Lee Farkas isn’t exactly a household name in America, but this week he became the first mortgage executive of a once top-ranked lender to be found guilty of a fraud with its roots in the housing bust.

Farkas, the former chairman and CEO of Taylor, Bean & Whitaker (TBW), is looking at a possible life sentence.

Earlier in the week a jury found him guilty on all 14 counts tied to a $2.9 billion fraud scheme that lasted seven years and resulted in the failure of the Ocala, Fla.-based TBW, and played a role in the downfall of its chief warehouse lender, Colonial Bank.

Among the many charges levied against him, Farkas was accused of masterminding a scheme where nonbank TBW sold at least $400 million of fictitious mortgages to Colonial Bank.

Earlier this year TBW’s former treasurer, Desiree Brown, pleaded guilty, admitting that she worked with Farkas to generate money for the lender through the sale of "fictitious trades, which had no pool of loans collateralizing them, to Colonial bank."

Not only did TBW rank among the nation’s 10 largest lenders at one point, it was a top issuer of Ginnie Mae MBS. Both TBW and Colonial failed in the late summer of 2009, after an aborted takeover of the bank by TBW.

After a 10-day trial in the Eastern District of Virginia, the jury found him guilty on several different charges, including conspiracy to commit bank fraud, securities fraud, and wire fraud.
Farkas was first arrested in June of 2010. TBW was in business for about two decades.

At press time, his attorney William Cummings had not commented on a possible appeal.

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