Question

This is for forensic accounting. We're supposed to find out information on Lee B. Farkas? He was the CEO of a mortgage company called Taylor, Bean & Whitaker. He is now in jail because of mortgage fraud.

Height? Weight? Eye and hair color? Which relative wrote the Vile Plutocrat?

Answer 1

Forensic Accounting :

These specialized accountants examine tax and business records to identify irregularities that can impact major criminal and civil cases. They are often certified public accountants (CPAs) who use forensic accounting to detect and/or find evidence of embezzlement, corruption, and other financial crimes. Forensic accountants may work in state or federal law enforcement, including with the Federal Bureau of Investigation (FBI), the United States Secret Service, or on behalf of public accounting firms and large corporations. Accountants who specialize in forensics may start their own consulting business or advance to a supervisor position

Below is narrative which describes how the fraud is carried out :

TBW - Taylor, Bean & Whitaker Mortgage Corp., is a privately-held Florida corporation organized in 1982 and headquartered in Ocala, Florida. TBW expanded rapidly, and by 2008, was the largest non-depository mortgage lender in the United States. Farka was one of the owner of TBW.

Beginning in the first-quarter of 2002, TBW (Farka's Organisation) began to experience liquidity problems, primarily because the cash generated from its mortgage servicing rights was insufficient to cover its growing business

Around this time, TBW began to overdraw its then limited warehouse line of credit with Colonial Bank by approximately $15 million each day

Farkas, with the assistance of the Colonial Bank Officer, thereafter began a pattern of “kiting” in TBW’s accounts at Colonial Bank, whereby certain debits to TBW’s warehouse line of credit were not entered until after credits due to the warehouse line of credit for the following day were entered.

Recognizing the continued difficulty in concealing this initial fraudulent conduct, Farkas, with the assistance of the Colonial Bank Officer, devised a plan whereby TBW would create and submit fictitious loan (COLB Account) information to sale the loan and get the funds keeping such fictitious loan as collateral.

Farkas, with the assistance of the Colonial Bank Officer, created fictitious trades that consisted of fictitious loans and rolled these loans from the COLB Account to trades on the AOT Account. Once on the AOT Account, Colonial Bank’s accounting systems could not identify the individual loans, or the age of those loans, within that trade.

Because the fictitious trades containing fictitious loans could not readily be sold to third-party investors, Defendant Farkas, with the assistance of the Colonial Bank Officer, utilized several manipulative and deceptive devices to conceal these trades as they aged on the AOT Account

TBW’s cash flow problems intensified in or around 2007, when a private label purchaser reneged on its obligation to purchase an approximately $600 million trade held in the AOT Account (the “Failed Trade”). TBW was unable to immediately repackage and resell the Failed Trade and therefore was unable to repay its contractual obligations to Colonial Bank for advancing the funds necessary to make the underlying loans in the first place.