgage house Taylor, Bean & Whitaker (TBW) was charged with 16 separate counts of securities and bank fraud over the alleged scheme, in part designed to "scam" the Treasury's $700bn Troubled Assets Relief Programme (TARP.)
Mr Farkas, who allegedly ran the scheme in the seven years to 2009, is accused of misappropriating more than $1bn, according to civil and criminal writs filed by the Securities and Exchange Commission (SEC) and the US Department of Justice.
Lanny Breuer, assistant Attorney General, said Mr Farkas participated in a "massive" fraud which was "stunning in its scale."
The SEC accused Mr Farkas of allegedly selling more than $1.5bn of "fabricated or impaired" mortgage loans to Alabama based Colonial Bank, having told Colonial that they were "quality, liquid assets."
In addition, he is accused of being the mastermind behind "a bogus equity investment" of $300m that caused Colonial to misrepresent its balance sheet to the Treasury when it applied for TARP funding. However, the SEC charge stresses that "Farkas and co-conspirators never obtained any TARP funds."
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