The Real Deal Miami

Feds go after mastermind of $3 billion mortgage fraud scheme

June 24, 2011 03:24PM

It’s been less than a week since Paul Allen, CEO of Florida-based former mortgage lender Taylor Bean & Whitaker, once one of America’s largest lending firms, was sentenced to more than three years in prison for his part in a $3 billion mortgage scheme. Now, federal prosecutors are seeking a life sentence for the man convicted of orchestrating the scheme, majority owner Lee Farkas, according to the Associated Press.

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

Prosecutors seem to agree. A maximum sentence “will send the most forceful and unequivocal message to senior corporate executives that engaging in fraud and deceit in order to pump up your company or line your own pockets is unacceptable and will have severe consequences,” prosecutors wrote, recommending that Farkas should receive at least a 50-year sentence.

According to the AP, Farkas and others at Taylor Bean allegedly persuaded mid-level executives to look the other way when Taylor Bean was overdrawing its main account by a few million dollars. Eventually, the company double- and triple-pledged mortgages it held to a variety of investors.

Farkas apparently led a privileged life. He had a private jet, a sea-plane, an extensive collection of classic cars, and vast real estate holdings on the East Coast.

Defense attorneys are seeking a 15-year sentence. [Associated Press]