Thursday, March 17, 2011

ColonialPalooza: Fourth executive charged by SEC

image Remember a few weeks ago, when I wrote that the guilty pleas from Desiree Brown and Catherine Kissick were “just the start?” My sources told me then that things would be moving a bit more rapidly in the month of March, and we haven’t been disappointed.

Since then, Raymond Bowman, the former president of Taylor Bean & Whitaker entered a guilty plea in exchange for a deal with the prosecution for his testimony.

Today, news arrives that a fourth individual has been charged by the Securities and Exchange Commission, and this time it’s another Colonial Bank executive.  Teresa Kelly of Ocoee, Florida was charged late yesterday for her role in what federal investigators have described as a $1.5 to $2.0 billion securities fraud scheme, and she promptly pleaded guilty before before U.S. District Judge Leonie M. Brinkema in Alexandria, Virginia.

More charges and more plea agreements are expected.

According to court documents, Kelly was deeply involved in one of the largest checking kiting schemes in the history of the planet. Hundreds and hundreds of millions of dollars were moved back and forth between accounts in an elaborate shell game that lasted from 2002 until TBW and Colonial both collapsed in early 2009.

Also this week, Lee Farkas, the former CEO of TBW asked the court to continue his trial, requesting a delay from the April 4 start date to late May or early June. Judge Brinkema is expected to rule on that request by tomorrow.

It is broadly believed that federal investigators want the hide of former Colonial CEO and current Auburn University Trustee, Bobby Lowder. The feds are motivated in part by the fact that, while the TARP fraud schemes have produced some results in gaining convictions or guilty pleas, no “top level” executives or CEO’s have been snagged.  There is political pressure on DOJ to get a “splashy” conviction. Colonial BancGroup, at the height of its power and prestige, was a $26 billion, multi-state bank holding company with tentacles in Alabama, Florida, Georgia and Nevada. When it failed in summer of 2009, it was the largest failure of the year and the sixth largest in US history.

That’s a pretty big splash.

Exit question: Indicting, trying and convicting a once-mighty bank CEO is a RealBigDeal© right? But would the feds also go after the bank’s board of directors? Are they culpable?

Follow me on Twitter and Facebook, and visit the Timeline Page for a complete chronology of events.