The former treasurer of what had been one of the country's largest privately held mortgage lenders pleaded guilty Thursday to a nearly $2 billion fraud conspiracy that authorities say contributed to the failure of her employer as well as an Alabama-based bank.
Desiree Brown, 45, of Hernando, Fla., faces up to 30 years when she is sentenced in June. She was an executive at Ocala, Fla.-based Taylor, Bean & Whitaker, which filed for bankruptcy in 2009.
According to court documents, Brown admitted that she willingly participated in a yearslong scheme to sell more than $400 million in fictitious mortgages to Alabama-based Colonial Bank. Other mortgages sold to Colonial existed but had already been sold to other parties and were therefore worthless to Colonial.
Colonial collapsed in 2009, the sixth-biggest bank failure in U.S. history.
Taylor Bean and Colonial later used those fraudulent balance sheets to support an application by Colonial in October 2008 for $570 million in taxpayer funding under the government's Troubled Assets Relief Program (TARP), according to the plea. Neither Taylor Bean nor Colonial actually received TARP funding, though they came close: In December 2008, the Treasury Department had issued conditional approval for $553 million in funding to Colonial.
Brown and her attorney declined comment after Thursday's hearing.
The former CEO of the company, Lee Bentley Farkas, is scheduled to go on trial in April. Brown's plea agreement requires her to testify against Farkas if prosecutors want her testimony.
Also on Thursday, the Securities and Exchange Commission filed related civil charges against Brown, accusing her of aiding the alleged fraud scheme and attempted TARP scam.
As part of the civil case, Brown agreed Thursday to an order that, among other things, bars her from engaging in any future violations of securities laws.
The SEC will also seek civil penalties against Brown.
"Brown willingly participated with Farkas in a $1.5 billion fraud on Colonial Bank and its investors," Lorin Reisner, deputy enforcement director at the SEC, said in a statement. "Brown also aided efforts by Farkas to mislead Colonial Bank and its regulators regarding the bank's application for TARP funds."
Roughly 2,000 Taylor Bean workers lost their jobs in August 2009 when they were laid off on the same day that federal agents raided the company's headquarters.
AP Business Writer Marcy Gordon contributed to this report from Washington.