Taylor, Bean & Whitaker's (TBW)  former chairman and CEO Lee Farkas ordered data sent to its warehouse lender, Colonial Bank, for nonexistent mortgages in an effort to cover up growing deficits, an ex-president testified in court this week.

Raymond Bowman, testifying for the government in federal court in Alexandria, Va., said that in 2003 Farkas said selling "dummy" loans, known as Plan B, was necessary to keep Taylor Bean in business. "I told him I didn't think it was a good idea," said Bowman, who pleaded guilty last month to conspiracy and making false statements. Bloomberg News reported that Bowman said he thought the plan was unethical and "possibly illegal."

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