Deloitte and Touche Sued for $7 Billion for Taylor Bean Accounting Oversights
Deloitte & Touche LLP has been sued in state court in Miami for its failure to detect fraudulent activities at mortgage lender Taylor Bean & Whitaker Mortgage (TBW). The suit alleges that Deloitte & Touche's oversight of Taylor Bean's financials from 2002-2009 led to more than $7 billion in losses as former Chairman Lee Farkas, along with a host of Taylor Bean execs, orchestrated the scam which led to the demise of the once-12th leading mortgage lender nationwide. Taylor Bean’s bankruptcy trustee, Neil Luria, and its Ocala Funding unit are seeking more than $7.6 billion in damages from the oversight. In June, Farkas was sentenced to 30 years in prison and ordered to forfeit approximately $38.5 million for his role in a $2.9 billion-plus fraud scheme that contributed to the failure of TBW and Colonial Bank. At one time, TBW was one of the largest privately-held mortgage lending institutions in the United States and Colonial Bank was one of the 25 largest banks in the United States. Farkas and his co-conspirators engaged in a scheme that misappropriated more than $1.4 billion from Colonial Bank’s Mortgage Warehouse Lending Division (MWLD) in Orlando, Fla., and approximately $1.5 billion from Ocala Funding, a mortgage lending facility controlled by TBW. Farkas and his co-conspirators misappropriated this money to, among other things, cover TBW’s operating expenses. “Deloitte’s negligence, and willful blind eye, was the fuel without which the looters’ fraud would have sputtered out long before it resulted in the multibillion-dollar debt under which TBW collapsed,” said the complaint.