The chief financial officer of the now-defunct Taylor Bean & Whitaker (TBW) will be spending at least five years in prison for concealing the fraudulent activities of the privately held mortgage banking company.

Former CFO Delton de Armas late last week pleaded guilty to one count of conspiracy to commit bank and wire fraud, and one count of making false statements.

A U.S. District Court sentenced him to 60 months in prison for his role in TBW’s collapse, which resulted in at least $2.4 billion of losses to banks that provided the Ocala, Fla.-based lender with warehouse lines of credit.

“As CFO, de Armas could have—and should have—put a stop to the massive fraud at TBW the moment he discovered it,” said U.S. attorney Neil MacBride for the Eastern District of Virginia. “Instead, he and others lied for years on end to investors, banks, regulators and auditors and caused more than $2.4 billion in losses to major financial institutions.”

According to court documents, the overdrafts and operating losses were covered up by having the bank purchase from TBW more than $1.5 billion in what was really worthless mortgage assets, including loans that TBW had already sold to other investors.

Also, the bank purchased fake pools of loans that were supposedly being formed into MBS.

“Rather than blow the whistle on billions of dollars in fraud, de Armas chose to help conceal it,” said special inspector general Christy Romero for the Troubled Asset Relief Program. “This CFO lied to investors, banks, regulators and auditors to cover up the massive fraud scheme which resulted in the failure of both TBW and Colonial Bank.”

Former company CEO Lee Farkas was sentenced to 30 years in jail for orchestrating the scam. Six additional conspirators who participated in the scheme have already been sentenced to prison terms that range from three months to eight years.

TBW, which filed for bankruptcy in the summer of 2009, was in business for almost two decades. It was a top player in the GNMA market.

Currently, roughly $30 billion of TBW Freddie Mac MSRs are for sale in the secondary market.

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