June 10, 2011 – By Jeremy Pelofsky
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Alexandria, Virginia (Reuters) - Two former senior Taylor, Bean & Whitaker Mortgage Corp executives were sentenced on Friday to several years in prison for their roles in a multi-billion dollar fraud that took down the big lender.
The fraud ran more than seven years until August 2009 when TBW collapsed after the U.S. housing market imploded, taking Colonial BancGroup Inc's Colonial Bank with it and putting hundreds of people at the firm out of work.
The Obama administration elicited guilty pleas from six senior executives. TBW's former chairman, Lee Farkas, was convicted in April on 14 counts of bank, securities and wire fraud as well as conspiracy.
It is one of the few cases in which prosecutors have been able to penetrate the executive suites of a major firm in the wake of the 2008 global financial crisis. Most prosecutions have involved lower-level employees or much smaller firms.
U.S. District Judge Leonie Brinkema sentenced TBW's former president Raymond Bowman to 30 months in prison after he pleaded guilty to two counts -- conspiracy to commit bank, securities and wire fraud and making false statements.
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Prosecutors asked that he be imprisoned for five years, half the possible sentence because he cooperated with authorities. They said Bowman helped TBW steal hundreds of millions of dollars, and that he knew that the scheme at the firm was unethical at the very least and likely illegal.
Brinkema sentenced Desiree Brown, the company's former treasurer, to six years in prison after she pleaded guilty to conspiracy to commit wire, securities and bank fraud.
Prosecutors wanted eight years, a higher sentence because she administered the day-to-day activities of the fraud on behalf of Farkas and TBW, according to court filings.
Brown had no formal financial training and Farkas had picked her for the position "because he could control her," the government's sentencing memorandum filed with the court said. TBW did some $20 billion in mortgage sales annually.
Farkas is due to be sentenced on June 27.
One of the federal prosecutors said the TBW investigation was ongoing.
The cases are: USA v. Bowman, No. 11-cr-118 and USA v. Brown, No. 11-cr-84 in U.S. District Court for the Eastern District of Virginia.
(Editing by Robert MacMillan)