Lee Farkas, Ex-CEO of Bankrupt Mortgage Lender TBW, Indicted on TARP Fraud

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Lee Farkas, the former CEO of the now bankrupt mortgage lending company Taylor, Bean & Whitaker, has been indicted for allegedly engaging in a fraud scheme to misappropriate $1 billion from the government's Troubled Assets Relief Program and other targets. He has been charged with 16 counts of conspiracy, bank fraud, wire fraud and securities fraud. The indictment loudly echoes public concerns that bailout money would be mishandled at best, and fraudulently obtained at worst.

The indictment in Virginia accuses Farkas and unnamed co-conspirators of submitting false information to the Federal Deposit Insurance Corp. and to the Securities and Exchange Commission when trying to obtain money from the TARP for their company -- TBW, which was once among the largest privately held mortgage lending companies in the country. TBW filed for bankruptcy and ceased operating in August 2009. But according to the indictment, the firm's troubles began in 2002, and it was while trying to cover up the problems that the scheme was devised.

While the "scheme ultimately led to the misappropriation of more than $1 billion" from various sources, according to the 30-page indictment, Farkas and his co-conspirators were never actually successful in obtaining any TARP funds.
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