Ex-TBW executive pleads guilty to mortgage fraud

Reuters News
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Posted: Apr 01, 2011 4:47 PM
Ex-TBW executive pleads guilty to mortgage fraud

By James Vicini

WASHINGTON (Reuters) - The former chief executive officer of bankrupt Taylor, Bean & Whitaker Mortgage Corp pleaded guilty on Friday over his role in a $1.5 billion fraud scheme, the U.S. Justice Department said.

It said the executive, Paul Allen, entered the plea in federal court in Alexandria, Virginia, to one count of conspiracy to commit bank, wire and securities fraud and to one count of false statements.

Allen, 55, who lives in Oakton, Virginia, faces up to five years in prison on each count. The judge set sentencing on June 21.

He appeared before Judge Leonie Brinkema, who already has heard a number of other TBW executives admit wrongdoing in one of the biggest fraud cases so far in the U.S. mortgage meltdown.

The latest plea occurred right before Monday's scheduled start of a trial of former TBW Chairman Lee Farkas, who faces criminal charges of 16 counts related to the losses at the company. The judge plans to select a jury and hear opening arguments on Monday.

Under his plea deal with prosecutors, Allen has agreed to cooperate, a department spokesman said.

TBW's collapse also contributed to the downfall of one of the 50 largest U.S. banks, Alabama-based Colonial Bank, which had sought funds from the federal bank bailout program, the Troubled Asset Relief Program.

Both companies filed for bankruptcy protection in August 2009.

Other TBW executives who have pleaded guilty include former president Raymond Bowman; former treasurer Desiree Brown; and Sean Ragland, a former senior financial analyst. Executives from Colonial Bank also have pleaded guilty.

The case is USA v. Allen, No. 11-cr-165, in U.S. District Court for the Eastern District of Virginia.

(Additional reporting by Jeremy Pelofsky, Editing by Lisa Von Ahn)