Taylor Bean & Whitaker Ex-CEO Sentenced for $3 Billion Fraud
Paul Allen the former Chief Executive Officer of Taylor Bean & Whitaker, based in Ocala, FL, has been sentenced to a 40 month prison sentence for what officials have called one of the biggest corporate frauds in U.S. history, according to Investment News. The $3 billion fraud resulted in a criminal investigation that led to the demise of Taylor Bean in 2009 and the loss of jobs for some 2,000 employees. According to the article, Alabama based Colonial Bank was also forced to shutter its doors after it purchased hundreds of millions of dollars worth of Taylor Bean mortgages that had already been sold to other investors. The collapse of Colonial was the sixth largest bank failure in U.S. history. Additionally, Deutsche Bank and BNP Paribas lost almost $2 billion after they purchased corporate paper from Taylor Bean that had no collateral backing it.
The conviction of Paul Allen and company chairman, Lee Farkas, represent some of the most high profile executives in the housing and financial industries to get prison time following the housing sector collapse. When Allen became CEO of Taylor Bean in 2003, the fraud was already well established with the firm owing Colonial Bank over $100 million. According to the article, Allen’s part in the scheme was really with the commercial paper loans from Deutsche Bank and BNP Paribas that ended up being the largest part of the fraud, which elicited an apology from him to “to the entire financial community.”