June 22 (Bloomberg) -- Former Taylor, Bean & Whitaker Mortgage Corp. chief executive officer Paul Allen sentenced to about 3 1/2 years in prison in federal court in Virginia for his role in a $3 billion fraud scheme.
Allen, 55, yesterday became the sixth person sent to prison by U.S. District Judge Leonie Brinkema for participating in a fraud that duped some of the largest U.S. financial institutions. The scheme also targeted the federal bank bailout program and contributed to the failure of Montgomery, Alabama-based Colonial Bank and its parent, Colonial BancGroup Inc.
Prosecutors asked Brinkema to sentence Allen to six years in prison. Allen, of Oakton, Virginia, pleaded guilty in April to one count of conspiracy to commit bank and wire fraud and one count of making false statements. He testified for the government at the trial of Taylor Bean’s former chairman, Lee Farkas.
“As TBW’s chief executive officer, Mr. Allen served as an accomplice to Lee Farkas and his massive fraud scheme,” Assistant Attorney General Lanny Breuer, head of the Justice Department’s criminal division, said in an e-mailed statement yesterday. “Today’s sentence sends a strong message that corporate fraud by senior executives will not be tolerated.”
Sean Ragland, 37, a former senior financial analyst at Taylor Bean who also pleaded guilty to the fraud, was sentenced today to three months in prison.
The fraud scheme involved the sale of fictitious loans or loans already owned by other investors.
A jury in Alexandria found Farkas guilty April 19 of 14 counts of conspiracy and bank, wire and securities fraud after two-week trial. Farkas was taken into custody after the verdict He is to be sentenced on June 30.
The cases are U.S. v. Allen, 11-cr-00165, and U.S. v. Ragland, 11-cr-00162, U.S. District Court, Eastern District of Virginia (Alexandria).
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