On June 30, 2011, Lee Farkas, the former Chairman of Taylor Bean & Whitaker ("TBW"), was sentenced to 30 years in prison for his role the failure of his company and of Colonial Bank. While the sentence fell short of the Government's request for a sentence of 385 years, it is likely that the 58-year old Mr. Farkas will spend the rest of his life in jail.
As previously discussed here, Mr. Farkas was convicted in April, 2011 (in one of the first criminal trials arising out of the market crisis) of twelve counts related to his role in a $2.9 billion fraud scheme that led to the failure of Colonial Bank (which was one of the 25 largest banks in the United States in 2009), and TBW, one of the largest privately held mortgage lending companies in 2009. The Department of Justice asserted that Mr. Farkas, the former Chairman of TBW, and his co-conspirators engaged in a scheme that misappropriated more than $1.4 billion 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. The Government also asserted that Mr. Farkas personally misappropriated more than $20 million from TBW and Colonial Bank to finance his lifestyle.
The sentence fell far short of the Government's original request, but will likely accomplish the Government's goal of seeing Mr. Farkas spend the rest of his life in jail. In a June 23, 2011 filing, the Government argued that Mr. Farkas had "orchestrated a fraud of staggering proportions" and that "an appropriate sentence in this case would be a Guideline Sentence capped at the statutory maximum of 385 years." As an alternative, the Government argued that he should "remain in prison for life" to forcefully promote general deterrence."
In recent filings, Mr. Farkas, through his counsel, argued that a sentence of 15 years (which, he pointed out was nearly double the length of any sentence imposed on any of his co-conspirators) was appropriate. As Mr. Farkas acknowledged in his pleadings, the other six individuals pled guilty and cooperated, while he was convicted after a 11-day jury trial.
According to the New York Times, Judge Leonie M. Brinkema told Mr. Farkas that she did "not detect one bit of actual remorse,” as she sentenced him to a term of imprisonment that was considerably longer than all of the sentences of his co-conspirators put together. Judge Brinkema also ordered that Mr. Farkas forfeit $38.5 million.
Following the sentencing, Neil MacBride, the U.S. Attorney Office for the Eastern District of Virginia, stated “Today’s sentence ensures that Lee Farkas will spend the rest of his life in prison and is just punishment for a man who pulled off one the largest bank frauds in history.”