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In this episode of American Greed, Lee
Farkas is a fast talker and master

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manipulator. Lee was like a cult leader.
He had the charisma of a Gatsby.

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He invents fake loans to make his
fortune and funnels millions to support

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and fabulous lifestyle.

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Lee Farkas turned into a very big fish
in a very small pond. He had a jet.

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Houses. Expensive cars.

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And he levels anyone who dares to
question him.

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Being Farkas. It was the worst kind of
domestic dysfunction.

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Farkas' $3 .5 billion scam leaves
thousands jobless and many fighting

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foreclosure. You're wondering, why am I
getting a foreclosure notice? We've been

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making payments.

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His lies lead to one of the largest bank
failures in American history.

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It's not a crime to be greedy. It is a
crime to steal money from people. That's

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what happened here.

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On June 24, 2010, 57 -year -old Lee
Bentley Farkas makes bond and

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walks out of a Florida jail.

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The once high -flying mortgage mogul is
charged with engineering a series of

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massive frauds that have bankrupted his
own company.

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For more than a decade, Farkas peddled
fake mortgages and looted his company

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tens of millions of dollars, leaving
thousands of innocent homeowners to live

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mortgage nightmares.

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Jason Moore worked with Lee Farkas for
seven years.

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He always said, we have to make.

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As much money as possible right now.
Because this will not last forever.

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Houses aren't selling.

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Credit is scarce.

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And risky home loans have led to a
mounting list of bankrupt mortgage

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Reporter Nick Timoros has covered
Farkas' story for the Wall Street

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He was on trial because he stole from a
bank. He stole from investors.

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He did things that were so blatantly
wrong.

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you cross a red line at a certain point.

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Charged with 16 counts of wire, banking,
and securities fraud, Farkas faces a

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sentence of up to 385 years.

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Lee Farkas' story begins in Albuquerque,
New Mexico.

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His sister, Terry Huber, remembers a
responsible brother consumed with being

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respected and successful.

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He was very smart as a child.

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and always talking about business.

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When his father dies, Farkas drops out
of college and at 21 takes a crack at

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running the family insurance company.

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He didn't think school was that
important, and he felt he had to come

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take over my dad's business.

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The family business flounders. It seems
insurance isn't young Lee's forte.

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In the late 70s, Farkas sells the
business and goes in search of his

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Farkas kind of rambled from place to
place. It wasn't really clear what his

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great ambition was going to be in life.

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By the mid -1980s, Farkas lands in
Ocala, Florida, a sleepy town speckled

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horse farms.

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Gerald Ergel is the former mayor of
Ocala.

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Ocala is known as the horse capital of
the world.

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The people here are some of the nicest,
most congenial people that you'll ever

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meet.

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In largely evangelical conservative
Ocala, Lee lives as an openly gay man.

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But residents seem kind and trusting to
this businessman.

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He knew that there was a really large
senior population who were looking to

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build their dream homes.

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Farkas thinks it's the perfect place to
make a killing.

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He launches a construction company with
his life partner, Coda Robertson,

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backing the money.

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At first it did pretty well, but he
started to clash with old O

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'Callians, the old guard here, and he
was the new kid in town. He was

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he was bold, he was gay, and didn't fit
the typical mold.

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In sunny Ocala, residents accuse Farkas
of shady business practices.

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Farkas soon finds he's running a failing
business, again.

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In late 1989, the company folds.

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He racked up a ton of bills.

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He had judgments against him left and
right. He was known as a crook.

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But Farkas is about to find his calling.

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In 1991, he snaps up a little mortgage
company called Taylor Bean and Whitaker,

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or TBW, for $75 ,000.

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He was flat broke.

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He actually got the money to buy the
company from his partner's mother.

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Farkas has no formal training in
finance, but he's now running his own

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company. In a good month, the business
closes 40 loans, but Farkas thinks he

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do better.

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He could leverage his quick talking
skills, his ability to think quickly on

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feet. By the late 90s, the U .S. housing
market is growing rapidly, and so is

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the Internet.

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He was like a financial prophet. He
predicted the whole mortgage industry

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about to be broken wide open because of
the Internet. And he understood that

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those who mastered...

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Technology would be ahead of the curve
when it came to originating loans.

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selling people on loan products. Farkas
had that, and he was able to make a very

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successful business out of it.

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Farkas' salesmanship kicks into high
gear.

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He expands TBW, opening a dozen branches
in five states.

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It was then that Farkas meets 28 -year
-old Cambridge University graduate Jason

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Moore at a Florida barbecue and hires
him to spearhead Internet innovations.

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He offered me a six -figure salary like
he was handing me a pencil.

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I wasn't looking for a job, I wasn't
qualified, but I took it.

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By December 2000, TBW was processing
more than 6 ,000 mortgages a year.

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And Farkas is acquiring a taste for the
finer things in life.

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He stockpiles classic cars, a 65 Shelby
Cobra, a Model A Woody, a

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handful of investment homes and party
pads from Key West to Maine.

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He also invests heavily in his adopted
hometown, scooping up real estate and

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converting dilapidated buildings into
TVW offices.

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Locals welcome him as a vital employer.

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Lee's goal was to make Taylor Bean and
Whitaker the largest mortgage company in

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the world. The jobs that they created
here, that was a huge asset.

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In the early 2000s, the housing market
in the United States explodes.

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Taylor Bean and Whitaker grew and grew
and grew because this was a great time

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be in the business. These were the go
-go years of consumer mortgage lending.

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Credit is cheap.

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Regulations are loose, and Lee Farkas is
finally successful and respected.

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He said, you know what? Now is my time.
I see an industry that I can sink my

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teeth into, and I'm going for it.

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TBW is independent, a fact Farkas is
fiercely proud of. They would originate

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mortgages. They would get loans from
other people, from banks and from other

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credit facilities. They would take those
loans and sell them to other investors.

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But being independent, TBW lacks the
financial resources of big commercial

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and can't hold large amounts of loans on
the books.

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Taylor Bean Whitaker wasn't a bank, so
they relied on short -term funding.

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To secure TBW's loan money, Farkas
decides to rely on Colonial Bank, one of

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largest banks in the Southeast.

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An old financial acquaintance, Kathy
Kissick, is vice president at Colonial's

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Orlando -based mortgage lending
division.

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Farkas' former defense attorney, Bruce
Rogo, knows the history between Kissick

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and Farkas.

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Lee became the biggest customer of that
division at Colonial Bank, and so he

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would call upon her to fund mortgages.

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Farkas has dealt with Kathy Kissick long
enough to know she's easy to control.

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With Colonial's support, TBW becomes one
of the fastest -growing mortgage

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companies in America.

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It left many individuals wondering, how
could...

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Something happened so quickly. Up next
on American Green, Lee Farkas is

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manufacturing loans and shifting funds
to pump up TBW's profits.

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It was a combination of hubris and
insanity that left most of us shocked.

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By 2002, Lee Farkas' charm and the team
of talented executives he surrounds

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himself with have allowed him to grow
Taylor Bean and Whitaker into a mortgage

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industry force.

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Farkas wants to crush his competition,
and now he's on his way.

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He had forethought.

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To go to mom -and -pop institutions
across the country and give them the

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to get online approvals instantly in a
matter of seconds. It was something that

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no other mortgage lender was doing and
made Lee an instant banking rock star.

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Farkas sells technology tools to smaller
banks, and they bring their business to

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TBW. He has also impressed Fannie Mae,
the government -backed agency that

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almost half of all mortgage -backed
securities.

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They like his online platform.

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and become TBW's biggest client.

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How could this maverick transform a
company that was

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based in a small town in the sleepy
south to such a level? It was

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unparalleled in the mortgage industry.

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But behind the scenes, Farkas has big
problems brewing.

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As an independent mortgage company, TBW
still needs short -term funds.

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Colonial Bank supplies that money.

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And two of TBW's accounts at Colonial
Bank are overdrawn.

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The deficit is $10 million at first.

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That quickly jumps to $100 million.

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While Farkas is aware of the overdraft,
only a few of his top executives are

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clued in.

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Ray Bowman is one of those few.

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He quietly starts poring through bank
records.

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What Bowman discovers is shocking.

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The company isn't charging high enough
fees on the mortgage loans they're

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making. And TBW is running in the red on
everything from operating expenses to

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payroll. The entire operation, really
from the beginning, was smoke and

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Because Lee controlled virtually every
aspect of the company, none of us

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individually fully understood what was
going on until it was too late.

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But Bowman is loyal.

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He caves into the pressure from Farkas
and his secrets stay in -house.

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Lee simply said, you're not going to do
anything.

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I refuse to fix the situation, and
you're not going to do anything.

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Ray was defeated.

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He, in the end, felt powerless to act.

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If word gets out, Farkas' business could
go under, or worse, he could go to

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jail.

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But he has a backup plan.

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Longtime business associate Kathy
Kissick.

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Farkas tells Kissick he needs a favor.

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Kissick is willing to help. After all,
TBW is her biggest client.

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She agrees to temporarily cover the
shortfall until the missing money is

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replaced. The banks do overdraft reports
that Kathy Kissick would move money

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from different accounts to cover up the
overdraft.

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Kissick and Farkas call the cover -up
operation sweeping.

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At the end of each day, Kissick and her
underling in Orlando sweep money from

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TBW's profitable accounts into TBW's
master account.

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Bank records get processed overnight.

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In the morning, colonial executives see
a rosy picture of TBW's balances.

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Nobody outside Farkas' chosen circle
knows that...

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TBW was overdrawn by more than $100
million.

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I think Kathy Kissick had confidence in
Lee and believed that Lee could make all

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of this work, and that's why she
continued working with him and helping

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supporting him.

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For now, the cover -up works, and no one
is asking any questions.

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Farkas doesn't seem worried in the least
that he'll be caught.

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Tampa Bay Times business columnist
Robert Tregeau isn't surprised by

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demeanor. There is a naivete that, gee,
if I did something wrong, I'll get my

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hand slapped and we will just carry on.
He's spending weekends in the sunshine,

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hobnobbing in style, and hiring eagle
workers for new TBW positions.

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People were just absolutely almost
standing in line to go to work at Taylor

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and Whitaker.

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The pull of Lee Farkas is the incredible
charm and genuine emotion

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that he exuded. I mean, he had the
charisma of a Gatsby.

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But for all his good guy popularity,
Farkas is also gaining a reputation as a

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bullying hothead.

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He had a habit of publicly bawling out
colleagues, and he once screamed at his

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chief operating officer on a conference
call, what are you, stupid? He once

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fired his sister by email.

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He rehired her back a short time later.

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Those of us on the inside came to refer
to those events as being Farkas.

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It was a type of abuse that could only
be described as the

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worst kind of domestic dysfunction.

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In 2002, it seems Farkas' troubles are
multiplying.

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As the sweeping scheme with Colonial
expands, he lands in hot water with

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Mae, his crown jewel client.

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Fannie Mae discovered that some of the
loans that were coming to them

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were not up to snuff and in some cases
completely bogus.

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TBW's manufactured loans are clearly
illegal.

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But Farkas has a talent for smooth
talking his way out of trouble.

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He tells Fannie Mae that subordinates
placed loans that were never meant to be

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sold into groups that were sent to
Fannie.

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00:15:47,660 --> 00:15:49,860
It's all been just a big mistake.

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Fannie Mae, the largest buyer of
mortgages in the U .S., says, we're not

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to buy mortgages from you anymore. And
that's usually a scarlet letter.

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Fannie Mae cuts ties with TBW.

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00:16:02,560 --> 00:16:05,400
Fortunately for Farkas, they do it
quietly.

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The problem was they didn't tell anybody
else about it.

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The result was Taylor Bean shifted gears
and went to other government -sponsored

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enterprises and essentially continued
their bogus operation with the stamp of

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approval of these government entities
for many years.

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I negotiated a very smooth transition
between Fannie Mae and

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Freddie Mac. I had to publicly state
things that I knew not to be.

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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 and 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 and 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.