Prosecutors said Farkas used the stolen money to augment a life of luxury. Farkas owned as many as 40 cars, including a vintage collection; a company jet and a plane he used to fly to a lake house in Maine; and an 8,000-square-foot house in Florida and other houses along the East Coast.
Farkas could face 20 to 30 years in prison for each count on the bank, wire and securities fraud convictions. He stood with his two attorneys at his side and held his head down with his hands folded in front of him as the courtroom deputy read the charges and repeated guilty after each one.
After the verdict was read, U.S. District Judge Leonie M. Brinkema said from the bench in Alexandria that she believed Farkas was “not honest when he testified from the stand.”
“The time has come for the defendant to recognize what he’s done is very serious,” she said, before two U.S. marshals escorted Farkas from the courtroom.
His sentencing is scheduled for July 1.
During the 10-day trial, prosecutors called nearly two dozen witnesses — six of whom were co-conspirators who pleaded guilty to some charges — to testify.
In his closing argument Monday, Assistant U.S. Attorney Charles Connolly said that Farkas was the leader of the conspiracy and that his fraud scheme was one of “staggering proportions and boldness.”
“The defendant ran one of the longest, largest fraud schemes,” Connolly said. “He lived the high life. A jet, a seaplane, houses up and down the East Coast. . . . He invented fake assets.”
Prosecutors said the scheme eventually led to the demise of Taylor, Bean & Whitaker and Colonial Bank in Alabama, one of the nation’s largest regional banks. The government said that from 2002 to 2009, Farkas and his co-conspirators used Taylor Bean as a middleman between lenders and investors. The firm borrowed money from Colonial Bank to buy Federal Housing Administration-insured home loans. Taylor Bean would pool the loans into securities and sell them to investors. Ginnie Mae would then guarantee those securities.
But when Taylor Bean began having cash flow problems, the government said, Farkas and co-conspirators covered the shortfalls with money from Colonial Bank. They misappropriated billions of dollars to cover Taylor Bean’s operating losses, authorities said.
Farkas’s attorneys — Bruce Rogow of Fort Lauderdale, Fla., and William B. Cummings of Alexandria – said their client didn’t believe he was doing anything wrong.
Some of his co-conspirators also didn’t believe that what they were doing was wrong and thought that the company had collateral to back the loans it was making, Rogow told the jury in his closing argument.
The case against Farkas is one of the largest to emerge from the crisis that brought the nation’s financial system to the brink of collapse.