Monday, March 14, 2011

White Collar and Securities: Executive Pleads in Mortgage Fraud Case

Raymond Bowman, former president of Taylor, Bean & Whitaker Mortgage Corp., pleaded guilty to charges in federal court in the Eastern District of Virginia stemming from a mortgage fraud that prosecutors characterized as a $1.9 billion scam. Bowman pleaded guilty to a count of conspiracy to commit wire fraud, bank fraud, and securities fraud. He also pleaded guilty to a count of making false statements. The government alleged that the crime defrauded the Troubled Asset Relief Program and caused the failure of Colonial Bank, based in Montgomery, Alabama.

The government prosecutors said that Bowman and other Taylor Bean executives conspired with executives at Colonial Bank. As part of the conspiracy Taylor Bean and Colonial Bank personnel transferred more than $400 million between the two entities to hide Taylor Bean overdrafts. The conspirators sent mortgage information to Colonial Bank for fictitious loans or actual loans that Taylor Bean had already sold or committed to sell to other investors. As a result, Colonial Bank got no value for its tens of millions of dollars of purported Taylor Bean mortgage assets. The conspirators caused Colonial Bank and the Freddie Mac to believe that they had undivided ownership interests in thousands of the same loans worth hundreds of millions of dollars.

Moreover, conspirators knew that their fraud caused Colonial Bank to file false periodic reports with the SEC.

Finally, Bowman lied to the FBI when questioned. This served as the basis for the false statements charge.

Bowman is the third Taylor Bean executive to plead guilty. They are all cooperating in the prosecution of former chairman Lee Farkas. All hope to lessen their sentences through cooperating against Farkas who goes to trial on April 4, 2011.

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