Today, members of the Financial Fraud Enforcement Task Force announced a 16-count indictment for Lee Bentley Farkas (Farkas), the former chairman of a private mortgage lending company, Taylor, Bean & Whitaker (TBW), for "his alleged role in a more than $1.9 billion fraud scheme that contributed to the failure of Colonial Bank, one of the 50 largest banks in the United States in 2009, and TBW, one of the largest privately held mortgage lending companies in the United States" in 2009. The indictment [http://www.ocala.com/assets/pdf/OS20530616.PDF], unsealed today in U.S. District Court for the Eastern District of Virginia, charges Farkas with one count of conspiracy to commit bank, wire and securities fraud; six counts of bank fraud; six counts of wire fraud; and three counts of securities fraud, and seeks approximately $22 million in forfeiture from Farkas. According to the indictment and a motion seeking Farkas’s detention, Farkas and his co-conspirators, among other things, "allegedly engaged in a scheme to misappropriate more than $400 million from Colonial Bank’s Mortgage Warehouse Lending Division in Orlando, Fla., and approximately $1.5 billion from Ocala Funding, a mortgage lending facility controlled by TBW." In addition, the indictment further alleges that Farkas and his co-conspirators "committed wire and securities fraud in connection with their attempt to convince the United States government to provide Colonial Bank with approximately $553 million in TARP funds."

Separately today, the Securities and Exchange Commission also charged Farkas with "orchestrating a large-scale securities fraud scheme and attempting to scam" TARP. The SEC complaint, similar to the charges announced by members of the Financial Fraud Enforcement Task Force, alleges, among other things, that Farkas "engaged in a pattern of fraudulent conduct for the purposes of selling at least $1.5 billion of fictitious and impaired residential mortgage loans" from TBW to Colonial Bank, and that Farkas "caused Colonial Bancgroup to misstate to investors and TARP officials that it had obtained commitments for a $300 million capital infusion, which would qualify Colonial Bank for TARP funding."