Lifetime Trading Ban for Taylor Bean Fraudster

     (CN) – The former chairman of Taylor, Bean & Whitaker who was convicted of hiding the firm’s losses of more than $3.5 billion can no longer sell securities or lead public companies, a federal judge ruled.
     From 2002 to 2009, former Taylor, Bean & Whitaker chairman Lee Bentley Farkas, 60, along with co-conspirators, hid the mortgage company’s extreme financial difficulties, ultimately resulting in over $3.5 billion in losses to various victims.
     Farkas also appropriated more than $20 million from the firm to finance his lavish lifestyle, then concealed the missing funds by moving the deficit to a mortgage lender controlled by Taylor, Bean & Whitaker.
     In 2011, he was found guilty of 14 counts, including conspiracy and wire fraud. U.S. District Judge Leonie Brinkema sentenced Farkas to 30 years in prison, and ordered him to pay restitution of $38.5 million in illegal earnings.
     After Farkas’ indictment, the Securities and Exchange Commission (SEC) filed a civil action against him, asking the court to permanently enjoin Farkas from ever selling securities or holding any senior position involving financial reporting in a public company.
     Brinkema granted the SEC’s motion for summary judgment last week, finding that Farkas’ criminal convictions established his violation of federal securities laws.
     “Liberally construing his pleading, Farkas appears to argue that the jury in his criminal case never specifically determined that any of his allegedly fraudulent statements or omissions related to ‘material’ facts, and therefore that any civil liability for violations of securities fraud statutes requires a materiality finding that differs from the materiality issue in the criminal case,” the 12-page opinion states.
     “Farkas is mistaken; the jury in his criminal case was specifically instructed that materiality was an essential element of the securities fraud charges, and obviously found materiality in finding Farkas guilty beyond a reasonable doubt,” Brinkema continued.
     The judge also rejected Farkas’ argument that he was not given the opportunity to fully defend himself on the materiality issues at trial.

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