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Businessman found guilty in $2.9 billion fraud

By Terry Frieden, CNN Justice Department Producer
  • Farkas was called one of the faces of the country's financial crisis
  • He was accused of masterminding a nearly $3 billion fraud scheme
  • Breuer predicted Farkas will spend decades in prison

Washington (CNN) -- A businessman described as "one of the faces of the financial crisis" was found guilty Tuesday on all 14 felony counts against him by a jury in Alexandria, Virginia.

Assistant Attorney General Lanny Breuer called the verdict against Lee Farkas, the former chairman of Taylor, Bean and Whitaker who was accused in a nearly $3 billion fraud, "a major victory."

Farkas "masterminded one of the largest bank fraud schemes in history," said Breuer. "His shockingly brazen scheme poured fuel on the fire of the financial crisis. It not only led to the downfall of TBW, one of the largest private mortgage lending companies in the United States, but also contributed to the failure of one of the country's largest commercial banks.

"Mr. Farkas may have thought he could steal nearly $3 billion from investors and taxpayers and sail into the sunset. But now a jury has told him otherwise, and he must face the severe consequences," Breuer added.

The jury found Farkas guilty of multiple counts of bank, wire, and securities fraud. He'll be sentenced July 1, and Breuer predicted Farkas will serve "decades" in prison.

Witnesses at the trial described to the jury how TBW and Colonial executives perpetrated the massive fraud that brought down the once powerful Colonial BancGroup. The scheme began in 2002, according to a Justice Department statement, "when Farkas and his co-conspirators ran overdrafts in TBW bank accounts at Colonial Bank in order to cover TBW's cash shortfalls."

Six other people have already pleaded guilty for their roles in the fraud scheme, the Justice Department said.