Federal authorities say the case against Lee B. Farkas, former chairman of Florida-based Taylor Bean & Whitaker, is one of the largest prosecutions arising from the nation’s financial crisis.
The fraud put thousands of employees out of work and contributed to the collapse of Colonial Bank, which authorities described as the sixth-largest bank collapse in US history.
Farkas, 58, who denied any wrongdoing when he testified at his trial, was convicted in April of all 14 counts, including securities fraud and conspiracy.
Yesterday, he acknowledged making errors in judgment to keep his company afloat. But he did not directly apologise for any fraud.
“When faced with the prospect of Taylor Bean & Whitaker sinking, I had to take risks,’’ said Farkas, who was taken into custody following the verdict and appeared in court yesterday in a green prison jumpsuit.
US District Judge Leonie Brinkema told Farkas she detected no remorse as she sentenced him to 30 years - twice the term requested by his attorneys.
The fraud began in 2002; Taylor Bean collapsed in 2009 and the scheme unraveled, prosecutors said. Taylor Bean overdrew its main account with Alabama-based Colonial Bank by several million dollars and eventually double- and triple-pledged mortgages it held to a variety of investors.
They say Farkas was motivated by a lavish lifestyle and maintained several dozen classic cars, a private jet and seaplane, and multiple houses, including one in Key West. The government is seeking to forfeit $38.5 million.
Farkas, of Ocala, Florida, is the last of seven employees and executives from Taylor Bean and from Colonial to be sentenced. The other six cooperated with the government and agreed to testify against him to secure lighter sentences for themselves.
Prosecutors say Colonial and two other major banks - Deutsche Bank and BNP Paribas - were collectively cheated out of nearly $3 billion in a scheme that spanned more than seven years. They say Farkas and his codefendants also tried to fraudulently obtain more than $500 million in taxpayer-funded relief from the government’s bank bailout program, the Troubled Asset Relief Program, also called TARP. Neither Taylor Bean nor Colonial ever received any TARP money.
