United States v. Raymond Bowman
Court Docket Number: 1:11-cr-118-LMB
The case is assigned to the Honorable Leonie M. Brinkema, United States District Court Judge for the Eastern District of Virginia, United States Courthouse, 400 Courthouse Square, Alexandria, Virginia 22314.
On June 10, 2011, defendant Raymond Bowman, the former president of Taylor, Bean and Whitaker (TBW), was sentenced to 30 months in prison on his March 14, 2011 guilty plea to one count of conspiracy to commit bank, wire and securities fraud (Count 1: 18 U.S.C.§ 371) and one count of false statements (Count 2: 18 U.S.C. §1001) for his role in a more than $2.9 billion fraud scheme that contributed to the failures of Colonial Bank and TBW.
In pleading, Bowman admitted that from 2003 through August 2009, he and his co-conspirators engaged in a scheme to defraud various entities and individuals, including Colonial Bank, a federally insured bank; Colonial BancGroup Inc.; and the investing public. Bowman admitted that he knowingly and intentionally participated in a fraud scheme that caused Colonial Bank and Colonial BancGroup to purchase tens of millions of dollars of worthless assets, caused Colonial BancGroup to report false information in its financial statements, and artificially inflated the value of TBW’s mortgage servicing rights. Court documents state that in early 2002, Bowman learned that TBW began running overdrafts in its master bank account at Colonial Bank because of TBW’s inability to meet its operating expenses, which included payroll, servicing payments owed to third-party purchasers of loans and/or mortgage-backed securities and other obligations. In or about the fall of 2003, Bowman and other co-conspirators engaged in a series of fraudulent actions to cover up the overdrafts, first by sweeping overnight money from one TBW account with excess funds into another, and later through the fictitious “sales” of mortgage loans to Colonial Bank, a fraud scheme the conspirators dubbed “Plan B.” The conspirators accomplished this by sending mortgage data to Colonial Bank for loans that did not exist or that TBW had already committed or sold to other third-party investors. According to the statement of facts, Bowman believed that Plan B data included data for loans that did not exist and knew that without Plan B, TBW would likely fail and go out of business. TBW used its mortgaging rights (MSR) to collateralize a working capital line of credit at Colonial Bank, and it retained third-party companies to conduct periodic MSR valuations. According to court documents, Bowman admitted that he, at Farkas’s request, directed co-conspirators to manipulate TBW’s borrowing base by billions of dollars to artificially inflate the MSR valuations and to avoid a margin call.
In 2005, TBW established a wholly owned, special purpose entity called Ocala Funding, LLC, as a financing vehicle to provide it with additional funding for mortgage loans. The facility obtained funds for mortgage lending from the sale of asset-backed commercial paper to financial institutions. In his statement of facts, Bowman admitted that he learned from other co-conspirators at TBW that within a year of its creation, Ocala Funding had a significant collateral deficit. As Bowman acknowledged, by August 2009, the deficit had grown to approximately $1.5 billion and TBW, fraudulently, had caused Colonial Bank and the Federal Home Loan Mortgage Corporation (Freddie Mac) to believe that they each had an undivided ownership interest in thousands of the same loans worth hundreds of millions of dollars. Bowman also admitted that on August 3, 2009, when interviewed by agents from the FBI and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), he falsely stated to the agents that he was not aware of Plan B loans, and that he was not aware of any fraudulent activities between Colonial Bank and TBW.
In August 2009, the Alabama State Banking Department, Colonial Bank’s regulator, seized the bank and appointed the FDIC as receiver. Colonial BancGroup also filed for bankruptcy in August 2009.
Related Cases: In a related case, United States v. Lee Bentley Farkas, defendant Farkas was convicted after a jury trial in April 2011 on one count of conspiracy to commit bank, wire and securities fraud; six counts of bank fraud; four counts of wire fraud; and three counts of securities fraud. Farkas was remanded into custody after the trial and is scheduled to be sentenced on June 30, 2011 at 10:30 a.m. in Courtroom 600 before Judge Brinkema. Farkas was arrested in June 2010 and charged in a 16-count indictment for his role in the fraud scheme. Also, in two related cases, United States v. Desiree Brown (Court Docket No. 1:11-cr-84-LMB), and United States v. Catherine Kissick (Court Docket No. 1:11-cr-88-LMB), Desiree Brown, the former TBW treasurer, and Catherine Kissick, a former senior vice president of Colonial Bank and head of Colonial Bank's Mortgage Warehouse Lending Division, each pleaded guilty to separate criminal informations charging them with one count of conspiracy to commit bank, wire and securities fraud for their roles in the fraud scheme that contributed to the failure of Colonial Bank and TBW. On June 10, 2011, defendant Brown was sentenced to 72 months in prison on her February 2011 guilty plea and on June 17, 2011, defendant Kissick was sentenced to eight years in prison followed by three years of supervised release on her March 2011 guilty plea.
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Government's Filing with Respect to Restitution
Criminal Information and Statement of Facts