Taylor Bean Ex-President Bowman Gets 30-Month Fraud Sentence

Raymond Bowman, former president of Taylor, Bean & Whitaker Mortgage Corp., was sentenced to 2 1/2 years in prison for his part in a $3 billion mortgage fraud.

Desiree Brown, the lender’s former treasurer, received a six-year term. Both were sentenced today in federal court in Alexandria, Virginia, for their roles in a scheme that duped some of the largest U.S. financial institutions, targeted the federal bank bailout and contributed to the failures of Montgomery, Alabama-based Colonial Bank and its parent, Colonial BancGroup Inc. (CBCGQ)

“We need to send a message,” U.S. District Leonie Brinkema said. Bowman’s “high corporate title” factored into her decision, the judge said. Others in the mortgage industry will be looking at this case “and thinking about their own conduct,” she said.

Prosecutors sought a five-year term for Bowman and eight for Brown. Brinkema said she wouldn’t ban the two from seeking jobs in the mortgage industry after serving their time. Both will be required to pay restitution to victims, though the amount hasn’t been determined.

“I can’t imagine anyone would want to go through this,” Bowman told Brinkema. “The past two years of my life have been very rough.”

Bowman, 45, who lives in Atlanta, faced a maximum sentence of 10 years in prison after pleading guilty in March to one count of conspiracy to commit wire fraud, bank fraud and securities fraud and one count of lying to investigators.

Possible Witness

Assistant U.S. attorney Charles Connolly told Brinkema that the government’s investigation is continuing and Bowman may “be called in the future for testimony on that.”

Brown, also 45, faced a maximum sentence of 30 years in prison after pleading guilty to a more serious fraud conspiracy count. Brown, who was the first of six cooperators to be sentenced, cried as she told Brinkema “it was always my intent to try and fix the problems so TBW would be healthy again.”

Prosecutors said both should receive shorter terms than the maximums because they admitted their crimes and helped the government in its case against Lee Farkas, Taylor Bean’s former chairman.

A jury in Alexandria found Farkas guilty April 19 of 14 counts of conspiracy and bank, wire and securities fraud after a two-week trial. Farkas was taken into custody after the verdict. He is scheduled to be sentenced on June 27.

‘Control and Manipulate’

“They allowed Lee Farkas to control and manipulate them into doing what they knew was wrong, and now they will pay for their crimes,” U.S. Attorney Neil MacBride in Alexandria said in an e-mailed statement. “At the same time, these defendants agreed to cooperate with the government and that cooperation was clearly taken into account in the sentences imposed today.”

Brown, who started at Taylor Bean as a receptionist, was the second person involved in the conspiracy who agreed to cooperate, prosecutors said. She gave the government documents and recordings of Farkas and also helped explain how the scheme worked, said Patrick Stokes, deputy chief of the Justice Department’s fraud section.

Bowman’s decision to cooperate helped the government secure a guilty plea and cooperation from Paul Allen, Taylor Bean’s former chief executive officer, said Connolly. Allen is scheduled to be sentenced on June 21.

70 Letters

Brinkema received more than 70 letters of support for Bowman, which she said “paint a tragic and glowing picture” of Taylor Bean’s former president.

“Many of the people involved in this case are basically decent human beings who got wrapped up in what at first looked like a runaway business but turned into a significant criminal operation,” Brinkema said.

Prosecutors allege the fraud began in 2002 when Farkas had trouble meeting operating expenses, such as payroll and mortgage-loan servicing payments owed to the government- sponsored Freddie Mac and Ginnie Mae.

With assistance from officials at Colonial Bank, at one time among the country’s 50 biggest, Farkas and other conspirators sent mortgage data to the bank for loans that didn’t exist or that Taylor Bean had already sold to other investors, the government said.

The Bowman case is U.S. v. Bowman, 11-cr-00118, the Brown case is USA v. Brown, 11-cr-00084, and the Farkas case is USA v. Farkas, 1:10-cr-00200, U.S. District Court, Eastern District of Virginia (Alexandria).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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