CEO sentenced to three years for historic mortgage fraud scheme

TRD New York /
Jun.June 22, 2011 02:01 PM

Paul Allen, CEO of Florida-based former mortgage lender Taylor Bean & Whitaker, once one of America’s largest lending firms, has been sentenced to over three years in prison after pleading guilty to one count of making false statements and one count of conspiring to commit bank and wire fraud, the Huffington Post reported. His actions, he admitted, were part of a $3 billion corporate fraud scheme, among the most significant in the history of the United States. Federal prosecutors had sought a six-year jail term.

“I messed up. I messed up big,” Allen told U.S. District Judge Leonie. “There was no excuse for my behavior.”

Taylor Bean went bust in 2009 when the criminal investigation became public. Its collapse resulted in the loss of 2,000 jobs and contributed to the collapse of Colonial Bank, which had bought hundreds of millions of dollars in Taylor Bean mortgages, already sold to other investors.

Allen’s lawyer urged for leniency, saying that Chairman Lee Farkas often excluded Allen from knowledge of operations. Farkas masterminded the scheme, he said.

“Mr. Allen was not treated as a CEO. He did not function as a CEO,” said defense lawyer Stephen Graeff. “Sentence Mr. Allen, the man, not Mr. Allen, the title.” [Huffington Post]

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