U.S. prosecutors finished their case against Lee Farkas, the former chairman of Taylor, Bean & Whitaker Mortgage Corp. accused of masterminding a $1.9 billion fraud scheme that targeted the federal bank bailout program.
Prosecutors spent eight days laying out the allegations for jurors in federal court in Alexandria, Virginia. The government called nearly two dozen witnesses, including officials at Freddie Mac, Bank of America and Deutsche Bank AG. (DBK) Six of those who testified were former colleagues or associates of Farkas who had pleaded guilty to conspiracy charges.
Farkas, 58, is charged with orchestrating a fraud involving fake mortgage assets that duped some of the country’s largest financial institutions, targeted the Troubled Asset Relief Program and contributed to the failure of Montgomery, Alabama- based Colonial Bank.
Farkas is accused of 14 counts of conspiracy and wire, bank and securities fraud. If convicted of the single conspiracy charge, Farkas faces a prison term of as long as 30 years.
Bruce Rogow, one of Farkas’s lawyers, said in court that Farkas may testify in his own defense as the final witness.
The government’s last witness was Raymond Peroutka, a forensic accountant hired by prosecutors to analyze mortgage and accounting records at Colonial Bank, Taylor Bean, and Freddie Mac and Ginnie Mae.
Patrick Stokes, deputy chief of the U.S. Justice Department’s Fraud Section, had Peroutka explain wire transactions that form the basis for several of the counts in the indictment.
During cross examination, Farkas’s lawyer, Craig Kuglar, asked Peroutka whether he saw any evidence of Farkas requesting these wire transfers.
“I don’t have a specific recollection of any,” Peroutka said.
The case is U.S. v. Farkas, 10-cr-00200, U.S. District Court, Eastern District of Virginia (Alexandria).
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