Ocala Funding Files for Bankruptcy Protection in Florida
The Orlando-based company listed both assets and debt of more than $1 billion each in Chapter 11 documents filed today in U.S. Bankruptcy Court in Jacksonville, Florida. Taylor Bean owns a 100 percent membership interest in Ocala Funding, according to court papers.
Ocala Funding issued asset-backed commercial paper to financial institutions including Deutsche Bank, Germany’s biggest bank, and Paris-based BNP Paribas, according to court papers.
From 2002 through August 2009, Lee Farkas, ex-chairman of Taylor Bean, directed the sale of more than $1.5 billion in fake mortgage assets to Colonial Bank and misappropriated more than $1.5 billion from Ocala Funding LLC, according to a statement of facts filed by prosecutors.
“The debtor has liabilities that exceed its assets by more than $2 billion,” Neil Lauria, Ocala’s chief restructuring officer, said in court papers. “Nearly half this shortfall is the result of transfers of the debtor’s assets to Freddie Mac under the direction and control of the Farkas Parties.”
The Federal Deposit Insurance Corp. is listed as the largest unsecured creditor with a claim of $898.9 million.
Taylor Bean’s Bankruptcy
Taylor Bean filed for bankruptcy protection on Aug. 24, 2009. Prior to its collapse, the company was servicing more than 500,000 mortgages, including $51.2 billion of Freddie Mac loans, court papers show.
Ocala is seeking court authority to investigate the Federal Home Loan Corp., known as Freddie Mac, and the Federal Housing Finance Agency to determine its chances of recovering transfers made to Freddie Mac to allegedly conceal the fraud perpetrated by Taylor Bean executives, according to court documents.
From September 2008 until Taylor Bean’s collapse almost a year later, Freddie Mac received about $805 million of Ocala’s funds.
“These Transfers of Ocala’s assets provided no benefit to Ocala,” lawyers for the company said in court papers. They were made “with the intent of hindering, delaying and defrauding Ocala’s creditors” when the company was “insolvent or was rendered insolvent as a result of such transfers,” the attorneys wrote.
The case is In re Ocala Funding LLC, 3:12-bk-04524, U.S. Bankruptcy Court, Middle District of Florida (Jacksonville).