By Jeremy Pelofsky
WASHINGTON (Reuters) - U.S. prosecutors have urged a judge to send the former chairman of bankrupt Taylor, Bean & Whitaker Mortgage Corp to prison for the rest of his life for masterminding the $2.9 billion fraud scheme that took down the company.
Lee Farkas, 58, was convicted in April on 14 counts of conspiracy, bank, securities and wire fraud as part of the scheme in which he used some of the proceeds to live a lavish lifestyle with a jet and collection of antique cars.
Prosecutors said in a court filing on Thursday that the statutory maximum was 385 years and they urged District Judge Leonie Brinkema to sentence him to at least 50 years to ensure that Farkas spends the rest of his life in prison.
"The nature, duration, and scope of Farkas's criminal acts warrant maximum punishment for maximum deterrence," they said. Sentencing is scheduled for Thursday.
The fraud began in 2002 and ran until TBW filed for bankruptcy in August 2009. The mortgage giant's collapse was a major contributing factor to the implosion of one of the largest U.S. regional banks, Colonial Bank.
Farkas was accused of running a wide-ranging scheme to cover up large losses at TBW by moving funds between accounts at Colonial Bank and also selling mortgage loans that either did not exist, were worthless or had already been sold.
He also attempted to help Colonial Bank obtain a $553 million loan from the federal bank bailout program, but the money was never disbursed. The bank was shut down by regulators and most of its assets were sold to BB&T Corp.
Prosecutors have also asked that Farkas be required to forfeit more than $42 million.
"To invite the fact that we want this person in our prison system until we bury him is just ridiculous," said Farkas' attorney William Cummings. "It's a waste of taxpayer dollars."
He acknowledged that his client will likely get a lengthy sentence but said that the case has already had a deterrent effect so adding decades more was unnecessary. "A substantial sentence is scary enough," he said.
Several other TBW and Colonial Bank employees who pleaded guilty for their roles in the fraud were sentenced earlier this month. The longest sentence so far handed down was eight years to Catherine Kissick, who was Farkas' key point of contact at Colonial Bank.
The case is USA v. Farkas, No. 10-cr-200, in U.S. District Court for the Eastern District of Virginia.
(Reporting by Jeremy Pelofsky, editing by Matthew Lewis)