The chief financial officer of what had been one of the nation's largest private mortgage companies pleaded guilty to charges Tuesday for his role in a $3 billion fraud scheme.
Delton de Armas, 41, of Carrollton, Tex., was CFO of Florida-based Taylor Bean and Whitaker up until its collapse in 2009.
On Tuesday de Armas became the eighth person convicted in one of the biggest fraud schemes to emerge from the nation's housing crisis. The other seven, including Taylor Bean founder and chairman Lee Farkas, were sentenced last year, with Farkas receiving a 30-year term.
De Armas faces up to 10 years after pleading in U.S. District Court to conspiracy to commit fraud and making false statements.
The company hid billions of dollars in debts with phony accounting and by double- and triple-selling mortgages it held to various financial institutions.
Taylor Bean's collapse threw its 2,000 employees out of work and also helped bring down Alabama-based Colonial Bank, the sixth-largest bank failure in U.S. history.
At Tuesday's plea hearing, de Armas first tried to tell the judge that he only became aware of the fraud at the very end of the scheme, but under questioning from U.S. District Judge Leonie Brinkema, he acknowledged that he knowingly signed off on misleading financial statements back to 2006.
Between 2006 and 2009, the "hole" in Taylor Bean's books for a subsidiary called Ocala Funding grew from $150 million to more than $1 billion.
Regarding the company's financial statements, de Armas told the judge: "Hindsight has the benefit of clarity. ... I regret that I didn't speak up more."
He declined comment after Tuesday's hearing.
Neil MacBride, U.S. Attorney for the Eastern District of Virginia, whose office prosecuted the case, said de Armas could have put a stop to the fraud the moment he discovered it.
"Instead, the hole in Ocala Funding grew to $1.5 billion on his watch, and as it grew, so did his lies to investors and the government," MacBride added.
While the housing crisis apparently peaked a couple of years ago, prosecutors continue to bring a large number of mortgage fraud cases, with the Taylor Bean case among the most prominent. The FBI says that nearly 1,100 individuals were convicted of mortgage fraud in fiscal 2011 alone.
"The actions of Mr. de Armas and his co-conspirators contributed to the financial crisis and led to the collapse of one of the country's largest commercial banks. The FBI and our partners remain vigilant in investigating such fraudulent activity in our banking and mortgage industries," said James McJunkin, assistant director in charge of the FBI's Washington Field Office.
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