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Friday, May 24, 2024 | Back issues
Courthouse News Service Courthouse News Service

Feds Land Another Guilty Plea in $1.5B TARP Scam

(CN) - The former president of what used to be the nation's largest nondepository mortgage lender pleaded guilty to his role in a $1.5 billion fraud of the U.S. Treasury's Troubled Asset Relief Program.

In addition to admitting to bank, wire and securities fraud conspiracy charges, Raymond Bowman also admitted to lying to investigators about his knowledge of the scheme in Virginia's Eastern District Court.

Bowman, the former president of Taylor, Bean and Whitaker, admitted that between 2003 and 2009, he and his co-conspirators caused Colonial Bank to go under by tricking the bank into buying millions of dollars in worthless assets.

When Bowman learned that Taylor Bean was in financial trouble in 2002 and could not meet operating expenses like payroll and mortgage-backed securities, he tried to cover up the firm's problems. Bowman admitted that he and others swept overnight money from one account to another, and then "sold" nonexistent mortgage loans to Colonial Bank, according to the Justice Department.

According to court documents, Bowman knew that Taylor Bean would go out of business without manipulation.

Taylor Bean used its mortgage-servicing rights to collateralize a working capital credit line at Colonial Bank, and Bowman admitted that he directed co-conspirators to manipulate the company's borrowing base by artificially inflating the mortgage-servicing valuations.

Then in 2005, Taylor Bean created Ocala Funding to provide the company with additional funding for mortgage lending. Ocala sold asset-backed commercial paper, which Bowman admitted ran a significant collateral deficit within a year of the company's creation. By August of 2009, the deficit grew to approximately $1.5 billion.

Shortly thereafter, in an interview by FBI agents, Bowman denied any fraudulent loan activity between Colonial Bank and his firm. Colonial filed for bankruptcy the same month.

The trial of former Taylor Brown chairman Lee Farkas, who was charged with a 16-count indictment for his role in the scheme, is scheduled April. Former senior vice president of Colonial Bank Catherine Kissick and former Taylor Brown treasurer Desiree Brown pleaded guilty earlier this year.

Bowman, 45, could face 10 years in prison for the two counts when he is sentenced on June 10.

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