The former CEO of failed mortgage lender Taylor, Bean and Whitaker was convicted of all 14 counts of bank, wire and securities fraud Tuesday. TBW, based in Ocala, Fla., originated, serviced and sold mortgages in pools to Freddie Mac and relied on various purchase facilities, credit lines and other financing vehicles, usually with Colonial Bank and Ocala Funding. TBW filed for bankruptcy in August 2009. According to U.S. prosecutors, Farkas and co-conspirators at Colonial Bank devised a scheme in early 2002 to cover up cash flow problems. Court documents show the scheme led to the misappropriation of more than $3 billion. Farkas was found to be hiding overdrafts in the TBW primary bank account at Colonial, sold millions of dollars in mortgages that did not exist, and misappropriated more from Ocala through improper fund transfers, fraudulent transactions and false documentation. A spokesperson for the Department of Justice said Farkas was remanded into custody and will be sentenced on July 1. Farkas faces a maximum prison term of 30 years for the conspiracy charge and for each count of bank fraud, 20 years for each count of wire fraud related to the Troubled Asset Relief Program, and 30 years for each count of wire fraud affecting a financial institution, the DOJ said. Lanny Breuer, assistant attorney general for the criminal division of the DOJ could not say whether or not other conspirators faced possible charges, but the investigation is ongoing. “Farkas was really the mastermind of one of the largest bank fraud schemes in history,” Breuer said. “His shockingly brazen scheme dropped fuel on the fire of the financial crisis. What he did led not only to the downfall fall of TBW, what was the second-largest mortgage lender in the country, but also to the failure of one of the largest commercial banks, Colonial Bank.” Write to Jon Prior. Follow him on Twitter @JonAPrior.

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