Mastermind of $2.9 billion scam gets 30 years

Lee B. Farkas, who federal prosecutors have considered the “mastermind” behind one of the largest bank fraud schemes in history, has been was sentenced to 30 years in prison.

Farkas, the former chairman of the mortgage firm Taylor, Bean & Whitaker, is the single largest prosecution from the financial crisis, the New York Times reports.

Prosecutors say the $2.9 billion scheme, which began in 2002, led to the collapse of Colonial Bank and cheated investors and the government out of billions of dollars.

Prosecutors claimed that TBW executives secretly overdrew the mortgage lending company’s accounts with Colonial Bank and to cover up the overdrafts, sold Colonial about $1.5 billion in “fake” and “worthless” mortgages, some of which already had been purchased by other investors. Ultimately, Colonial filed for bankruptcy in August 2009, making it one of the largest bank failures in history.

The government, in wanting to send a warning to the financial industry, had originally asked for a 385-year prison sentence for Farkas.