Thursday, June 17, 2010

Feds Bust Billion-Dollar Mortgage Fraud Ring

Federal agents have arrested former mortgage-lending executive Lee Farkas for his involvement in a billion dollar fraud ring. As the former chief of Taylor Bean & Whitaker, a wholesale mortgage lender, Farkas "operated a sophisticated shell game" to prop up his struggling company and take advantage of investors and taxpayers.

According to CNN.com, Farkas could spend life in jail if found guilty. Officials claim he “ripped off the Federal Housing Administration and investors in at least two financial firms, and tried to make off with funds from the Troubled Asset Relief Program”

"The gravity of this fraud is really quite amazing," said Assistant Attorney General Lanny A. Breuer. He said losses from the scheme will be measured "in the billions."

Among other things, authorities said, Farkas filed false information to get TARP loans via an investment in TBW's biggest lender, Colonial Bank of Alabama. Colonial failed last August in the third-biggest bank failure of the year.

Taylor Bean also was a huge lender under Federal Housing Administration programs. Officials said the FHA and Ginnie Mae, another government mortgage lender, lost some $3 billion in the Taylor Bean fraud. It is the FHA program's biggest-ever loss, they said.

Continue reading at CNN.com…