Lee Farkas, mortgage lender, charged with TARP fraud

When the U.S. federal government created the Troubled Asset Relief Program, it was intended to help bail out lenders struggling. The cost of the TARP program has been significantly less than expected. However, the Securities and Exchange Commission is prosecuting some mortgage lenders for fraud that amounts to $ 1.9 billion. The SEC has charged Lee Farkas with fraud of the TARP system.

Article Source: Lee Farkas, mortgage lender, charged with TARP fraud

Mortgage lenders Taylor, Bean and Whitaker

The majority owner and chairman of mortgage lender Taylor, Bean and Whitaker, Lee Farkas, was responsible for investments that mortgage lender sold. In order to defraud the TARP fund, allegedly, TBW sold over $ 1.5 billion in bad loans to the Colonial Bank. Because of these investments, Colonial Bank was able to get TARP money from the bailout fund. While Taylor, Bean and Whitaker under Lee Farkas was previously one of the largest non-bank mortgage lenders in the U.S., it filed for bankruptcy in August of 2009.

Lee Farkas's alleged crimes against TARP

When he was the head of the mortgage lender, Lee Farkas presumably defrauded the SEC of more than $ 1 billion. The SEC says that Farkas sold half a billion in fake loans and one billion in "damaged" loans that he did not disclose. Lee Farkas also allegedly headed up a “bogus equity investment” that assisted Colonial Bank qualify for TARP funds. Along with other alleged crimes, the SEC claims that Lee Farkas cost them $ 1.9 billion.

Ramping up Fed oversight

The amount of oversight the Fed has is being ramped up under the watch of Ben Bernanke. In overall, the Fed has come out in support of the financial reform bill working its way by way of Congress. The oversight that both the Fed and the SEC might have over the financial industry is also being ramped up – including increased prosecutions of those that have defrauded the funds.