Feds alleged South Florida's Colonial Bank attempted fraud to hide foreclosure losses

March 9, 2011

Not even when Wall Street greed finally caused the economy to implode did the fraud stop. Bloomberg News reports that the former treasurer of one of the nation's largest mortgage companies has admitted to assisting in a $1.9 billion fraud scheme targeting the Troubled Asset Relief Program, which was designed to bail the country out of the worst recession since the Great Depression.

Foreclosure attorneys in Miami are generally beyond surprise when it comes to bank antics these days. But this case is as blatant an illustration of brazen Wall Street greed as you will ever find. The actions at Taylor, Bean & Whitaker Mortgage Corp. contributed to the failure of Colonial Bank, which had numerous branches in South Florida. At the time, many South Florida homeowners were fighting to prevent foreclosure by Colonial or other lending institutions.
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The 45-year-old executive pleaded guilty in federal court in Virginia to conspiring to commit wire fraud, securities fraud an bank fraud, and is working with prosecutors to bring the former chairman to trial next month. The 58-year-old chairman is accused of a massive scheme to deceive TARP and other financial firms by covering up losses at the company. He has been indicted on 16 counts and faces up to life in prison if convicted.

The treasurer, who is a resident of Hernando, Florida, faces up to 30 years in prison and has been ordered to pay restitution to 250 victims.

Colonial BancGroup Inc. was one of the nation's 50 largest when it imploded. The crime involved transferring money back and forth between the bank and Taylor Bean, in order to hide overdrafts. The treasurer admitted that from 2003 to 2009 she and others conspired to defraud Colonial Bank, its shareholders, the government and other investors.

The group is also accused of selling Colonial Bank more than $400 million in fake assets. They allegedly diverted more than $1 billion and when they again ran out of money they attempted to obtain $533 million through TARP. Federal regulators detected the fraud and Colonial filed for bankruptcy in 2009.

If banks have the gall to attempt to defraud the government, how do you think homeowners are being treated? If you are facing foreclosure in Miami or are dealing with bad real estate debt, please speak to an experienced real estate attorney.

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If you need help with foreclosure issues in Miami or the surrounding areas, including short sales, deficiency judgments, strategic defaults or other help for Miami homeowners, contact Jacobs|Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.

Ex-Taylor Bean Official Admits Guilt in $1 9 Billion Fraud - Bloomberg.pdf