The former treasurer of Taylor, Bean & Whitaker (TBW), Ocala, Fla., pleaded guilty to criminal charges involving her role in selling "fictitious" mortgages to Colonial Bank, contributing to that institution's failure.
TBW's Desiree Brown pleaded guilty on Thursday to bank, wire and securities fraud, according to statement released by the Department of Justice (DOJ). She faces a maximum of 30 years in prison. Sentencing is scheduled for June 10.
Based in Montgomery, Ala., Colonial Bank was TBW's chief warehouse lender. The bank was seized by the Federal Deposit Insurance Corp. in August 2009. TBW failed shortly thereafter.
Former TBW chairman and owner Lee Farkas was arrested in June 2010 and goes on trial in April for his role in the same fraudulent scheme that ensnarled Brown.
The government says Brown admitted to working with Farkas to generate money for TBW through the sale of "fictitious trades, which had no pool of loans collateralizing them, to Colonial bank."
Colonial, a securitizer of GNMA product, paid TBW more than $400 million for the worthless assets.
One of the goals of the scheme was to obtain funding for TBW to cover the costs of "operations and servicing payments owed to third-party purchasers of loans and mortgaged-backed securities," DOJ said.
In the spring of 2009 TBW — a nondepository mortgage lender specializing in Federal Housing Administration loans — had hoped to buy Colonial using borrowed money from mortgage bankers, wealthy individuals, and Troubled Asset Relief Program funds. (At the time Colonial had granted TBW roughly $3 billion in warehouse commitments.)
The sale of Colonial to TBW was never consummated.