Taylor, Bean & Whitaker
Encyclopedia
Taylor, Bean & Whitaker was a top 10 wholesale mortgage lending
firm. Taylor, Bean & Whitaker closed $35 billion in residential mortgage loans in 2007. It employed about 2,000 workers and was the fifth largest issuer of GNMA securities. On August 3, 2009, FBI Agents raided the company's headquarters in Ocala, Florida
in connection with an investigation related to the company's acquisition of a majority stake in Colonial BancGroup. Taylor Bean & Whitaker had signed a deal on March 31, 2009 to become the majority owner of Colonial BancGroup in a $300 million equity stake. The next day, the Federal Housing Administration
suspended the company from issuing FHA mortgage loans and Ginnie Mae mortgage backed securities.On August 14, 2009, Taylor Bean & Whitaker ceased business operations and terminated all employees at its headquarters.
On April 19, 2011, a federal jury in Alexandria, Virginia
convicted Farkas, the majority owner of the company, of 14 counts of fraud. According to the government case, the fraud began in 2002 when Taylor overdrew
its account with Colonial BancGroup by several million dollars. Taylor Bean then promised to cover the amount by the end of the day in a process known as sweeping
. When the overdrafts grew to over $100 million midlevel Taylor Bean executives sold Colonial BancGroup $1 billion in mortgages that it did not own. Taylor Bean also operated a subsidiary, Ocala Funding, which sold $1.5 billion of worthless commercial paper
to several banks including Deutsche Bank
and BNP Paribas
.
During his sentencing hearing on June 30, 2011, Farkas read a statement saying that he "strived to be a good person." However, Federal District Judge Leonie Brinkema
replied that she did not observe any genuine remorse and sentenced Farkas to 30 years in federal prison
. Farkas is currently serving his sentence at the Federal Correctional Institution, Williamsburg, a facility in South Carolina that holds minimum and medium security inmates, and is scheduled for release in 2037.
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
firm. Taylor, Bean & Whitaker closed $35 billion in residential mortgage loans in 2007. It employed about 2,000 workers and was the fifth largest issuer of GNMA securities. On August 3, 2009, FBI Agents raided the company's headquarters in Ocala, Florida
Ocala, Florida
Ocala is a city in Marion County, Florida. As of 2007, the population recorded by the U.S. Census Bureau was 53,491. It is the county seat of Marion County, and the principal city of the Ocala, Florida Metropolitan Statistical Area, which had an estimated 2007 population of 324,857.-History:Ocala...
in connection with an investigation related to the company's acquisition of a majority stake in Colonial BancGroup. Taylor Bean & Whitaker had signed a deal on March 31, 2009 to become the majority owner of Colonial BancGroup in a $300 million equity stake. The next day, the Federal Housing Administration
Federal Housing Administration
The Federal Housing Administration is a United States government agency created as part of the National Housing Act of 1934. It insured loans made by banks and other private lenders for home building and home buying...
suspended the company from issuing FHA mortgage loans and Ginnie Mae mortgage backed securities.On August 14, 2009, Taylor Bean & Whitaker ceased business operations and terminated all employees at its headquarters.
On April 19, 2011, a federal jury in Alexandria, Virginia
Alexandria, Virginia
Alexandria is an independent city in the Commonwealth of Virginia. As of 2009, the city had a total population of 139,966. Located along the Western bank of the Potomac River, Alexandria is approximately six miles south of downtown Washington, D.C.Like the rest of northern Virginia, as well as...
convicted Farkas, the majority owner of the company, of 14 counts of fraud. According to the government case, the fraud began in 2002 when Taylor overdrew
Overdraft
An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn". If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft...
its account with Colonial BancGroup by several million dollars. Taylor Bean then promised to cover the amount by the end of the day in a process known as sweeping
Sweep account
A sweep account is an account set up at a bank or other financial institution where the funds are automatically managed between a primary cash account and secondary investment accounts.- Overview :...
. When the overdrafts grew to over $100 million midlevel Taylor Bean executives sold Colonial BancGroup $1 billion in mortgages that it did not own. Taylor Bean also operated a subsidiary, Ocala Funding, which sold $1.5 billion of worthless commercial paper
Commercial paper
In the global money market, commercial paper is an unsecured promissory note with a fixed maturity of 1 to 270 days. Commercial Paper is a money-market security issued by large banks and corporations to get money to meet short term debt obligations , and is only backed by an issuing bank or...
to several banks including Deutsche Bank
Deutsche Bank
Deutsche Bank AG is a global financial service company with its headquarters in Frankfurt, Germany. It employs more than 100,000 people in over 70 countries, and has a large presence in Europe, the Americas, Asia Pacific and the emerging markets...
and BNP Paribas
BNP Paribas
BNP Paribas S.A. is a global banking group, headquartered in Paris, with its second global headquarters in London. In October 2010 BNP Paribas was ranked by Bloomberg and Forbes as the largest bank and largest company in the world by assets with over $3.1 trillion. It was formed through the merger...
.
During his sentencing hearing on June 30, 2011, Farkas read a statement saying that he "strived to be a good person." However, Federal District Judge Leonie Brinkema
Leonie Brinkema
Leonie M. Brinkema is a United States District Court judge, in the Eastern District of Virginia.-Early life and education:...
replied that she did not observe any genuine remorse and sentenced Farkas to 30 years in federal prison
Federal prison
Federal prisons are run by national governments in countries where subdivisions of the country also operate prisons.In the United States federal prisons are operated by the Federal Bureau of Prisons. In Canada the Correctional Service of Canada operates federal prisons. Prison sentences in these...
. Farkas is currently serving his sentence at the Federal Correctional Institution, Williamsburg, a facility in South Carolina that holds minimum and medium security inmates, and is scheduled for release in 2037.
External links
- Company homepage
- Company REO homepage (from wayback machineWayback machineThe WABAC Machine refers to a fictional machine from the cartoon segment Peabody's Improbable History, an ongoing feature of the 1960's cartoon series The Rocky and Bullwinkle Show. The WABAC Machine is a plot device used to transport the characters Mr. Peabody and Sherman back in time...
in December 2008)