The Ocala Star-Banner’s Suevon Lee is in Alexandria, reporting on the trial of Lee Farkas, the man prosecutors say was the chief architect of a nearly $2 billion fraud scheme between his former company, Taylor Bean & Whitaker, and executives at Colonial BancGroup.
As the nation’s financial crisis worsened, both companies failed and toppled Bobby Lowder’s banking empire. Five former executives of the two firms have already pleaded guilty.
The government’s first witness is former Colonial CFO Sarah Moore. Her testimony is expected to be a key part of the prosecution’s case.
CORRECTION: the sentence above has been revised to correct a typographical error in the first version of this post. Ms. Moore has not pled guilty to any crime, nor has she been charged with one. We regret the error and apologize to Ms. Moore.
TARP, the Troubled Asset Relief Program, is a federal program to buy assets and equity from financial institutions to strengthen the financial sector. It was part of the government's measures in 2008 to address the subprime mortgage crisis.
Sarah Moore, the former chief financial officer of Colonial, was the government's first witness. She said an application for TARP funds had been filed with the Federal Deposit Insurance Corp. and other regulators. Along with the application were balance sheets listing supposedly worthless assets.
"If a bank employee and a bank customer are working together, it's very difficult to find errors or omissions [on a financial filing]," Moore said. "A customer is typically a check on a bank and a bank employee is a check on the customer. If these two are working together, it makes it very difficult to find any issues."
The trial is expected to last about three weeks. Moore continues her testimony today.