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Would you like to inspect the original subtitles? These are the user uploaded subtitles that are being translated: 1 00:00:07,560 --> 00:00:13,340 In this episode of American Greed, Lee Farkas is a fast talker and master 2 00:00:13,340 --> 00:00:18,580 manipulator. Lee was like a cult leader. He had the charisma of a Gatsby. 3 00:00:18,820 --> 00:00:24,080 He invents fake loans to make his fortune and funnels millions to support 4 00:00:24,080 --> 00:00:25,440 and fabulous lifestyle. 5 00:00:26,940 --> 00:00:33,480 Lee Farkas turned into a very big fish in a very small pond. He had a jet. 6 00:00:33,940 --> 00:00:36,110 Houses. Expensive cars. 7 00:00:36,590 --> 00:00:39,710 And he levels anyone who dares to question him. 8 00:00:40,070 --> 00:00:46,430 Being Farkas. It was the worst kind of domestic dysfunction. 9 00:00:47,110 --> 00:00:53,510 Farkas' $3 .5 billion scam leaves thousands jobless and many fighting 10 00:00:53,510 --> 00:00:58,350 foreclosure. You're wondering, why am I getting a foreclosure notice? We've been 11 00:00:58,350 --> 00:00:59,350 making payments. 12 00:00:59,410 --> 00:01:04,290 His lies lead to one of the largest bank failures in American history. 13 00:01:04,700 --> 00:01:09,580 It's not a crime to be greedy. It is a crime to steal money from people. That's 14 00:01:09,580 --> 00:01:10,580 what happened here. 15 00:01:22,700 --> 00:01:29,580 On June 24, 2010, 57 -year -old Lee Bentley Farkas makes bond and 16 00:01:29,580 --> 00:01:31,300 walks out of a Florida jail. 17 00:01:34,090 --> 00:01:38,350 The once high -flying mortgage mogul is charged with engineering a series of 18 00:01:38,350 --> 00:01:41,350 massive frauds that have bankrupted his own company. 19 00:01:42,790 --> 00:01:47,910 For more than a decade, Farkas peddled fake mortgages and looted his company 20 00:01:47,910 --> 00:01:53,530 tens of millions of dollars, leaving thousands of innocent homeowners to live 21 00:01:53,530 --> 00:01:54,590 mortgage nightmares. 22 00:01:56,530 --> 00:02:00,070 Jason Moore worked with Lee Farkas for seven years. 23 00:02:00,710 --> 00:02:02,990 He always said, we have to make. 24 00:02:03,560 --> 00:02:09,560 As much money as possible right now. Because this will not last forever. 25 00:02:10,300 --> 00:02:11,620 Houses aren't selling. 26 00:02:11,880 --> 00:02:13,060 Credit is scarce. 27 00:02:13,500 --> 00:02:18,000 And risky home loans have led to a mounting list of bankrupt mortgage 28 00:02:19,240 --> 00:02:23,820 Reporter Nick Timoros has covered Farkas' story for the Wall Street 29 00:02:24,300 --> 00:02:27,900 He was on trial because he stole from a bank. He stole from investors. 30 00:02:28,160 --> 00:02:31,280 He did things that were so blatantly wrong. 31 00:02:32,010 --> 00:02:34,130 you cross a red line at a certain point. 32 00:02:34,630 --> 00:02:40,490 Charged with 16 counts of wire, banking, and securities fraud, Farkas faces a 33 00:02:40,490 --> 00:02:43,270 sentence of up to 385 years. 34 00:02:46,010 --> 00:02:49,870 Lee Farkas' story begins in Albuquerque, New Mexico. 35 00:02:50,550 --> 00:02:55,670 His sister, Terry Huber, remembers a responsible brother consumed with being 36 00:02:55,670 --> 00:02:57,630 respected and successful. 37 00:02:58,170 --> 00:03:00,790 He was very smart as a child. 38 00:03:01,710 --> 00:03:03,950 and always talking about business. 39 00:03:05,390 --> 00:03:11,110 When his father dies, Farkas drops out of college and at 21 takes a crack at 40 00:03:11,110 --> 00:03:12,890 running the family insurance company. 41 00:03:13,390 --> 00:03:17,370 He didn't think school was that important, and he felt he had to come 42 00:03:17,370 --> 00:03:18,750 take over my dad's business. 43 00:03:19,030 --> 00:03:23,870 The family business flounders. It seems insurance isn't young Lee's forte. 44 00:03:24,470 --> 00:03:29,530 In the late 70s, Farkas sells the business and goes in search of his 45 00:03:30,060 --> 00:03:33,940 Farkas kind of rambled from place to place. It wasn't really clear what his 46 00:03:33,940 --> 00:03:35,920 great ambition was going to be in life. 47 00:03:37,160 --> 00:03:43,660 By the mid -1980s, Farkas lands in Ocala, Florida, a sleepy town speckled 48 00:03:43,660 --> 00:03:44,660 horse farms. 49 00:03:47,600 --> 00:03:50,540 Gerald Ergel is the former mayor of Ocala. 50 00:03:51,400 --> 00:03:53,920 Ocala is known as the horse capital of the world. 51 00:03:54,160 --> 00:03:58,400 The people here are some of the nicest, most congenial people that you'll ever 52 00:03:58,400 --> 00:03:59,400 meet. 53 00:03:59,760 --> 00:04:06,180 In largely evangelical conservative Ocala, Lee lives as an openly gay man. 54 00:04:06,560 --> 00:04:10,320 But residents seem kind and trusting to this businessman. 55 00:04:10,920 --> 00:04:14,800 He knew that there was a really large senior population who were looking to 56 00:04:14,800 --> 00:04:15,800 build their dream homes. 57 00:04:15,960 --> 00:04:19,300 Farkas thinks it's the perfect place to make a killing. 58 00:04:19,720 --> 00:04:24,140 He launches a construction company with his life partner, Coda Robertson, 59 00:04:24,140 --> 00:04:25,280 backing the money. 60 00:04:26,540 --> 00:04:33,460 At first it did pretty well, but he started to clash with old O 61 00:04:33,460 --> 00:04:38,600 'Callians, the old guard here, and he was the new kid in town. He was 62 00:04:38,800 --> 00:04:44,200 he was bold, he was gay, and didn't fit the typical mold. 63 00:04:44,720 --> 00:04:50,000 In sunny Ocala, residents accuse Farkas of shady business practices. 64 00:04:50,820 --> 00:04:54,780 Farkas soon finds he's running a failing business, again. 65 00:04:55,580 --> 00:04:57,940 In late 1989, the company folds. 66 00:04:58,300 --> 00:05:00,120 He racked up a ton of bills. 67 00:05:00,420 --> 00:05:05,380 He had judgments against him left and right. He was known as a crook. 68 00:05:06,360 --> 00:05:09,100 But Farkas is about to find his calling. 69 00:05:09,800 --> 00:05:14,700 In 1991, he snaps up a little mortgage company called Taylor Bean and Whitaker, 70 00:05:14,900 --> 00:05:18,260 or TBW, for $75 ,000. 71 00:05:18,580 --> 00:05:19,900 He was flat broke. 72 00:05:20,160 --> 00:05:25,040 He actually got the money to buy the company from his partner's mother. 73 00:05:25,760 --> 00:05:30,600 Farkas has no formal training in finance, but he's now running his own 74 00:05:30,600 --> 00:05:36,720 company. In a good month, the business closes 40 loans, but Farkas thinks he 75 00:05:36,720 --> 00:05:37,609 do better. 76 00:05:37,610 --> 00:05:41,450 He could leverage his quick talking skills, his ability to think quickly on 77 00:05:41,450 --> 00:05:47,130 feet. By the late 90s, the U .S. housing market is growing rapidly, and so is 78 00:05:47,130 --> 00:05:47,929 the Internet. 79 00:05:47,930 --> 00:05:52,850 He was like a financial prophet. He predicted the whole mortgage industry 80 00:05:52,850 --> 00:05:58,910 about to be broken wide open because of the Internet. And he understood that 81 00:05:58,910 --> 00:06:00,310 those who mastered... 82 00:06:00,750 --> 00:06:05,750 Technology would be ahead of the curve when it came to originating loans. 83 00:06:05,750 --> 00:06:10,230 selling people on loan products. Farkas had that, and he was able to make a very 84 00:06:10,230 --> 00:06:11,630 successful business out of it. 85 00:06:12,190 --> 00:06:15,050 Farkas' salesmanship kicks into high gear. 86 00:06:15,330 --> 00:06:20,270 He expands TBW, opening a dozen branches in five states. 87 00:06:21,840 --> 00:06:26,840 It was then that Farkas meets 28 -year -old Cambridge University graduate Jason 88 00:06:26,840 --> 00:06:32,700 Moore at a Florida barbecue and hires him to spearhead Internet innovations. 89 00:06:33,220 --> 00:06:38,760 He offered me a six -figure salary like he was handing me a pencil. 90 00:06:39,420 --> 00:06:44,140 I wasn't looking for a job, I wasn't qualified, but I took it. 91 00:06:44,820 --> 00:06:50,640 By December 2000, TBW was processing more than 6 ,000 mortgages a year. 92 00:06:51,480 --> 00:06:54,600 And Farkas is acquiring a taste for the finer things in life. 93 00:06:54,920 --> 00:07:01,900 He stockpiles classic cars, a 65 Shelby Cobra, a Model A Woody, a 94 00:07:01,900 --> 00:07:05,820 handful of investment homes and party pads from Key West to Maine. 95 00:07:09,520 --> 00:07:15,380 He also invests heavily in his adopted hometown, scooping up real estate and 96 00:07:15,380 --> 00:07:18,360 converting dilapidated buildings into TVW offices. 97 00:07:19,770 --> 00:07:22,050 Locals welcome him as a vital employer. 98 00:07:23,330 --> 00:07:27,870 Lee's goal was to make Taylor Bean and Whitaker the largest mortgage company in 99 00:07:27,870 --> 00:07:32,810 the world. The jobs that they created here, that was a huge asset. 100 00:07:33,990 --> 00:07:38,570 In the early 2000s, the housing market in the United States explodes. 101 00:07:39,750 --> 00:07:43,310 Taylor Bean and Whitaker grew and grew and grew because this was a great time 102 00:07:43,310 --> 00:07:47,090 be in the business. These were the go -go years of consumer mortgage lending. 103 00:07:47,650 --> 00:07:48,690 Credit is cheap. 104 00:07:49,450 --> 00:07:54,190 Regulations are loose, and Lee Farkas is finally successful and respected. 105 00:07:54,490 --> 00:07:58,970 He said, you know what? Now is my time. I see an industry that I can sink my 106 00:07:58,970 --> 00:08:01,010 teeth into, and I'm going for it. 107 00:08:01,370 --> 00:08:07,030 TBW is independent, a fact Farkas is fiercely proud of. They would originate 108 00:08:07,030 --> 00:08:11,090 mortgages. They would get loans from other people, from banks and from other 109 00:08:11,090 --> 00:08:14,490 credit facilities. They would take those loans and sell them to other investors. 110 00:08:14,790 --> 00:08:20,670 But being independent, TBW lacks the financial resources of big commercial 111 00:08:20,670 --> 00:08:24,070 and can't hold large amounts of loans on the books. 112 00:08:24,710 --> 00:08:28,670 Taylor Bean Whitaker wasn't a bank, so they relied on short -term funding. 113 00:08:29,320 --> 00:08:35,940 To secure TBW's loan money, Farkas decides to rely on Colonial Bank, one of 114 00:08:35,940 --> 00:08:37,419 largest banks in the Southeast. 115 00:08:38,020 --> 00:08:43,280 An old financial acquaintance, Kathy Kissick, is vice president at Colonial's 116 00:08:43,280 --> 00:08:45,380 Orlando -based mortgage lending division. 117 00:08:45,960 --> 00:08:51,840 Farkas' former defense attorney, Bruce Rogo, knows the history between Kissick 118 00:08:51,840 --> 00:08:52,840 and Farkas. 119 00:08:53,100 --> 00:08:59,340 Lee became the biggest customer of that division at Colonial Bank, and so he 120 00:08:59,340 --> 00:09:02,440 would call upon her to fund mortgages. 121 00:09:03,440 --> 00:09:08,080 Farkas has dealt with Kathy Kissick long enough to know she's easy to control. 122 00:09:08,520 --> 00:09:13,700 With Colonial's support, TBW becomes one of the fastest -growing mortgage 123 00:09:13,700 --> 00:09:15,180 companies in America. 124 00:09:15,780 --> 00:09:20,160 It left many individuals wondering, how could... 125 00:09:20,670 --> 00:09:26,450 Something happened so quickly. Up next on American Green, Lee Farkas is 126 00:09:26,450 --> 00:09:31,190 manufacturing loans and shifting funds to pump up TBW's profits. 127 00:09:31,450 --> 00:09:37,690 It was a combination of hubris and insanity that left most of us shocked. 128 00:09:51,080 --> 00:09:56,240 By 2002, Lee Farkas' charm and the team of talented executives he surrounds 129 00:09:56,240 --> 00:10:00,400 himself with have allowed him to grow Taylor Bean and Whitaker into a mortgage 130 00:10:00,400 --> 00:10:01,520 industry force. 131 00:10:02,140 --> 00:10:06,680 Farkas wants to crush his competition, and now he's on his way. 132 00:10:07,120 --> 00:10:09,040 He had forethought. 133 00:10:09,910 --> 00:10:14,170 To go to mom -and -pop institutions across the country and give them the 134 00:10:14,170 --> 00:10:18,710 to get online approvals instantly in a matter of seconds. It was something that 135 00:10:18,710 --> 00:10:23,870 no other mortgage lender was doing and made Lee an instant banking rock star. 136 00:10:24,270 --> 00:10:28,670 Farkas sells technology tools to smaller banks, and they bring their business to 137 00:10:28,670 --> 00:10:33,670 TBW. He has also impressed Fannie Mae, the government -backed agency that 138 00:10:33,670 --> 00:10:35,890 almost half of all mortgage -backed securities. 139 00:10:36,490 --> 00:10:38,410 They like his online platform. 140 00:10:39,000 --> 00:10:41,240 and become TBW's biggest client. 141 00:10:42,160 --> 00:10:47,880 How could this maverick transform a company that was 142 00:10:47,880 --> 00:10:54,180 based in a small town in the sleepy south to such a level? It was 143 00:10:54,180 --> 00:10:56,020 unparalleled in the mortgage industry. 144 00:10:57,340 --> 00:11:01,620 But behind the scenes, Farkas has big problems brewing. 145 00:11:01,900 --> 00:11:06,760 As an independent mortgage company, TBW still needs short -term funds. 146 00:11:07,800 --> 00:11:09,820 Colonial Bank supplies that money. 147 00:11:10,120 --> 00:11:13,720 And two of TBW's accounts at Colonial Bank are overdrawn. 148 00:11:13,940 --> 00:11:17,020 The deficit is $10 million at first. 149 00:11:17,280 --> 00:11:19,640 That quickly jumps to $100 million. 150 00:11:20,920 --> 00:11:26,020 While Farkas is aware of the overdraft, only a few of his top executives are 151 00:11:26,020 --> 00:11:27,020 clued in. 152 00:11:27,060 --> 00:11:29,000 Ray Bowman is one of those few. 153 00:11:29,520 --> 00:11:32,460 He quietly starts poring through bank records. 154 00:11:33,040 --> 00:11:35,500 What Bowman discovers is shocking. 155 00:11:36,120 --> 00:11:39,540 The company isn't charging high enough fees on the mortgage loans they're 156 00:11:39,540 --> 00:11:44,900 making. And TBW is running in the red on everything from operating expenses to 157 00:11:44,900 --> 00:11:49,440 payroll. The entire operation, really from the beginning, was smoke and 158 00:11:49,900 --> 00:11:55,280 Because Lee controlled virtually every aspect of the company, none of us 159 00:11:55,280 --> 00:11:59,480 individually fully understood what was going on until it was too late. 160 00:11:59,780 --> 00:12:01,180 But Bowman is loyal. 161 00:12:01,820 --> 00:12:06,120 He caves into the pressure from Farkas and his secrets stay in -house. 162 00:12:06,520 --> 00:12:10,660 Lee simply said, you're not going to do anything. 163 00:12:11,120 --> 00:12:15,280 I refuse to fix the situation, and you're not going to do anything. 164 00:12:15,840 --> 00:12:17,340 Ray was defeated. 165 00:12:17,560 --> 00:12:20,900 He, in the end, felt powerless to act. 166 00:12:21,200 --> 00:12:26,300 If word gets out, Farkas' business could go under, or worse, he could go to 167 00:12:26,300 --> 00:12:27,300 jail. 168 00:12:27,360 --> 00:12:28,960 But he has a backup plan. 169 00:12:29,450 --> 00:12:32,050 Longtime business associate Kathy Kissick. 170 00:12:32,490 --> 00:12:35,170 Farkas tells Kissick he needs a favor. 171 00:12:36,430 --> 00:12:41,250 Kissick is willing to help. After all, TBW is her biggest client. 172 00:12:41,630 --> 00:12:46,590 She agrees to temporarily cover the shortfall until the missing money is 173 00:12:46,590 --> 00:12:52,890 replaced. The banks do overdraft reports that Kathy Kissick would move money 174 00:12:52,890 --> 00:12:56,290 from different accounts to cover up the overdraft. 175 00:12:58,540 --> 00:13:02,040 Kissick and Farkas call the cover -up operation sweeping. 176 00:13:02,360 --> 00:13:07,040 At the end of each day, Kissick and her underling in Orlando sweep money from 177 00:13:07,040 --> 00:13:11,260 TBW's profitable accounts into TBW's master account. 178 00:13:12,680 --> 00:13:14,980 Bank records get processed overnight. 179 00:13:15,440 --> 00:13:20,200 In the morning, colonial executives see a rosy picture of TBW's balances. 180 00:13:20,860 --> 00:13:24,680 Nobody outside Farkas' chosen circle knows that... 181 00:13:24,880 --> 00:13:28,180 TBW was overdrawn by more than $100 million. 182 00:13:30,020 --> 00:13:36,320 I think Kathy Kissick had confidence in Lee and believed that Lee could make all 183 00:13:36,320 --> 00:13:41,120 of this work, and that's why she continued working with him and helping 184 00:13:41,120 --> 00:13:42,120 supporting him. 185 00:13:42,540 --> 00:13:46,940 For now, the cover -up works, and no one is asking any questions. 186 00:13:47,640 --> 00:13:50,400 Farkas doesn't seem worried in the least that he'll be caught. 187 00:13:51,210 --> 00:13:56,390 Tampa Bay Times business columnist Robert Tregeau isn't surprised by 188 00:13:56,530 --> 00:14:03,170 demeanor. There is a naivete that, gee, if I did something wrong, I'll get my 189 00:14:03,170 --> 00:14:08,710 hand slapped and we will just carry on. He's spending weekends in the sunshine, 190 00:14:09,030 --> 00:14:14,010 hobnobbing in style, and hiring eagle workers for new TBW positions. 191 00:14:14,710 --> 00:14:18,970 People were just absolutely almost standing in line to go to work at Taylor 192 00:14:18,970 --> 00:14:19,970 and Whitaker. 193 00:14:21,100 --> 00:14:27,620 The pull of Lee Farkas is the incredible charm and genuine emotion 194 00:14:27,620 --> 00:14:31,760 that he exuded. I mean, he had the charisma of a Gatsby. 195 00:14:32,100 --> 00:14:36,960 But for all his good guy popularity, Farkas is also gaining a reputation as a 196 00:14:36,960 --> 00:14:38,040 bullying hothead. 197 00:14:38,340 --> 00:14:43,060 He had a habit of publicly bawling out colleagues, and he once screamed at his 198 00:14:43,060 --> 00:14:47,000 chief operating officer on a conference call, what are you, stupid? He once 199 00:14:47,000 --> 00:14:49,320 fired his sister by email. 200 00:14:49,840 --> 00:14:51,720 He rehired her back a short time later. 201 00:14:51,980 --> 00:14:58,500 Those of us on the inside came to refer to those events as being Farkas. 202 00:14:58,540 --> 00:15:05,480 It was a type of abuse that could only be described as the 203 00:15:05,480 --> 00:15:08,360 worst kind of domestic dysfunction. 204 00:15:08,980 --> 00:15:12,720 In 2002, it seems Farkas' troubles are multiplying. 205 00:15:13,740 --> 00:15:18,360 As the sweeping scheme with Colonial expands, he lands in hot water with 206 00:15:18,360 --> 00:15:20,380 Mae, his crown jewel client. 207 00:15:21,060 --> 00:15:27,780 Fannie Mae discovered that some of the loans that were coming to them 208 00:15:27,780 --> 00:15:31,940 were not up to snuff and in some cases completely bogus. 209 00:15:33,100 --> 00:15:36,000 TBW's manufactured loans are clearly illegal. 210 00:15:36,580 --> 00:15:40,320 But Farkas has a talent for smooth talking his way out of trouble. 211 00:15:40,940 --> 00:15:44,620 He tells Fannie Mae that subordinates placed loans that were never meant to be 212 00:15:44,620 --> 00:15:47,360 sold into groups that were sent to Fannie. 213 00:15:47,660 --> 00:15:49,860 It's all been just a big mistake. 214 00:15:51,220 --> 00:15:55,580 Fannie Mae, the largest buyer of mortgages in the U .S., says, we're not 215 00:15:55,580 --> 00:15:58,800 to buy mortgages from you anymore. And that's usually a scarlet letter. 216 00:15:59,020 --> 00:16:01,880 Fannie Mae cuts ties with TBW. 217 00:16:02,560 --> 00:16:05,400 Fortunately for Farkas, they do it quietly. 218 00:16:06,580 --> 00:16:09,960 The problem was they didn't tell anybody else about it. 219 00:16:10,240 --> 00:16:15,960 The result was Taylor Bean shifted gears and went to other government -sponsored 220 00:16:15,960 --> 00:16:22,700 enterprises and essentially continued their bogus operation with the stamp of 221 00:16:22,700 --> 00:16:26,280 approval of these government entities for many years. 222 00:16:26,860 --> 00:16:33,520 I negotiated a very smooth transition between Fannie Mae and 223 00:16:33,520 --> 00:16:39,120 Freddie Mac. I had to publicly state things that I knew not to be. 224 00:16:39,560 --> 00:16:43,820 True. And in Lee's eyes, he saw that as a point of strength. 225 00:16:44,220 --> 00:16:49,820 For their silence and loyalty, Farkas makes Jason Moore his chief operating 226 00:16:49,820 --> 00:16:53,220 officer, and he promotes Ray Bowman to president. 227 00:16:53,660 --> 00:16:59,320 From that point onward, he operated with a sense of unbridled power. 228 00:16:59,840 --> 00:17:03,100 Meanwhile, TBW is hemorrhaging money. 229 00:17:03,560 --> 00:17:07,640 The sweeping scheme has become too time -consuming and risky. 230 00:17:08,440 --> 00:17:12,400 So by the end of 2003, Kathy Kissick comes up with a new plan. 231 00:17:12,740 --> 00:17:14,400 She calls it Plan B. 232 00:17:15,200 --> 00:17:20,640 She and colonial underlings move TBW's debt into a special account called Colby 233 00:17:20,640 --> 00:17:23,579 to secretly signify fake loans. 234 00:17:24,359 --> 00:17:28,860 Kathy would say, send me more mortgages. And Lee would say to his people, find 235 00:17:28,860 --> 00:17:30,440 mortgages that you can send there. 236 00:17:30,810 --> 00:17:36,170 There was not a borrower. There was not a property attached to a loan. But TBW 237 00:17:36,170 --> 00:17:42,090 needed to create a fake loan so that Colonial Bank would give us money so 238 00:17:42,090 --> 00:17:46,390 we could then fund real loans coming in the door. 239 00:17:46,710 --> 00:17:51,670 Laundering TBW's fake mortgage loans through Colonial is a temporary fix. 240 00:17:52,070 --> 00:17:56,730 But until Farkas can come up with $100 million, the cover -up becomes a 241 00:17:56,730 --> 00:17:58,510 continuous, vicious cycle. 242 00:17:59,100 --> 00:18:04,340 In emails to Kathy Kissick, Farkas assures her someday they'll be laughing 243 00:18:04,340 --> 00:18:05,780 the situation on a beach. 244 00:18:06,220 --> 00:18:10,080 Kissick's half -joking response, I hope it's not from prison. 245 00:18:10,380 --> 00:18:16,780 In 2005, Farkas moves most of the sweeping and Plan B loans over to 246 00:18:16,780 --> 00:18:22,360 Assignment of Trade, or AOT accounts, where they're bundled into pools. 247 00:18:23,210 --> 00:18:27,850 These bundled pools of loans give Farkas the perfect cover to shift TBW's fake 248 00:18:27,850 --> 00:18:29,990 loan production into overdrive. 249 00:18:30,190 --> 00:18:35,330 He would go back to loans he had originated ten years prior, change a few 250 00:18:35,330 --> 00:18:41,650 details. It surprised him how easy it was. And when he discovered that the 251 00:18:41,650 --> 00:18:47,750 couldn't easily be traced, he just kept going back year after year after year. 252 00:18:48,380 --> 00:18:49,860 and selling them to multiple investors. 253 00:18:50,320 --> 00:18:56,100 Up next, Lee Farkas hatches a new scheme to swindle billions more from some of 254 00:18:56,100 --> 00:18:57,860 the richest banks in the world. 255 00:18:58,740 --> 00:19:05,380 He was robbing a bank by using a pencil. It plays to the 256 00:19:05,380 --> 00:19:10,320 arrogance of Lee Farkas. Clearly, this was a smart guy. 257 00:19:23,210 --> 00:19:27,870 In 2005, Colonial Bank executive Kathy Kissick is getting nervous. 258 00:19:28,210 --> 00:19:33,490 She has been inventing or shuffling worthless mortgages to help Lee Farkas 259 00:19:33,490 --> 00:19:35,310 his losses for more than two years. 260 00:19:35,670 --> 00:19:39,310 Now, more than anything, Kissick desperately wants out. 261 00:19:41,010 --> 00:19:46,850 If the fraud is uncovered, Kissick could lose her job or face jail time. 262 00:19:47,310 --> 00:19:50,450 But Farkas' unpredictable mind games are powerful. 263 00:19:51,180 --> 00:19:55,720 Kissy can't stand up for herself long enough or loud enough to stop the 264 00:19:55,720 --> 00:20:00,160 bleeding. Lee Farkas would make people cry the way that he dealt with Kathy, 265 00:20:00,160 --> 00:20:04,420 yelling at her one day, trying to be nice to her the next day, to try to get 266 00:20:04,420 --> 00:20:09,120 to keep his business afloat, even if it was through, you know, illegal methods. 267 00:20:09,520 --> 00:20:13,880 The stakes are high for Farkas. On the books, TBW's profits are soaring. 268 00:20:14,100 --> 00:20:18,280 But huge operating expenses and undercharging for mortgages are burying 269 00:20:18,280 --> 00:20:19,280 company in debt. 270 00:20:19,830 --> 00:20:24,290 It seems Farkas, the brilliant mortgage visionary, hasn't paid attention to 271 00:20:24,290 --> 00:20:25,530 dollars and cents details. 272 00:20:26,190 --> 00:20:32,810 Ever. I don't think Lee Farkas should be penalized for bad business decisions. 273 00:20:32,970 --> 00:20:37,870 I think he should be penalized for blatant fraud. 274 00:20:38,870 --> 00:20:43,470 Farkas hasn't paid Kissick off to cover for his schemes. He's made her a 275 00:20:43,470 --> 00:20:44,630 psychological hostage. 276 00:20:45,110 --> 00:20:48,270 She was scared. She was just plain frightened. 277 00:20:49,130 --> 00:20:50,690 of what had occurred. 278 00:20:51,370 --> 00:20:56,390 Meanwhile, Lee Farkas presents his company as a paradigm of ethical virtue. 279 00:20:56,890 --> 00:21:02,010 As attorney Paul Singerman explains, posters and hotline numbers demand 280 00:21:02,010 --> 00:21:04,830 employees to report mortgage fraud. 281 00:21:05,250 --> 00:21:12,070 My favorite is the Forrest Gump knockoff. All the while, the biggest 282 00:21:12,070 --> 00:21:16,810 of that fraud was Mr. Farkas. 283 00:21:17,949 --> 00:21:21,390 TBW's overdrafts at Colonial keep deepening by the day. 284 00:21:22,550 --> 00:21:25,050 Farkas owes more than $500 million. 285 00:21:26,210 --> 00:21:31,310 With Kissick keeping quiet, Farkas still has Colonial as his major cash cow. 286 00:21:31,970 --> 00:21:35,450 But he needs more money, and he needs it fast. 287 00:21:36,090 --> 00:21:40,730 Lee hatched this idea to approach big -time investors. 288 00:21:40,930 --> 00:21:42,590 They would give TBW... 289 00:21:43,100 --> 00:21:49,820 $500 million if TBW would securitize that $500 million with its 290 00:21:49,820 --> 00:21:51,240 own collateral. 291 00:21:51,840 --> 00:21:57,460 So in January 2005, Farkas creates a new business, Ocala Funding LLC. 292 00:21:58,300 --> 00:22:03,480 Ocala Funding has no employees. It's wholly owned by Taylor Bean, and it's a 293 00:22:03,480 --> 00:22:06,760 short -term credit facility. It's asset -backed commercial paper. 294 00:22:07,480 --> 00:22:10,100 Companies use commercial paper to raise money. 295 00:22:10,830 --> 00:22:15,710 Based on the value of a company's collateral or assets, investors will 296 00:22:15,710 --> 00:22:21,710 money. Big name banks, including Deutsche Bank and BNP Paribas, put in 297 00:22:21,710 --> 00:22:24,010 $2 billion to Ocala Funding. 298 00:22:24,210 --> 00:22:28,890 Colonial executives think they have more than half a billion dollars in loans. 299 00:22:29,950 --> 00:22:35,310 That loan collateral was pure fiction. It didn't exist. 300 00:22:35,770 --> 00:22:37,770 Ocala Funding was... 301 00:22:38,320 --> 00:22:42,440 Lee's and TBW's personal piggy bank. 302 00:22:42,640 --> 00:22:45,740 It was a scheme of epic proportions. 303 00:22:46,480 --> 00:22:51,420 Farkas says the investor money will allow TBW to offer more home loans to 304 00:22:51,420 --> 00:22:52,420 everyday people. 305 00:22:52,840 --> 00:22:58,660 Some of TBW's home loans are authentic, but more are fabricated with made -up 306 00:22:58,660 --> 00:23:01,500 addresses, altered dates, or dollar amounts. 307 00:23:02,460 --> 00:23:05,820 Most of them are worthless, but hard to track. 308 00:23:06,220 --> 00:23:07,360 Ocala Funding. 309 00:23:08,130 --> 00:23:14,590 should have had $1 ,750 ,000 or more in 310 00:23:14,590 --> 00:23:17,310 mortgages, and it had almost none. 311 00:23:17,650 --> 00:23:23,810 By 2006, Jason Moore resigns from his position as chief operating officer, but 312 00:23:23,810 --> 00:23:29,350 stays at TBW in a less prominent role as a not -for -profit consultant outside 313 00:23:29,350 --> 00:23:30,790 the circle of secrets. 314 00:23:32,030 --> 00:23:36,690 It just became so apparent that he had become... 315 00:23:37,100 --> 00:23:43,700 someone that i could not rescue um that i really chose to save myself 316 00:23:43,700 --> 00:23:50,400 next on american greed tbw is tanking fast but lee farkas has one more 317 00:23:50,400 --> 00:23:56,480 play this time cheating to cash in on bank bailouts regulators and 318 00:23:56,480 --> 00:23:59,980 begin to say well wait a minute what's happening here are these really your 319 00:23:59,980 --> 00:24:01,940 loans where is this funding coming from 320 00:24:15,180 --> 00:24:20,760 In 2006, Taylor Bean and Whitaker is one of America's busiest mortgage lenders. 321 00:24:21,040 --> 00:24:25,380 The company has expanded to more than two dozen branches in 12 states. 322 00:24:26,160 --> 00:24:29,560 Chairman Lee Farkas has plans to expand globally. 323 00:24:29,800 --> 00:24:34,800 But the bulk of TBW's home loans are valueless. That doesn't stop Farkas from 324 00:24:34,800 --> 00:24:37,040 siphoning millions from his own company. 325 00:24:37,340 --> 00:24:41,200 He essentially would run all of his personal... 326 00:24:41,630 --> 00:24:43,230 expenses through the company. 327 00:24:43,430 --> 00:24:48,190 He simply used that money to fund whatever he wanted. 328 00:24:48,770 --> 00:24:53,510 Jason Moore can't take the fraud or Farkas's lies any longer. 329 00:24:53,830 --> 00:24:59,490 In January of 2007, Moore resigns and walks away with nothing from TBW. 330 00:24:59,810 --> 00:25:04,770 I could no longer turn a blind eye. I knew that if I didn't leave, it would 331 00:25:04,770 --> 00:25:05,770 consume me. 332 00:25:06,410 --> 00:25:11,110 By 2007, housing sales are drying up and prices are plummeting. 333 00:25:11,580 --> 00:25:15,840 Yet even with ominous signs of a tanking economy, TBW seems immune. 334 00:25:16,200 --> 00:25:22,560 The company employs more than 2 ,500 from coast to coast. And in 2008, Fargus 335 00:25:22,560 --> 00:25:27,400 expands into shining new corporate headquarters, built for $26 million. 336 00:25:27,860 --> 00:25:32,240 When somebody walks into this building, the first thing they always say is, wow, 337 00:25:32,560 --> 00:25:34,500 this is an amazing building. 338 00:25:35,420 --> 00:25:40,180 It was really a showpiece, something the community was proud of. 339 00:25:40,800 --> 00:25:46,500 Tracy Dush and her two children, Richard and Emily, all land jobs with TVW. 340 00:25:46,880 --> 00:25:52,260 And like most employees, they are impressed with the luxurious new office 341 00:25:52,500 --> 00:25:58,520 Complete with onyx walls, a gourmet executive dining room, millions in wall 342 00:25:58,520 --> 00:25:59,520 decor. 343 00:25:59,710 --> 00:26:03,290 and a palatial entryway with gel -infused floors. 344 00:26:03,750 --> 00:26:06,870 I loved going to work every day. I worked with great people. 345 00:26:07,110 --> 00:26:10,170 My kids would tell you the same thing. It felt like family. 346 00:26:10,410 --> 00:26:14,590 We were making good money. It was stressful. You know, it was very high 347 00:26:14,710 --> 00:26:15,710 very high pressure. 348 00:26:15,810 --> 00:26:17,530 But like I said, we had a lot of fun. 349 00:26:17,970 --> 00:26:24,410 As executive chef assistant, Emily Dush witnesses firsthand how Farkas spares no 350 00:26:24,410 --> 00:26:25,410 expense. 351 00:26:25,570 --> 00:26:28,230 We would get caviar. It was like... 352 00:26:28,490 --> 00:26:32,070 $150 for a jar that was tiny. 353 00:26:32,410 --> 00:26:39,190 I got to cook the pumpkin swordfish, del sol, ox, eel, 354 00:26:39,490 --> 00:26:42,850 duck, and that was how it was every day. 355 00:26:43,310 --> 00:26:49,070 In Ocala, Farkas earns a reputation as a philanthropist, donating millions to 356 00:26:49,070 --> 00:26:50,070 local causes. 357 00:26:50,270 --> 00:26:53,750 He had a heart for doing things for the community. 358 00:26:54,930 --> 00:26:57,110 Marion Theater was a prime example. 359 00:26:58,250 --> 00:27:05,210 Farkas stepped in, $1 .23 million put into the theater and brought it 360 00:27:05,210 --> 00:27:06,790 back to its original state. 361 00:27:07,090 --> 00:27:13,490 The problem is the gifts being made were other people's money, 362 00:27:13,650 --> 00:27:18,090 innocent people's money, not Mr. Farkas's money. 363 00:27:18,910 --> 00:27:25,170 Farkas has masterfully kept his crimes at TBW clandestine, but the reality of 364 00:27:25,170 --> 00:27:27,090 his business is about to come to light. 365 00:27:28,940 --> 00:27:34,160 In early 2009, Colonial Bank is reeling from bad investments and the collapse of 366 00:27:34,160 --> 00:27:35,160 the housing market. 367 00:27:35,260 --> 00:27:36,700 But there's a lifeline. 368 00:27:36,960 --> 00:27:42,860 The bank could score $533 million from the government's Troubled Asset Relief 369 00:27:42,860 --> 00:27:44,520 Program, or TARP. 370 00:27:44,820 --> 00:27:48,600 The Florida housing market was a serious mess. 371 00:27:49,040 --> 00:27:52,080 Colonial began to suffer. 372 00:27:53,400 --> 00:27:55,580 Financially, it needed to raise capital. 373 00:27:55,960 --> 00:27:58,180 If Colonial goes under... 374 00:27:58,760 --> 00:28:01,960 TBW is dead in the water. Everything has got to come to light. 375 00:28:02,500 --> 00:28:06,980 If TBW goes under, they're going to blow the whistle on Colonial Bank. 376 00:28:07,220 --> 00:28:10,820 They're in bed together in a much deeper way than they have been in the past. 377 00:28:11,380 --> 00:28:15,420 Colonial goes to the Treasury and says, we'd like to sign up for TARP, please. 378 00:28:15,840 --> 00:28:20,460 And Treasury says, first you need to raise $300 million on your own. 379 00:28:20,680 --> 00:28:24,140 They want to see that Colonial can make it before the government's going to put 380 00:28:24,140 --> 00:28:25,140 in even more money. 381 00:28:25,440 --> 00:28:28,740 Farkas sets the wheels in motion for yet another con. 382 00:28:29,080 --> 00:28:34,680 Lee's reputation as an escape artist preceded him all his life. He had 383 00:28:34,680 --> 00:28:37,540 out of one sticky situation after another. 384 00:28:38,000 --> 00:28:44,180 Farkas pledges to raise $150 million for Colonial and to help get the rest, even 385 00:28:44,180 --> 00:28:45,860 though his own company is drowning. 386 00:28:46,580 --> 00:28:50,220 If he could inject or appear to inject. 387 00:28:50,940 --> 00:28:53,680 Hundreds of million dollars into Colonial Bank. 388 00:28:53,880 --> 00:28:55,420 This would buy time. 389 00:28:55,860 --> 00:29:00,820 Lee Farkas claims that he has different investors that are part of this $300 390 00:29:00,820 --> 00:29:02,680 million investment. 391 00:29:03,020 --> 00:29:06,580 And Lee Farkas has to fool people into thinking that they've actually raised 392 00:29:06,580 --> 00:29:11,800 money. As part of the TARP vetting process, Colonial also has to open its 393 00:29:11,800 --> 00:29:13,000 to government regulators. 394 00:29:13,480 --> 00:29:14,820 It should be routine. 395 00:29:15,220 --> 00:29:18,800 But right away, TARP agents can tell something is off. 396 00:29:19,280 --> 00:29:20,280 Way off. 397 00:29:20,910 --> 00:29:24,810 The majority of Colonial's mortgage lending is devoted only to one company, 398 00:29:25,030 --> 00:29:26,730 Taylor, Bean, and Whitaker. 399 00:29:27,150 --> 00:29:32,950 And TBW's accountant, Deloitte and Touche, who has given TBW glowing audit 400 00:29:32,950 --> 00:29:37,730 reports since 2002, suddenly won't sign off on its latest reports. 401 00:29:38,630 --> 00:29:42,050 Investigators sift through thousands of documents, piecing together a 402 00:29:42,050 --> 00:29:43,830 complicated web of deceit. 403 00:29:44,410 --> 00:29:48,370 Betrayal leads to Colonial Bank employees and Kathy Kissick. 404 00:29:48,570 --> 00:29:49,570 All lines. 405 00:29:50,720 --> 00:29:57,080 led back to TBW Lounge. There was no way of concealing what had happened. 406 00:29:57,380 --> 00:30:01,860 When American Greed returns, the feds have Lee Farkas right where they want 407 00:30:01,900 --> 00:30:03,600 and he has no idea. 408 00:30:04,280 --> 00:30:07,500 It's only going to be a matter of time before they figure things out. 409 00:30:08,080 --> 00:30:09,200 I don't think so. 410 00:30:17,230 --> 00:30:21,390 In 2009, TARP investigators are planning their next move. 411 00:30:21,690 --> 00:30:26,690 They know Lee Farkas' attempt to transfer millions to Colonial Bank is a 412 00:30:26,690 --> 00:30:32,110 reckless last -ditch effort to get $553 million more in TARP bailout funds. 413 00:30:33,490 --> 00:30:38,550 His falsified transactions are computer -generated and easily traceable. 414 00:30:38,770 --> 00:30:45,030 Once it was eventually discovered that the $300 million was bogus money, 415 00:30:46,000 --> 00:30:51,920 that disqualified Colonial Bank to receive a federal bailout. The 416 00:30:51,920 --> 00:30:55,000 rejects Colonial Bank's request for tarp money. 417 00:30:55,600 --> 00:30:59,480 Like any expert showman knows, appearances are everything. 418 00:31:00,520 --> 00:31:03,860 Farkas may be panicked, but he doubles down on his spending. 419 00:31:04,320 --> 00:31:08,580 His Ocala home, like his office, is one of the finest in town. 420 00:31:09,040 --> 00:31:12,180 It was big and gorgeous. 421 00:31:13,450 --> 00:31:17,770 I mean, the minute you drove up and met the gate, you knew it was going to be 422 00:31:17,770 --> 00:31:24,630 like you were on MTV Cribs. He has a seaplane, a $28 million corporate 423 00:31:24,630 --> 00:31:29,870 jet with a private hangar, and is expanding his empire outside of the 424 00:31:29,870 --> 00:31:36,390 world. Lee dumped countless millions into a local gym here in Ocala, 425 00:31:36,530 --> 00:31:38,530 several high -end restaurants. 426 00:31:38,790 --> 00:31:42,150 His outside investments were worth in excess. 427 00:31:43,100 --> 00:31:45,080 of 20 million dollars. 428 00:31:45,400 --> 00:31:48,920 And those funds were taken from corporate funds. 429 00:31:49,260 --> 00:31:52,360 And he has developed a pension for carousing. 430 00:31:52,560 --> 00:31:57,340 He opened a string of gay bars in Atlanta. 431 00:31:57,760 --> 00:32:00,760 He very quickly became known as the gay entrepreneur. 432 00:32:01,690 --> 00:32:06,450 To those who've known him for years, Farkas' exploits in and beyond the 433 00:32:06,450 --> 00:32:09,290 boardroom are becoming alarmingly reckless. 434 00:32:09,650 --> 00:32:16,370 He left his partner of 35 years for someone much younger. He even bought a 435 00:32:16,370 --> 00:32:22,830 famous strip club in Atlanta. Many of the strippers were then hired by TBW to 436 00:32:22,830 --> 00:32:24,050 work as account executives. 437 00:32:25,090 --> 00:32:29,530 Observers find his wild swings even more disturbing than the unpredictable 438 00:32:29,530 --> 00:32:30,810 Farkas of old. 439 00:32:31,390 --> 00:32:37,110 It was almost as if Lee was telling them, I'm in control of this situation. 440 00:32:37,570 --> 00:32:43,090 There was a parallel between his personal life and the kinds of schemes 441 00:32:43,090 --> 00:32:44,570 was hatching professionally. 442 00:32:44,990 --> 00:32:46,890 He felt that he was untouchable. 443 00:32:47,450 --> 00:32:51,910 Farkas is making millions at TPW and tapping millions more. 444 00:32:52,600 --> 00:32:57,860 Yet the revenue stream is all ill -gotten gains from fake loans and cooked 445 00:32:57,860 --> 00:33:02,600 books. Farkas looted to the extent of tens of millions of dollars. 446 00:33:03,400 --> 00:33:08,880 TARP investigators, who began with a routine inquiry, find more evidence of 447 00:33:08,880 --> 00:33:10,700 insecurities fraud by the day. 448 00:33:10,940 --> 00:33:14,480 They ask their FBI partners to turn up the heat. 449 00:33:15,860 --> 00:33:18,000 By the summer of 2009... 450 00:33:18,480 --> 00:33:22,680 The feds have convinced several of Farkas' cohorts to flip and become FBI 451 00:33:22,680 --> 00:33:28,160 informants. With home and cell phone lines tapped, agents listen in to a 452 00:33:28,160 --> 00:33:33,360 call between Farkas and TBW's Ocala funding president, Desiree Brown. 453 00:33:33,880 --> 00:33:34,880 How are you? 454 00:33:35,340 --> 00:33:36,500 I'm a mess. 455 00:33:36,900 --> 00:33:41,900 I got home last night and there's business cards from FBI agents on my 456 00:33:42,300 --> 00:33:44,480 You're not obligated to talk to them. 457 00:33:44,990 --> 00:33:47,910 It's only going to be a matter of time before they figure things out. 458 00:33:48,530 --> 00:33:49,650 I don't think so. 459 00:33:50,170 --> 00:33:53,870 If anybody took the time to look through the emails, they would eventually 460 00:33:53,870 --> 00:33:54,930 figure it out, Lee. 461 00:33:55,650 --> 00:34:01,610 On August 3rd, federal agents raid Colonial Bank's Orlando office and 462 00:34:01,610 --> 00:34:02,770 Bean and Whitaker headquarters. 463 00:34:03,750 --> 00:34:05,590 It's the beginning of the end. 464 00:34:09,610 --> 00:34:14,570 Two days after the raid... Tracy Dush and more than 2 ,000 other TBW employees 465 00:34:14,570 --> 00:34:16,630 are greeted with a mass email. 466 00:34:16,969 --> 00:34:22,710 It said, basically, due to circumstances beyond our control, this is going to be 467 00:34:22,710 --> 00:34:24,670 your last day. We're shutting down permanently. 468 00:34:25,070 --> 00:34:27,110 I'm telling you, people were crying. 469 00:34:27,790 --> 00:34:32,429 They were distraught. We had literally that afternoon, this was 2 o 'clock, to 470 00:34:32,429 --> 00:34:33,989 get our stuff packed and leave. 471 00:34:35,710 --> 00:34:39,070 TBW files for bankruptcy on August 24th. 472 00:34:39,719 --> 00:34:45,600 One day later, Colonial Bank, with $26 billion in assets, goes under. 473 00:34:46,060 --> 00:34:50,100 It's the sixth largest bank failure in U .S. history. 474 00:34:51,900 --> 00:34:54,840 The FDIC steps in to pick up the pieces. 475 00:34:55,800 --> 00:34:59,120 Back in Ocala, grim reality replaces shock. 476 00:34:59,520 --> 00:35:01,980 TBW had a huge presence in our community. 477 00:35:02,200 --> 00:35:07,100 And the day that the Fed shut it down, it felt like a gut punch. It had 478 00:35:07,100 --> 00:35:08,200 tremendous ripple effects. 479 00:35:08,730 --> 00:35:12,210 Everyone in Ocala knows someone out of work because of Lee Farkas. 480 00:35:13,050 --> 00:35:17,750 In the Dush family, Tracy and her two children go into survival mode. 481 00:35:18,110 --> 00:35:24,970 All of a sudden, you know, three of us are out of work, and money gets tight 482 00:35:24,970 --> 00:35:25,848 really quick. 483 00:35:25,850 --> 00:35:28,870 We were already in a bad economy. Florida was one of the worst states in 484 00:35:28,870 --> 00:35:34,070 United States at that time, so it was out of the frying pan and into the fire, 485 00:35:34,210 --> 00:35:36,910 you know? People would go, is there anything I can do for you? 486 00:35:37,400 --> 00:35:41,220 Yeah, you can pray. I don't know if I'm going to have food tomorrow. I need 487 00:35:41,220 --> 00:35:43,560 something, a small job, a babysitting gig. 488 00:35:43,840 --> 00:35:45,060 I'll clean your house. 489 00:35:45,440 --> 00:35:46,440 Anything. 490 00:35:47,740 --> 00:35:52,500 TBW's fallout has left a wake of foreclosure nightmares for homeowners 491 00:35:52,500 --> 00:35:53,359 the country. 492 00:35:53,360 --> 00:35:59,800 We still get calls fairly often from people who took out a mortgage. 493 00:36:00,410 --> 00:36:07,010 And that mortgage ended up at Taylor Bean and was somehow eventually packaged 494 00:36:07,010 --> 00:36:08,290 into securities. 495 00:36:08,530 --> 00:36:13,470 They have no idea what is the status of their mortgage. 496 00:36:14,270 --> 00:36:19,210 Like Sandy Smith in Stephenville, Texas, who is fighting to keep the four 497 00:36:19,210 --> 00:36:21,350 -bedroom home she bought in 2007. 498 00:36:21,750 --> 00:36:27,970 We found out later that Taylor Bean and Whitaker didn't really own our mortgage. 499 00:36:28,970 --> 00:36:30,190 We were told they did. 500 00:36:30,470 --> 00:36:34,050 For months, Smith promptly mailed her mortgage payment to TBW. 501 00:36:34,310 --> 00:36:37,070 Now, she doesn't know where her money went. 502 00:36:37,790 --> 00:36:42,850 All of a sudden, you get a foreclosure notice, and you're wondering, why am I 503 00:36:42,850 --> 00:36:45,250 getting a foreclosure notice? We've been making payments. 504 00:36:45,810 --> 00:36:49,610 Smith can't get a straight answer on who cashed her mortgage checks. 505 00:36:50,030 --> 00:36:54,390 She knows that her mortgage note was packaged into securities, then sold to 506 00:36:54,390 --> 00:36:55,390 multiple banks. 507 00:36:55,530 --> 00:36:56,650 And she's not alone. 508 00:36:57,680 --> 00:37:01,920 TBW did the same thing to more than 500 ,000 other homeowners. 509 00:37:03,000 --> 00:37:06,560 As these loans are being sold to different entities, homeowners are 510 00:37:06,560 --> 00:37:09,880 letters from multiple institutions saying, this is my loan, no, this is my 511 00:37:09,960 --> 00:37:14,040 no, it's my loan. How can all of these people want my money all at the same 512 00:37:14,040 --> 00:37:18,880 time? For Smith, who has fought four foreclosures and even potential eviction 513 00:37:18,880 --> 00:37:19,880 from her home, 514 00:37:20,380 --> 00:37:22,200 Farkas' downfall means little. 515 00:37:22,580 --> 00:37:24,500 She wants the laws to change. 516 00:37:25,670 --> 00:37:30,510 You're not supposed to lose your house, and you've done everything that you're 517 00:37:30,510 --> 00:37:31,510 supposed to do. 518 00:37:32,310 --> 00:37:34,310 Who's going to enforce those laws? 519 00:37:34,670 --> 00:37:41,410 Do we see the justice system as working? No, absolutely not. 520 00:37:42,710 --> 00:37:49,230 Up next, prosecutors get ready to hammer TVW's chairman as Lee Farkas comes face 521 00:37:49,230 --> 00:37:51,170 -to -face with his victims in court. 522 00:37:51,530 --> 00:37:53,970 There were an awful lot of people who were so... 523 00:37:54,540 --> 00:37:59,920 They had had a good job, and now it just went up in smoke. A lot of people would 524 00:37:59,920 --> 00:38:02,540 still like to nail his hide to the wall. 525 00:38:14,160 --> 00:38:20,960 On June 15, 2010, federal prosecutors in Alexandria, Virginia, indict Lee Farkas 526 00:38:20,960 --> 00:38:23,500 after building their case for more than a year. 527 00:38:24,330 --> 00:38:29,930 He's charged with 16 counts of conspiracy to commit bank fraud, wire 528 00:38:29,930 --> 00:38:30,930 securities fraud. 529 00:38:33,870 --> 00:38:37,610 Ocala's once favorite son is led away in handcuffs. 530 00:38:38,950 --> 00:38:41,050 He was ready to fight his battle. 531 00:38:41,570 --> 00:38:48,370 So that just made him stronger, actually. He was ready to fight for what 532 00:38:48,370 --> 00:38:49,370 thought was right. 533 00:38:49,910 --> 00:38:53,010 Farkas' trial begins in April 2011. 534 00:38:54,280 --> 00:38:58,660 One by one, six co -conspirators who have cut deals for reduced sentences 535 00:38:58,660 --> 00:39:04,320 testify against Farkas, and prosecutors present millions of doctored loan 536 00:39:04,320 --> 00:39:06,020 documents as evidence. 537 00:39:07,320 --> 00:39:12,460 Despite all the layers of financial complexity, the trial lasts less than 538 00:39:12,460 --> 00:39:17,560 weeks. Taylor Bean and Whitaker was Lee Farkas, and when Taylor Bean and 539 00:39:17,560 --> 00:39:22,080 Whitaker fell, then Lee Farkas was going to fall. 540 00:39:22,640 --> 00:39:28,120 On April 19, 2011, Farkas is found guilty of 14 counts of fraud. 541 00:39:29,580 --> 00:39:32,540 Six co -conspirators are also found guilty. 542 00:39:32,880 --> 00:39:36,420 Their prison sentences range from eight years to three months. 543 00:39:37,320 --> 00:39:40,040 Kathy Kissick gets eight years for her role. 544 00:39:40,500 --> 00:39:46,160 Ray Bowman, who kept quiet after uncovering TBW's massive debt, gets five 545 00:39:46,740 --> 00:39:52,120 Jason Moore, who was never investigated for any wrongdoing, follows the trials 546 00:39:52,120 --> 00:39:57,780 closely. My friends and former colleagues who are now in jail and those 547 00:39:57,780 --> 00:40:04,480 who managed to escape, we are left feeling a profound sense of shame, but 548 00:40:04,480 --> 00:40:05,480 also betrayal. 549 00:40:06,320 --> 00:40:09,700 Prosecutors seek the maximum sentence against Lee Farkas. 550 00:40:10,280 --> 00:40:16,840 I think there's a tip -off when the prosecutors are seeking a 385 -year 551 00:40:16,840 --> 00:40:17,840 sentence. 552 00:40:18,400 --> 00:40:23,300 against Lee Farkas, and his attorneys were thinking more like 15 years. 553 00:40:23,640 --> 00:40:28,980 But on June 30, 2011, the judge hands down a sentence of 30 years. 554 00:40:30,340 --> 00:40:35,060 For Terry Huber, Farkas' sister, justice has not been served. 555 00:40:35,480 --> 00:40:41,360 I see people on the news every day that have killed people, that have raped 556 00:40:41,360 --> 00:40:46,300 people, that have done horrible things, and they... 557 00:40:46,650 --> 00:40:50,490 go to prison for 10 years, that was a life sentence for him. 558 00:40:51,050 --> 00:40:56,350 The judge also orders that Farkas personally forfeit $38 .5 million. 559 00:40:57,190 --> 00:41:02,310 In lieu of cash, prosecutors seize all of his assets, including his houses and 560 00:41:02,310 --> 00:41:03,350 vintage car collection. 561 00:41:04,750 --> 00:41:09,190 The number pales in comparison to the staggering amount that investors and 562 00:41:09,190 --> 00:41:13,170 homeowners have lost through years of Farkas' fake loan scams. 563 00:41:14,060 --> 00:41:19,660 When you add up all of TBW's thefts, Lee and TBW cheated investors out of about 564 00:41:19,660 --> 00:41:22,400 $3 billion in total. 565 00:41:22,680 --> 00:41:26,360 Back at his Miami law firm, Paul Sigerman has already started proceedings 566 00:41:26,360 --> 00:41:31,780 against Deloitte & Touche, TBW's old accountant, who stamped healthy audit 567 00:41:31,780 --> 00:41:37,740 reports for years, hitting the firm with a $7 .6 billion lawsuit for negligence. 568 00:41:38,060 --> 00:41:44,560 Had Deloitte & Touche done what it agreed to do, which was to detect fraud. 569 00:41:44,760 --> 00:41:48,060 This could have ended years earlier than it did. 570 00:41:49,180 --> 00:41:53,800 In a statement to American Greed, Deloitte and Touche responds that the 571 00:41:53,800 --> 00:41:59,660 defies common sense and maintains that these claims are utterly without merit. 572 00:42:00,900 --> 00:42:07,440 The Dush family and thousands of former TBW employees are recovering, but they 573 00:42:07,440 --> 00:42:09,660 know too many are still suffering. 574 00:42:10,110 --> 00:42:13,070 They were real people attached to those account numbers. 575 00:42:13,870 --> 00:42:19,990 And what was done affected real families. It really can happen 576 00:42:19,990 --> 00:42:22,290 to anybody, anywhere. 577 00:42:24,170 --> 00:42:27,470 TBW's palatial world headquarters stands vacant. 578 00:42:27,970 --> 00:42:33,230 Lee Farkas sits in a jail cell at Butner Federal Penitentiary in North Carolina. 579 00:42:34,450 --> 00:42:38,030 Farkas is scheduled for release in 2041. 580 00:42:39,000 --> 00:42:40,680 He will be 88 years old. 581 00:42:41,040 --> 00:42:46,020 Lee always taught me, don't be too greedy. Don't be afraid to pay people. 582 00:42:46,020 --> 00:42:49,420 perhaps used our own greed to sign on for this ride. 583 00:42:49,960 --> 00:42:52,220 His greed, it translated into power. 52456

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