June 24 (Bloomberg) -- Lee Farkas, the ex-chairman of Taylor, Bean & Whitaker Mortgage Corp., should be sentenced to life in prison for leading a $3 billion fraud involving fake mortgage assets, U.S. prosecutors told a judge in Virginia.
In a filing in Alexandria made public today, prosecutors asked U.S. District Judge Leonie Brinkema to order Farkas to prison for 385 years or no less than 50 years, “a period of years that would ensure that Farkas will remain in prison for life.” Farkas, 58, is to be sentenced June 30.
Prosecutors said in a sentencing memorandum that the recommended punishment is consistent with punishments imposed on “similarly situated” white-collar defendants, such as Bernard Madoff and former WorldCom Inc. Chairman Bernard Ebbers. Madoff is serving a 150-year sentence for a $13 billion Ponzi scheme and Ebbers received 25 years for an $11 billion accounting fraud, prosecutors said.
A federal jury convicted Farkas in April of 14 counts of conspiracy and bank, wire and securities fraud after a two-week trial. Prosecutors said Farkas orchestrated one of the largest and longest-running bank frauds in the U.S., which duped some of the country’s largest financial institutions, targeted the federal bank bailout program and contributed to the failures of Taylor Bean and Montgomery, Alabama-based Colonial Bank.
“Farkas fueled his lifestyle of ostentatious wealth by ripping off banks and attempting to steal from the government, all with little to no regard for the consequences to TBW’s or Colonial Bank’s employees, thousands of whom lost their jobs when TBW and Colonial Bank closed, or to the shareholders of Colonial BancGroup,” prosecutors said in the filing.
Prosecutors are also seeking a money judgment of $42 million, claiming that Farkas was paid millions in salary and “personally stole” more than $40 million from Taylor Bean and Colonial Bank.
William Cummings, a lawyer for Farkas, in a filing today urged Brinkema to send Farkas to prison no more than 15 years.
“The whole point of the financial transactions forming the basis for the charges against Mr. Farkas was not to enrich himself but to keep TBW a viable company so that the hard working people who had helped him build TBW from nothing would continue to have good, stable, well paying jobs,” Cummings said in the filing.
Six conspirators to the fraud scheme who pleaded guilty have been sentenced by Brinkema to prison terms ranging from three months to eight years.
The case is U.S. v. Farkas, 10-cr-00200, U.S. District Court, Eastern District of Virginia (Alexandria).
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