Taylor, Bean & Whitaker Mortgage Corp.’s former finance chief was sentenced to five years prison for helping his boss, Lee Farkas, commit what prosecutors say was one of the largest bank frauds in U.S. history, according to U.S. Attorney Neil MacBride.
Delton de Armas, 41, was sentenced today by U.S. District Judge Leonie Brinkema in Alexandria, Virginia, after pleading guilty on March 20 to one count of conspiracy to commit bank and wire fraud and one count of making false statements.
De Armas admitted he participated 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.
“As CFO, Mr. de Armas could have -- and should have -- put a stop to the massive fraud at TBW the moment he discovered it,” MacBride said in an e-mailed statement. “Instead, he and others lied for years on end to investors, banks, regulators and auditors and caused more than $2.4 billion in losses to major financial institutions.”
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. He issued false financial reports that masked shortfalls at Ocala Funding to keep auditors at bay and investors on board, according to the document.
Farkas, the ex-chairman of Taylor Bean, is serving a 30-year sentence. He was convicted in April 2011 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 who pleaded guilty and testified against Farkas were sentenced to prison terms ranging from three months to eight years. De Armas didn’t testify at Farkas’s trial.
De Armas admitted to falsifying mortgage loan data so 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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