Showing posts with label sentenced. Show all posts
Showing posts with label sentenced. Show all posts

Monday, May 20, 2013

Lauryn Hill sentenced on tax charges

The tax education of Lauryn Hill: Prison - CNN.comvar cnnCurrTime=new Date(1368981220000),cnnCurrHour=12,cnnCurrMin=33,cnnCurrDay="Sun",cnnIsIntl=true,clickID=212106,cnn_cvpAdpre="edition.",cnnCVPAdSectionT1="edition.cnn.com_entertainment_t1",cnnCVPAdSectionInPage="edition.cnn.com_entertainment_inpage",cnnShareUrl="%2F2013%2F05%2F06%2Fshowbiz%2Flauryn-hill-prison%2Findex.html",cnnShareTitle="The%20tax%20education%20of%20Lauryn%20Hill%3A%20Prison",cnnShareDesc="",cnnFirstPub=new Date('Monday May 6 06:11:07 EDT 2013'),cnnSectionName="entertainment",sectionName="entertainment",cnnSubSectionName="ent : news",cnnPageType="Story",cnnBrandingValue="default";cnnPartnerValue="";cnnOmniBranding="",cnnAuthor="Alan Duke, CNN",disqus_category_id=207582,disqus_identifier="/2013/05/06/showbiz/lauryn-hill-prison/index.html",disqus_title="The tax education of Lauryn Hill: Prison",cnn_edtnswtchver="edition",cnnIsStoryPage=true,cnn_metadata = {},cnn_shareconfig = [];cnn_metadata = {section: ["entertainment","ent : news"],friendly_name: "The tax education of Lauryn Hill: Prison",template_type: "content",template_type_content: "gallery",business: {cnn: {page: {author: "Alan Duke, CNN",broadcast_franchise: "",video_embed_count: "2",publish_date: "2013/05/06",photo_gallery: "The tax education of Lauryn Hill: Prison"},video: {video_player: ""}}},user: {authenticated: "",segment: {age: "",zip: "",gender: ""}}};if (typeof(cnnOmniPartner) !== "undefined") {if (cnn_metadata.template_type_content === "") {cnn_metadata.template_type_content = "partner";}}var photo_gallery = "The tax education of Lauryn Hill: Prison";if(typeof CNN==='undefined'){var CNN=Class.create();}CNN.expandableMap=[''];function _loginOptions(){};var disqus_url=(typeof disqus_identifier!=='undefined') ? 'http://www.cnn.com/2013/05/06/showbiz/lauryn-hill-prison/index.html' : 'http://www.cnn.com'+location.pathname;cnnad_newTileIDGroup(['970x66_top','300x250_rgt','300x250_rgt2','336x280_rgt','336x850_rgt','300x150_rgt','728x90_top','728x90_bot','BG_Skin','120x90_bot1','120x90_bot2','120x90_bot3']);cnnad_newTileIDGroup(['607x95_adlinks','336x280_adlinks']);Skip to main content CNN EDITION:  INTERNATIONAL U.S. MÉXICO ARABIC TV:   CNNi CNN en Español Set edition preference Sign up Log in Home Video World U.S. Africa Asia Europe Latin America Middle East Business World Sport Entertainment Tech Travel iReport SHARE THISPrintEmailMore sharingRedditStumbleUponDelicious/* push in config for this share instance */cnn_shareconfig.push({"id" : "cnn_sharebar1","url" : "http://www.cnn.com/2013/05/06/showbiz/lauryn-hill-prison/index.html","title" : "The tax education of Lauryn Hill: Prison"});The tax education of Lauryn Hill: PrisonBy Alan Duke, CNNMay 7, 2013 -- Updated 2107 GMT (0507 HKT)if (typeof cnnArticleGallery=="undefined"){var cnnArticleGallery={};if(typeof cnnArticleGallery.currentImageList=="undefined"){cnnArticleGallery.currentImageList=[];}}var expGalleryPT00=new ArticleExpandableGallery();expGalleryPT00.setImageCount(14);expGalleryPT00.setAdsRefreshCount(3);//cnn_adbptrackpgalimg("Celebrity tax woes", 1);.cnn_html_slideshow_metadata > .cnn_html_media_utility::before{color:red;content:'>>';font-size:9px;line-height:12px;padding-right:1px}.cnnstrylccimg640{margin:0 27px 14px 0}.captionText{filter:alpha(opacity=100);opacity:1}.cnn_html_slideshow_media_caption a,.cnn_html_slideshow_media_caption a:visited,.cnn_html_slideshow_media_caption a:link,.captionText a,.captionText a:visited,.captiontext a:link{color:#004276;outline:medium none}.cnnVerticalGalleryPhoto{margin:0 auto;padding-right:68px;width:270px}<a href='http://www.cnn.com/2013/05/06/showbiz/lauryn-hill-prison/index.html?hpt=en_c1' target='_blank'>Singer Lauryn Hill was sentenced to three months</a> in prison on Monday after telling a judge she intended to pay taxes, but it was just a question of when. Yet Hill isn't the only star with tax problems.Singer Lauryn Hill was sentenced to three months in prison on Monday after telling a judge she intended to pay taxes, but it was just a question of when. Yet Hill isn't the only star with tax problems.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":true,"x":0,"y":0,"pos":1,"title":"Celebrity tax woes"}Singer/actress Judy Garland's tax debt forced her to do something she vowed she would never do: host a television show. Reeling from poor ticket sales for Singer/actress Judy Garland's tax debt forced her to do something she vowed she would never do: host a television show. Reeling from poor ticket sales for "A Star is Born," Garland signed a $24 million deal with CBS for "The Judy Garland Show" in 1962 to pay the IRS for delinquent taxes dating back a decade.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":2,"title":"Judy Garland"}Willie Nelson cleared his $32 million tax debt to the IRS by selling assets and with profits from an album titled Willie Nelson cleared his $32 million tax debt to the IRS by selling assets and with profits from an album titled "The IRS Tapes: Who'll Buy My Memories." He discovered in 1990 that his accountants had not fully paid his taxes, a find made tougher by losses from investments in the 1980s.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":3,"title":"Willie Nelson"}Baseball legend Pete Rose spent five months in prison for tax evasion convictions in 1990, stemming from money made selling autographs and memorabilia. The tax man returned to his door with a $1 million lien for back taxes in 2004.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":4,"title":"Pete Rose"}Lil' Kim blamed her accountant when her tax troubles arose in 2005. The rapper was still behind in paying the government by more than $1 million in 2012.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":5,"title":"Lil\' Kim"}While O.J. Simpson has known bigger legal problems, delinquent taxes are on the list. The former football star, who's serving a long prison sentence in Nevada, owed the IRS and state of California hundreds of thousands of dollars for the past decade, according to court documents. cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":6,"title":"OJ Simpson"}Comedian Sinbad racked up a large unpaid tax bill, owing $8 million in 2009 to the IRS for 1998 to 2006 income, according to an IRS court filing in 2012. California officials also reported he owed that state $2 million. After filing for bankruptcy and selling his home, Sinbad used the tax troubles as material for a reality show.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":7,"title":"Sinbad"}Nicolas Cage revealed in 2010 that he owed $14 million in back taxes, which he has been working to pay off since. A federal tax lien filed last year said he owed $6.2 million from income in 2007.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":8,"title":"Nicolas Cage"}Wesley Snipes walked out of a federal prison in April after serving a tax evasion sentence that began in December 2010. He claimed that he was not legally obligated to pay federal taxes, an argument a jury did not buy.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":9,"title":"Wesley Snipes"}Ozzy Osbourne and wife Sharon were hit with a federal tax lien in April 2011 on one of their Los Angeles homes that said the couple owed $1.7 million in back taxes from 2008 and 2009. Sharon Osbourne initially blamed an accountant but later took personal responsibility.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":10,"title":"Ozzy Osbourne"}Rapper Jeffrey Atkins, also known as Ja Rule, was sentenced to 28 months in prison in July 2011 for failing to file tax returns with the IRS after admitting that he did not file his taxes for five years. According to TMZ, he was released on Tuesday.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":11,"title":"Ja Rule"}Former Former "Baywatch" actress Pamela Anderson was hit by a big back tax bill in December, totaling about $370,000. cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":12,"title":"Pamela Anderson"}Dionne Warwick filed for bankruptcy in March, citing more than $10 million in tax debt dating to 1991. Her publicist blamed Dionne Warwick filed for bankruptcy in March, citing more than $10 million in tax debt dating to 1991. Her publicist blamed "negligent and gross financial mismanagement."cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":13,"title":"Dionne Warwick"}"Hollywood Madam" Heidi Fleiss served 20 months of a 37-month sentence in a federal prison for convictions on conspiracy, tax evasion and money laundering relating to a high-priced prostitution ring servicing the rich and famous.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":14,"title":"Heidi Fleiss"}HIDE CAPTIONCelebrity tax woesJudy GarlandWillie NelsonPete RoseLil' KimOJ SimpsonSinbadNicolas CageWesley SnipesOzzy OsbourneJa RulePamela AndersonDionne WarwickHeidi Fleiss<<<1234567891011121314>>>Event.observe(window,'load',function(){if(typeof(cnn_adbptrackpgalimg) == 'function' && typeof(cnnArticleGallery) != 'undefined'){cnn_adbptrackpgalimg(cnnArticleGallery.currentImageList[0].image,"The tax education of Lauryn Hill: Prison");}});STORY HIGHLIGHTSNEW: "If that's not like enough to slavery, I don't know," Hill told the judgeThe singer must serve a year on probation and possibly three months of home confinementShe must report to prison on July 8, unless her lawyer files an appeal Hill pleaded guilty last year to failing to file returns on more than $1.8 million in taxes

(CNN) -- Lauryn Hill told the judge who sentenced her to prison that she planned to pay her taxes; it was just a question of when.

The judge reminded her that citizens don't get to choose when to pay the government just before ordering her to spend three months in a federal prison.

The Grammy-winning singer must report to prison on July 8 to begin serving the sentence for failure to pay federal income taxes for three years, followed by three months of home confinement and a year of supervised probation, the judge said. Hill must also pay penalties and taxes still owed and a $60,000 fine.

Hill pleaded guilty last year to three counts of failing to file tax returns on more than $1.8 million between 2005 and 2007.

The artist appeared Monday before U.S. Magistrate Judge Madeline Cox Arleo in federal court in Newark, New Jersey, for sentencing.

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"Someone did the math, and it came to around $600 million," she said. "And I sit here before you trying to figure out how to pay a tax debt? If that's not like enough to slavery, I don't know."

"This wasn't a life of jet-setting glamour," she said. "This was a life of sacrifice with very little time for myself and my children."

Hill releases new music

The income in question was mostly from music and film royalties paid to companies she owned between 2005 and 2008, according to the U.S. attorney's office.

"Although Hill pleaded guilty to charges specifically related to those tax years, her sentence also takes into account additional income and tax losses for 2008 and 2009 -- when she also failed to file federal returns -- along with her outstanding tax liability to the state of New Jersey, for a total income of approximately $2.3 million and total tax loss of approximately $1,006,517," the prosecutor said.

Hill's lawyer, Nathan Hochman, told CNN that Hill has fully paid her taxes.

"I think the judge gave a fair and reasonable sentence," Hochman said.

Her lack of a prior criminal record and the fact that she has six minor children helped, he said.

"I think the government has let a number of celebrities off and never criminally prosecuted them, Willie Nelson being at least one example," he said. "I think that the court took that into account as well. Ms. Hill did not get a slap on the wrist and let off with just paying a certain amount of money but has had to go through this entire criminal prosecution."

Hill also used her sentencing to talk about her music.

"I didn't make music for celebrity status," she told the court. "I made music for artistic and existential catharsis, which was not just necessary for myself but it was also necessary for the generations of oppressed people who hadn't had their voices expressed like I was able to do it. Music is not something I do from 9 to 5. It's a state of being, and like a doctor who delivers babies, I'm on call all the time because that's the kind of work this is."

Hill revealed in a message posted to her Tumblr account last month that she's been working on new music.

"It has been reported that I signed a new record deal, and that I did this to pay taxes. Yes, I have recently entered into an agreement with Sony Worldwide Entertainment, to launch a new label, on which my new music will be released," Hill wrote. "And yes, I am working on new music."

Her fans have been waiting for new music from her since her 1998 solo album, "The Miseducation of Lauryn Hill."

CNN's Doug Ganley contributed to this report.

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Saturday, October 20, 2012

Defendant in celeb 'Bling Ring' burglary case is sentenced

Diana Tamayo, 22, is sentenced to three years of probationShe was among five members of the "Bling Ring"The group targeted celebrities' houses, police say

Los Angeles (CNN) -- One of three remaining defendants in the "Bling Ring" pleaded no contest Friday to burglarizing the home of Lindsay Lohan in 2009 and was sentenced, the Los Angeles District Attorney's Office said in a news release.

Superior Court Judge Larry Paul Fidler sentenced Diana Tamayo, 22, to three years of probation and ordered her to complete 60 days of work for the California Department of Transportation. That could involve picking up trash from the side of the road, said DA spokeswoman Jane Robison.

Tamayo was given credit for the 10 days she served in jail.

It was not clear whether she had legal representation.

In exchange for the plea, the DA's office asked for the dismissal of a felony count of conspiracy to commit burglary and a count of receiving stolen property.

Tamayo is to return to court on November 8 for a restitution hearing.

The two remaining defendants in the case -- Courtney Leigh Ames, 21; and Roy Lopez Jr., 30 -- also are to appear on that date for a pretrial hearing. They are charged with conspiracy, first-degree residential burglary and receiving stolen property.

The three are among five people indicted in 2010. The indictment alleges that, between September 2008 and August 2009, they took more than $3 million in jewelry, clothes and accessories from the homes of Orlando Bloom, Paris Hilton, Brian Austin-Green and Megan Fox, Lindsay Lohan and "The Hills" reality star Audrina Patridge.

Two ringleaders, Nicholas Prugo and Rachel Lee, pleaded earlier.

Lee was sentenced last year to four years in prison for burglarizing Patridge's home. Lee pleaded no contest to one count of first-degree residential burglary.

Lohan's home was burglarized on August 2009, and an estimated $128,000 in jewelry, designer clothes and accessories was taken, authorities said.

Authorities said they believe an obsession with celebrity culture -- and breaking inside their homes and wearing their clothing -- could have been the motivation for the crimes.

The group allegedly studied celebrity magazines to pick out clothing and jewelry that they wanted, and then studied satellite maps of the victim's homes before deciding on the best method for entry, police said.

At first, police treated each robbery as a separate incident, but after noticing similarities on surveillance video from the homes of Patridge and Lohan, they concluded that the incidents were related.

"There's nothing to suggest that these kids were criminal masterminds -- this wasn't an 'Ocean's 11' caper," Los Angeles Police Department Officer Brett Goodkin told CNN in 2009. "It's really a series of quite run-of-the-mill residential burglaries, except they targeted the victims for who they are."

The ring has also been dubbed the Hollywood Hills Burglar Bunch.


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Tuesday, June 21, 2011

Ex-mortgage CEO sentenced to prison for $3B fraud (AP)

ALEXANDRIA, Va. – The CEO of what had been one of the nation's largest privately held mortgage lenders was sentenced Tuesday to more than three years in prison for his role in a $3 billion scheme that officials called one of the biggest corporate frauds in U.S. history.

The 40-month sentence for Paul R. Allen, 55, of Oakton, Va., is slightly less than the six-year term sought by federal prosecutors.

"I messed up. I messed up big," Allen told U.S. District Judge Leonie Brinkema before he was sentenced, apologizing to his family and "the entire financial community. "There was no excuse for my behavior."

Allen was chief executive at Ocala, Fla.-based Taylor Bean & Whitaker, which collapsed in 2009 after the criminal investigation became public, resulting in its 2,000 employees losing their jobs. The fraud also contributed to the collapse of Alabama-based Colonial Bank — the sixth largest bank failure in U.S. history — after Colonial bought hundreds of millions of dollars in Taylor Bean mortgages that had already been sold to other investors.

Two other banks — Deutsche Bank and BNP Paribas — lost nearly $2 billion after buying corporate paper from Taylor Bean that was not properly backed with collateral, authorities said.

Taylor Bean and Colonial also tried to obtain more than $500 million from the government's Troubled Asset Relief Program but ultimately never received any funding from the program also known as TARP.

Neil Barofsky, who served as TARP's special inspector general, said the Taylor Bean case was the most significant criminal prosecution to arise out of the nation's financial crisis. The convictions of company chairman Lee Farkas and Allen represent some of the most high-profile executives in the housing and financial industries to receive prison time in the aftermath of the housing sector meltdown.

Allen's lawyer argued for leniency on the theory that Allen was CEO in name only. The real mastermind was Farkas, who kept Allen out of the loop on much of the company's day-to-day operations, according to trial testimony.

"Mr. Allen was not treated as a CEO. He did not function as a CEO," said defense lawyer Stephen Graeff. "Sentence Mr. Allen the man, not Mr. Allen the title."

But Brinkema said Allen's title was significant, adding Allen's reputation in the industry lent credibility to Taylor Bean that it otherwise would not have had. Even worse, Brinkema said, Allen had subordinates who were reporting the problems to Allen, but Allen left them to fend for themselves. One of those Taylor Bean employees, Sean Ragland, also was sentenced Friday to three months in prison and nine months of home detention for his role in the scheme.

"I can't understand why in the world you didn't stop it," Brinkema told Allen.

Allen, for his part, apologized to his family and to "the entire financial community."

By the time Allen became CEO in 2003, the fraud was already under way, and Taylor Bean owed more than $100 million to Colonial. Allen's part in the schemes, came later, especially in the commercial paper loans from Deutsche bank and BNP Paribas that eventually grew to become the largest part of the fraud.

Ragland and Allen are the fifth and sixth persons to be sent to prison as part of the Taylor Bean-Colonial fraud, and investigators say the investigation is continuing. Sentences have ranged from three months to eight years.

All six received credit on their sentences for cooperating with investigators and testifying at Farkas' trial.

"Mr. Allen's sentence reflects his ultimate cooperation with this investigation, but also sends the message that unless executives expose and stop fraud when they first learn of it, they will be punished," said Neil MacBride, U.S. Attorney for the Eastern District of Virginia.

Farkas is to be sentenced next week, and prosecutors have indicated they will seek a significantly longer sentence for Farkas than for his co-conspirators.


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Saturday, June 18, 2011

Colonial Bank exec sentenced to 8 years in prison (AP)

ALEXANDRIA, Va. – A former bank executive was sentenced Friday to eight years in prison for her role in a $3 billion fraud scheme that helped topple her bank as well as one of the nation's largest private mortgage companies.

Federal prosecutors had sought a term of 11 years for Catherine Kissick, 50, of Orlando, Fla. Kissick had been a senior vice president at Alabama-based Colonial Bank.

Prosecutors said that Kissick, more than anybody, could have put a halt at the earliest stages to a staggering fraud scheme masterminded by Lee Farkas, the owner of Florida-based mortgage company Taylor Bean & Whitaker.

Indeed, Kissick's willingness to further such a massive fraud when she had no financial incentive to do so was one of the biggest mysteries in a case that officials have called the biggest prosecution to stem from the nation's financial crisis. Kissick received no bribes or payments to look the other way — court papers, in fact, show that prosecutors were initially incredulous that Kissick had willingly enabled Taylor Bean to steal hundreds of millions of dollars unless she was receiving some kind of kickback.

But Kissick said she felt she was trapped in a lie as events spiraled out of control.

She knew by 2002 that Taylor Bean & Whitaker was routinely overdrawing on its main account at Colonial by several million dollars. At first Kissick alerted her superiors and tried to work with Taylor Bean to fix the problem. Instead, the problem grew worse and worse and Kissick concealed from top bank officials that the hole in Taylor Bean's account was growing to hundreds of millions of dollars. The scheme took several forms, but the biggest damage came from worthless mortgages that Taylor Bean routinely sold to Colonial even though they had already been purchased by other investors.

The fraud continued for seven years, as Farkas and other Taylor Bean executives essentially steamrolled over Kissick and her constant entreaties to fix the problem. Kissick testified that she felt she had no choice to but to continue the scheme and hope that Taylor Bean would eventually make good on its debt.

Eventually, Taylor Bean defrauded Colonial out of more than $500 million. Two other banks, Deutsche Bank and BNP Paribas, lost nearly $2 billion in a separate scheme. Taylor Bean and Colonial even tried to use their cooked books to obtain more than $500 million in funding from the government's Troubled Assets Relief Program (TARP). But TARP never gave either Colonial or Taylor Bean any money, and TARP investigators helped unravel the scheme in 2009.

Colonial and Taylor Bean collapsed in 2009. Colonial's collapse was the sixth largest bank failure in U.S. history, and 2,000 Taylor Bean employees lost their jobs when the company shut its doors after a federal raid in August 2009.

At Friday's sentencing hearing, Kissick apologized for her actions.

"I started out at Colonial Bank trying to do the right thing," Kissick said. "I am so ashamed I was ever part of it."

Kissick said she should have told her superiors from the very outset that the problem couldn't be covered up.

In handing down the sentence, U.S. District Judge Leonie Brinkema expressed some sympathy for Kissick, but said she ultimately should have known that her efforts to fix the problem were fruitless and counterproductive.

"Seven years this was going on," Brinkema said. "At any point you could have gone to the auditors."

U.S. Attorney for the Eastern District of Virginia Neil MacBride said Kissick served as the ultimate enabler.

"Lee Farkas pulled off one of history's largest bank frauds because he had people inside Colonial Bank with the power to do it and hide it. Without help from Catherine Kissick - a high-level executive at one of the nation's top regional banks - the fraud scheme might have been discovered in its infancy."

Also on Friday, a lower-level Colonial employee — Teresa Kelly, 35, of Ocoee, Fla. — was sentenced to three months in prison for her role in the scheme. Kissick and Kelly are the third and fourth people to receive jail sentences in the investigation. Three more, including Farkas and Taylor Bean CEO Paul Allen, will be sentenced later this month.


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Tuesday, June 14, 2011

TBW execs involved in $3B fraud sentenced (AP)

ALEXANDRIA, Va. – Two executives at what had been the nation's largest private mortgage lender were sentenced to six and two-and-a-half years for their roles in a $3 billion fraud that officials have called the biggest criminal case to develop out of the nation's housing and financial crises.

Prosecutors had sought slightly longer terms of eight and five years, respectively, for Desiree Brown, treasurer at Ocala, Fla.-based Taylor Bean & Whitaker, and Raymond Bowman, the company's president. At the same time, though, prosecutors gave both credit for their cooperation in helping to unravel a series of complex financial frauds and deliver a guilty conviction against Taylor Bean's owner and chairman, Lee Farkas, who is expected to receive a significantly longer term when he is sentenced later this month.

"These TBW executives helped pull off one of the largest, longest-running bank fraud schemes in history," said Neil MacBride, U.S. Attorney for the Eastern District of Virginia. "They knew that without their fraud scheme, TBW would fail. They helped Lee Farkas do what they knew was wrong, and now they will pay for their crimes. At the same time, these defendants agreed to cooperate with the government and that cooperation was clearly taken into account in the sentences imposed today."

Taylor Bean cheated three banks, including Alabama-based Colonial Bank, out of nearly $3 billion over nearly a decade before the scheme unraveled in 2009, resulting in the collapse of Taylor Bean and the loss of jobs for its 2,000 workers, as well as the collapse of Colonial, which had been one of the 25 largest banks in America.

In large part, Taylor Bean concealed its fraud by selling or using as collateral mortgages that had already been sold to other investors. Mid-level executives at Colonial participated in the scheme and helped conceal the massive hole in Taylor Bean's account, at first to preserve their relationship with Taylor Bean and later because they were complicit and felt they had no choice but to continue.

Deutsche Bank and BNP Paribas were the other banks that were cheated in the fraud. They lost roughly $1.5 billion in commercial paper — essentially IOUs — that were supposed to be fully collateralized but had next to nothing backing them up.

The scheme also included a failed attempt to use the cooked books at Colonial and Taylor Bean to try to obtain more than $500 million in emergency funding from the government's Troubled Asset Relief Program (TARP).

Brown, 45, who received the six-year sentence, started at Taylor Bean as a receptionist and was elevated to treasurer and earned $500,000 annually even though she held only a high-school degree. Prosecutor Patrick Stokes said at Friday's sentencing that Farkas elevated Brown because he could easily manipulate her due to her lack of experience.

"She was blinded by her loyalty to Mr. Farkas," Stokes said.

Brown apologized for her actions.

"It was never my intent to commit a crime," she told U.S. District Judge Leonie Brinkema. "I'm very angry at myself for ... letting someone manipulate me into going against my morals."

Bowman, who received a two-and-a-half year term, may be called to testify against others in what is an ongoing investigation, said prosecutor Charles Connolly. Bowman and Brown were the first two to be sentenced out of seven, including Farkas, who have already been convicted.

Bowman, 45, told Brinkema that "all the people in this are basically decent people" who made mistakes. He asked Brinkema to show lenience toward Colonial executive Catherine Kissick, who will be sentenced next week. Bowman said that he and Farkas put Kissick in an impossible position and "basically ran her over." According to trial testimony, Taylor Bean already owed Colonial several million dollars by the time she first learned of the problems. Over the years, that grew to hundreds of millions of dollars as Farkas and others essentially ignored her constant entreaties to fix it.

Neil Barofsky, the former special inspector general at TARP whose office helped uncover the fraud, has called the Farkas case "the most significant criminal prosecution to date rising out of the financial crisis."


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