Taylor, Bean & Whitaker Mortgage Corp.’s former finance chief admitted to helping his boss, Lee Farkas, commit what prosecutors say was one of the largest bank frauds in U.S. history.
Delton de Armas, 41, pleaded guilty today in federal court in Alexandria, Virginia, to one count of conspiracy to commit bank and wire fraud and one count of false statements in a scheme that contributed to the failures of Montgomery, Alabama- based Colonial Bank and its parent, Colonial BancGroup, once among the nation’s 25 biggest depository banks.
He faces as much as 10 years in prison when he is sentenced by U.S. District Judge Leonie Brinkema on June 15.
“As CFO, Mr. de Armas could have put a stop to the fraud the moment he discovered it,” U.S. Attorney Neil MacBride said in an e-mailed statement. “Instead, the hole in Ocala Funding grew to $1.5 billion on his watch, and as it grew, so did his lies to investors and the government.”
From 2005 through August 2009, de Armas helped Farkas and other conspirators misappropriate more than $1.5 billion from Ocala Funding LLC, a financing vehicle used and controlled by Taylor Bean, according to a statement of facts filed by prosecutors and signed by de Armas. De Armas issued false financial reports that masked shortfalls at Ocala Funding in order to keep auditors at bay and investors on board, the document states.
‘Didn’t Speak Up’
“I regret I didn’t speak up more,” de Armas, of Carrollton, Texas, told Brinkema today after being asked about his role in covering up Taylor Bean and Ocala Funding’s financial problems.
Farkas, the ex-chairman of Taylor Bean, is serving a 30- year sentence after being convicted in April of 14 counts of conspiracy and bank, wire and securities fraud in what prosecutors said was a $3 billion scheme involving fake mortgage assets.
Six conspirators to the fraud scheme who pleaded guilty and testified against Farkas at trial were sentenced to prison terms ranging from three months to eight years. De Armas did not testify at Farkas’ trial.
De Armas admitted to falsifying mortgage loan data so that Taylor Bean would meet collateral thresholds set by its lenders and inflated the assets Taylor Bean supposedly owned, according to the statement of facts.
False financial statements were given to Ginnie Mae and Freddie Mac so that Taylor Bean’s authority to sell and service mortgage securities guaranteed by the government-sponsored entities would be renewed, according to the court filing.
The case is U.S. v. Armas, 12-00096, U.S. District Court, Eastern District of Virginia (Alexandria).
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