The Securities and Exchange Commission (SEC) Wednesday accused the former owner of Taylor Bean & Whitaker (TBW) with orchestrating a massive equity and MBS fraud tied to his firm's warehouse borrowings from Colonial Bank, a depository it tried to take control of last summer using Troubled Asset Relief Program (TARP) money.

In a civil complaint, the SEC said TBW owner and CEO Lee Farkas created $1.5 billion worth of "fictitious" whole loans and impaired MBS which were pledged to the bank's balance sheet and served as collateral for warehouse lines of credit.

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