US VS Lee B. Farkas

Lee B Farkas Story

In 1991, I purchased Taylor, Bean & Whitaker Mortgage Corp. (TBW) from First of America Bank in Michigan for $25,000, which I borrowed from a friend. There were eight employees.

TBW grew and grew, adding thousands of employees along the way. In 2009, it was closing and funding over $3 Billion in mortgage loans every month ($36 Billion annually). TBW was 90% wholesale, meaning its customers were community banks and mortgage brokerage businesses. We serviced almost all of the loans we originated; our portfolio reached well over $85 Billion at the end. We had over a million loans in our portfolio! I owned 100% of TBW, and at the end, had transferred 3% to the Company ESOP, leaving me with 97%. TBW also owned around 75% of Platinum Community Bank, a thrift based in the northwest suburbs of Chicago and 100% of Ocala Funding, a commercial paper funded financing vehicle used expressly to finance the acquisition of mortgage loans for TBW. TBW was a unitary thrift holding company regulated by the Office of Thrift Supervision.

TBW wasn't a criminal enterprise, rather it was a poorly financed mortgage bank. The challenges of being a free standing (not owned by a depository institution) mortgage originator included finding enough funding capacity to satisfy demand, finding financing to aggregate mortgage servicing rights, and finding financing to re-purchase loans as required by Fannie Mae, Freddie Mac, GNMA and other mortgage investors.

TBW's main funding source was Colonial Bank, and prior to that, SunTrust Bank. Cathie Kissick was our relationship manager at both banks. Lehman Brothers underwrote and structured an extendible commercial paper funded conduit for TBW around 2005 called "Ocala Funding". It was bankruptcy remote and peaked at a capacity of $5.4 Billion, money that was exclusively used to acquire mortgage loans for TBW. Colonial was TBW's main depository bank (TBW controlled over a billion dollars in cash deposits.) Over the years, Colonial financed mortgage loans, mortgage servicing rights, mortgage backed securities, OREO, TBW stock, Platinum Community Bank stock, construction loans, fixed assets, servicing advances, servicing sales receivables, repurchases, "haircuts" on loans, corporate advances, hedges against interest rate risk, cash and liquid securities and other miscellaneous assets and derivatives. At times, Colonial had syndicated the credit facilities amongst a number of banks, including JPMorgan Chase, GMAC, US Bank, PNC, Commerz Bank and many others. In 2005 through 2008, through Ocala Funding and Colonial, TBW had over $6 Billion available to close loans. In 2008, the entire commercial paper market collapsed, and TBW's funding capabilities were reduced dramatically.

In 2000, TBW was, like a lot of small mortgage originators, funding loans and aggregating servicing rights ("MSR's"). The loans were sold to other lenders, Freddie Mac, Fannie Mae or placed in securities guaranteed by GNMA and sold to wall street firms. The servicing rights (the right to collect payments and handle disbursements of taxes, insurance, etc.) were sold at quarterly auction. The market was robust and balanced between sellers and buyers for many years.

TBW's business model was a textbook mortgage bank. Conventional (loans eligible for sale to Fannie Mae or Freddie Mac) loans had 25 basis points of servicing. The servicer collected $250 per year for servicing a $100,000 loan plus interest income, late fees and other miscellaneous fees. TBW's cost to service was roughly $5 to $7 per month per loan, so it was a highly profitable business. Government guaranteed loans had 41 basis points or more of servicing. TBW had over $85 Billion of unpaid principal balances in its portfolio, with an approximate value of $1.25 Billion when the government seized it in 2009. Gross monthly revenue exceeded $50 million. By then, TBW was mostly a wholesale lender. TBW paid the originator of the loans a "service release fee" averaging 1.25% of the loan amount for the MSR's. The loans were typically "table funded," that is TBW provided the funds to the originators (mortgage brokers or community banks) to close the loans.

Until 2001, TBW would sell the MSR's quarterly and recoup all of its investment plus its profit. TBW's warehouse banks provided financing for the MSR's, which was repaid form the proceeds of the quarterly sales. It worked well. In 2001, two things happened. One was Fannie Mae terminated TBW over a misunderstanding; and two, liquidity for MSR's disappeared. There were simply no buyers. TBW started keeping the MSR's and growing its portfolio out of necessity. Financing the MSR's became a HUGE problem for TBW and me. Colonial and its lawyers created special facilities for TBW. Because the mortgage warehouse division was the only profitable division in the bank, they were eager to do more and more business. "Purchase" facilities were designed by Colonial's lawyers to avoid legal lending limitations on volume in mortgage warehousing. The bank could "buy" unlimited amounts of mortgage loans, but was severely limited in the amount it could lend TBW against similar collateral. So, although the facilities were documented as purchases of loans, they operated like a loan to TBW where interest was charged and paid every month on the outstanding balance. Colonial had no way to sell the securities or the loans had they actually purchased them. They had no agreements, nor could they qualify to enter into any agreements with securities dealers for that purpose. TBW always sold them and paid Colonial the amount they had advanced against them. It made TBW's accounting almost impossible. Settlements with purchasers of securities which TBW had already "sold" to Colonial were confusing, yet it happened every day.

Because Fannie Mae had terminated TBW as a servicer, warehouse banks were exiting TBW's nationally syndicated mortgage warehouse credit facility, leaving Colonial Bank, the agent for the facility, somewhat holding the bag. But, at the same time, because of healthy demand, mortgage originations, and therefore TBW's portfolio grew impressively. Financing of new originations and MSR's was a real challenge.

TBW grew into the third largest FHA/VA loan originator in the United States, behind Wells Fargo and the Bank of America. It was Freddie Mac's fifth largest customer by volume (I sat on Freddie Mac's advisory boards for years.) TBW was technically advanced and won all sorts of awards for excellence in its field.

Financing production and growing the portfolio continued to be a big challenge for me personally. Colonial bank tried to handle TBW's needs, but it was just too small. Efforts to save Ocala Funding, as the entire commercial paper market was in turmoil, were successful, but the revised rules became almost impossible to deal with. Only brand new mortgage loans were allowed, no delinquencies, no government guaranteed loans, etc. Cathie Kissick, Senior VP and head of mortgage warehouse lending at Colonial Bank and I worked hard to keep TBW assets financed. Colonial had several "sub-limits" within the credit facility that changed from time to time. For example, TBW had ventured into the world of private securitization and securitized around $6.5 Billion of "Alt A" loans in deals with various underwriters. Credit Suisse, Bank of America Securities, UBS, BNP Paribas, Lehman Brothers, Bear Stearns and others underwrote TBW's securities. Colonial Bank facilitated the deals by providing financing for loans as TBW originated and purchased them. Each deal required a minimum of $500 Million to cover the costs of the securitization and make economic sense. It took months for TBW to accumulate enough loans to issue a security. The outcome of these deals was that we (TBW and Colonial, depending on how you account for the loans, on or off balance sheet, etc.) got stuck with numerous loans that didn't fit in the deals (the "kicks," later called "dog loans" or "crap loans" at my trial). The deals were rated by S&P, Fitch and Moodys.

At the same time, Freddie Mac was forcing TBW to post cash collateral to do business with it. This was something new that had never been required before. It wasn't only TBW, but the entire industry. TBW (or Colonial, if the prosecutor's theory was correct that Colonial owned the loans. TBW took responsibility for it in any event.) was also facing repurchase demands for hundreds of millions of dollars of non-performing, sub-performing or performing loans. Every Freddie Mac customer was facing the same issue, after the government placed Freddie Mac in conservatorship. GNMA was also forcing repurchases, and buy-outs from the pools. The pressure on TBW, a non-depository institution, was extreme. Colonial elected to facilitate all the repurchases, which hurt TBW in another way. As Colonial used its facilities to repurchase loans, funds for new production of mortgages was further restricted. TBW limited its daily funding to $200 Million. Customers were calmoring for more.

Colonial was in trouble. It had a $29 Billion commercial real estate portfolio that was underperforming. Its regulators were stress testing it almost daily, and pressuring the holding company to sell the bank immediately. They got their TARP allocation and announced it to the world, but "forgot" to mention that they were required to raise $300 Million in private capital to match the TARP allocation of $540 Million.

Troubles intensified in 2008 when there was a global liquidity crisis and the commercial paper market collapsed. Ocala Funding survived, but shrank from $4.5 Billion to under $1 Billion in a month. While the other extendible commercial paper conduits liquidated, Ocala Funding survived.

Deloitte & Touche had audited TBW for three years. Cathie Kissick directed TBW to engage a "big four" accounting firm and replace James Moore & Company, who had audited TBW since 1991. Deloitte raised a question in 2009 about a conversation one of their accountants overheard between an officer of TBW and an officer of Colonial Bank. It was a serious question, and they insisted that TBW convene its audit committee to investigate it. Being a private company, TBW had no outside directors and therefore no way to assemble a proper audit committee. Jeff Cavender, TBW's general counsel, suggested that Troutman and Sanders, an Atlanta law firm engaged on another project for TBW act as the audit committee. Deloitte agreed. Troutman started investigating the issue. Deloitte kept expanding its "areas of concern". Troutman insisted on bringing in Navigent Consulting to help them. They asked TBW for a list of the assets that supported the various credit facilities at Colonial. TBW complied, but only after an exhausting effort. Since the loans were technically not on TBW's balance sheet, TBW didn't have an exact record. TBW's CFO assured me that there was adequate collateral, though. TBW
was working with Colonial to determine exactly what collateral was where.

Troutman never issued their report to Deloitte. Deloitte never finished the audit of TBW, which was due to HUD and others on 7/31/2009. On August 3, with the audit almost complete, SIGTARP executed a search warrant at TBW and Colonial Bank in Orlando.

The next day, I received termination letters from FHA, GNMA and Freddie Mac all within seconds of each other via my office e-mail. It was an amazing coincidence that all of the termination letters arrived at virtually the same time. I begged David Stevens, then
commissioner of FHA to reconsider. I engaged Troutman to write a begging letter for me. Stevens, whom I had known for years, promised to reconsider, but his position didn't change. I called Freddie Mac and asked if I could get GNMA and FHA to reconsider if they would reconsider. They agreed, but it never happened.

Unfortunately, I am unable to remember the events from August 4 through August 23, 2009, when TBW filed for bankruptcy protection. I was in a state of semi-shock. Jeff Cavender made the decision to shut down the operations and file for bankruptcy. Jeff said there was no way his small group (three lawyers in TBW's legal department) could answer all the inquiries from all the States Attorney Generals about TBW closings with no funds. The FDIC had frozen the accounts, and the wires for closings were not sent.

The termination by Freddie and GNMA forced TBW to loose its entire investment in its servicing portfolio of $1.25 Billion. There were over a million loans with an unpaid principal balance in excess of $85 Billion. The government seized the portfolio and gave it to the Bank of America. TBW suffered an immediate loss of $1.25 Billion. Also, hundreds of millions of dollars in loans and other assets became worthless because TBW ceased to be a going concern and the required representations and warranties were gone.

Because the lawyers from Troutman and Sanders were onsite, they were very involved in everything that was going on after the search warrant was executed. Had I known that, along with Navigent Consulting, their real mission was as a government agent, I would have acted very differently. They advised me that bankruptcy was necessary, and that in order to remain as a "debtor in possession", the officers and directors had to resign. This was to show good faith to the bankruptcy court to avoid them appointing a trustee. They emphasized to me that this was "critical." They would then sue Freddie Mac and GNMA for the $1.25 Billion value of the portfolios that they seized. There was a lot that I didn't know, and I was experiencing terrible emotional distress and I made a hugely bad decision to resign as advised. This allowed them to install Navigent personnel as officers and directors. Troutman and Sanders' attorneys lied to me, kicked me out of my own building and my own company, and gave me bad advice. The assured me that they "had my back" and although they would continue to represent my company, TBW, it was really my interests that they were protecting. When they tricked me and kicked me out of my office, lying and blaming the FDIC for removing me, it made it impossible for me to get to my personal records and other necessary evidence for my looming criminal case. It turned into a financial bonanza for Troutman, Navigant and their other attorneys. They have charged and been paid over $100 Million in fees.

When Ocala Funding was re-structured, in 2008, Colonial Bank became TBW's only source of "wet funding" (This refers to financing of newly originated mortgage loans before the documents are in the lender's possession.) Plans were being finalized for Platinum Bank to help with wet funding. TBW was funding $200 Million per day, almost all of which was being funded by Colonial Bank. Typically, it took a week to ten days for the documents to arrive from the closing, so the loans stayed "wet" for that period. The documents came to TBW's Central Document Facility in Ocala, and were couriered to Colonial Bank in Orlando. Colonial was also TBW's document custodian, so the original notes were kept by Colonial and certified to Freddie Mac, GNMA or whomever TBW requested. TBW pooled the loans, allocated and executed trades, and gave Colonial instructions as to certification requirements. TBW settled all the trades, and the funds all went to Colonial.

Colonial also financed other assets for TBW. Mortgage Servicing Rights, Real Estate Owned, construction loans in process, private label securities, receivables, repurchases, individual mortgage loans, all sorts of derivatives, "haircuts" on loans and securities, agency securities, non-agency securities, TBW and Platinum Bank stock, fixed assets, and all sorts of assets that are related to TBW's mortgage banking business.

Cathie Kissick allowed TBW to finance most of these sorts of assets on the Assignment of Trade ("AOT") line. MSR's agency bonds, non-agency bonds, receivables, repurchased loans, real estate owned and more were routinely financed there. The AOT facility was on Colonial's balance sheet. TBW wasn't really responsible to "pay Colonial back" for assets they acquiredm under the the AOT facility that failed to perform or defaulted or lost their value for some reason. There was no LEGAL obligation (In fact, in order to get a "true sale opinion" from their accountants, Colonial was not allowed to make TBW repurchase any of the assets.) I felt a moral obligation, however. In practice, TBW and Colonial treated the entire facility as a giant warehouse line. TBW paid interest on the entire outstanding amount every month. Colonial never experienced the first dollar of losses associated with the assets, as TBW treated them as their own and dealt with any issues. TBW sold the loans from the AOT line and transferred them directly to the purchasers or into the securities. Even though the agreements said that Colonial "owned" the assets, they were treated as if TBW owned them and Colonial had financed them. Some of the assets, as is the industry norm, and particularly during the liquidity crisis in 2008-2009, were not salable. Salable or not, TBW paid interest to Colonial on every dollar of it every month.

Colonial provided warehouse facilities of one type or another to over 70 smaller mortgage companies. Most of them were customers of TBW, that is, sold some or all of their loans to TBW after they were closed. It was very easy because the notes were already at Colonial and didn't have to be handled twice.

Around 2006, Washington Mutual Bank got out of the correspondent side of mortgage lending. TBW purchased 2/3 of their Florence, S.C. correspondent lending business, and merged it into TBW's business. The timing could not have been worse. While Ocala Funding was operating at capacity, it was fine, but when Ocala Funding shrunk, it was very difficult to finance the acquisition of these loans. It put more pressure on the TBW/Colonial relationship.

TBW has a great partnership with the Independent Community Bankers Association of America ("ICBA"). TBW was, for several years, the ICBA's only approved mortgage lender, and did almost exclusive business with over 2,000 community banks through its Community Banks Online Website. Again, this brought in a huge volume of mortgage business.

Teresa Kelly was the head analyst on TBW's account at Colonial. She was the person in charge of all of TBW's transactions. Cathie Kissick relied on her to keep the collateral straight. As the residential real estate bubble started to burst, TBW was experiencing numerous repurchase requests and demands for the posting of collateral from Freddie Mac, demands that loans be removed from GNMA pools, and the failure of its last private label security. Teresa was able to fund the daily loan volume in spite of all of this. Colonial's lawyers continually tweaked the documents to allow TBW to keep its business requirements funded.

I was totally unaware that Colonial had applied for TARP funds. When they got their TARP
approval, Cathie called me and told me. Unbeknownst to Cathie and I, the $540 Million award was contingent on Colonial raising $300 Million in private capital. I didn't even know Colonial was really in trouble. I really thought that Cathie was just "crying wolf" about Colonial's precarious situation.

Sarah Moore, Colonial Bank's Parent's CFO and some others came to Ocala on the Colonial jet to try to get me to help them raise the $300 Million in private capital that Treasury required before they could get their TARP allocation. They had tried everything and were having little if any success. They asked me if TBW would invest $25 Million. I said "yes". they asked me if TBW could invest $50 Million, and I said "yes" again. They were unable to raise any more more money, so I finally said that I would try to raise the entire $300 Million. We sketched out a dealm that involved TBW acquiring controlling interest in Colonial BancGroup. Colonial would have to give up its Alabama state charter, and convert to a thrift, under the auspices of the Office of Thrift Supervision (which no longer exists). TBW was already a unitary thrift holding company, and therefore could qualify to be Colonial's parent. It could not, however, qualify as a bank holding company, due to its high debt to equity ratio.

I became obsessed with the Colonial investment. The deal, highly dilutionary to the existing Colonial shareholders, was priced at $.50 per share. TBW would own $200 Million of the new shares, other investors would own $100 Million. I was sure the stock would go up. The stock had previously sold for up to $40.00 per share.

TBW engaged Deutsche Bank ("DB") as its advisor for the transaction and Locke, Lord & Bissel ("LLB") as its counsel. DB and LLB advised me every inch of the way. TBW's in house counsel was also very involved in the proposed transactions.

NOBODY was eager to invest with us. I spent 12 - 14 hours every day on the phone pitching the deal to anyone who would listen. I wouldn't quit because I knew if I had succeeded, several great things would have happened: 1) TBW would have saved its primary funding bank, 2) TBW would have made a fantastic investment in Colonial BancGroup stock with unlimited upside potential, and 3) most important to me, it would have been the first deal of the financial crisis where private equity and TARP funds were invested side by side. I was so excited to help herald private equity back into the banking business.

I finally put together enough investors to do the deal. TBW ended up with $200 Million "friends and family group" (other Colonial mortgage warehouse customers) committed $50 Million and I got some other people I knew and some of TBW's executives to subscribe to $50 Million. Paul Allen, TBW's CEO, wrote a "white paper" regarding where TBW was going to get its $200 Million. He gave it to Cathie Kissick and the FDIC. It was brilliant, and it would have worked, I think.

The Office of Thrift Supervision never approved the proposal, nor did the FDIC. The failure of the deal was due to lack of regulator approval, not financing.

Cathie Kissick had forced me to resign as CEO of TBW when Fannie Mae ceased doing business with TBW in 2001. I didn't want to, but she insisted, so I found a replacement for myself in Paul Allen. Paul and I didn't think too much alike, but his resume was excellent, and he was very smart. He had taught finance at LSU, worked at Freddie Mac, Fannie Mae, and the Dime Savings Bank. Paul's first big assignment at TBW was getting Ocala Funding off the ground. Paul took on the job and worked almost totally autonomously from me. I wasn't an officer or director. Paul sat with lawyers and bankers for untold hours getting the deal done. Even after it became totally operational, I was uninvolved in it.

Platinum Community Bank. Bill Giambrone, a Colonial mortgage warehouse customer owned this small thrift. It was in trouble. Cathie approached me about the possibility of TBW buying it from Bill, which ended up happening. TBW contributed around $30 Million in additional capital to Platinum after buying it. Colonial was fully in favor of TBW's plans for Platinum. Kamal Husein, Colonial's Treasurer, did a business plan where Platinum would acquire the mortgage warehouse financing operation from Colonial and employ the entire group. Cathie and her staff wanted to be rescued from Colonial which the media was calling a "Zombie Bank."

Paul Allen got Freddie Mac to approve TBW moving $300 Million in escrow deposits from Colonial to Platinum. Paul got the Office of Thrift Supervision to approve Platinum's participation in TBW's Community Banks Online lending platform. Paul opined that if Platinum restricted its purchases to mortgage loans originated by other community banks that the regulator would have no problem with the transactions. Platinum then funded $300 million of government insured mortgage loans originated by community banks.

It turned out that the regulator didn't agree with Paul. Even though Platinum was very well capitalized, the FDIC closed it shortly after TBW filed bankruptcy, thereby ending all hopes might have had for saving TBW's massive wholesale loan business.

Although my current habeas corpus litigation is not based on any of these issues, they paint a very thought provoking picture of the unfair treatment my case has received:

The government seized mortgage servicing assets worth $1.25 BILLION from my company, Taylor, Bean & Whitaker Mortgage Corp. ("TBW") and paid nothing. Additionally, they seized $300 MILLION in loans from the thrift that my company owned. And, hundreds and hundreds of millions of dollars of assets were either wasted or taken. The government directly caused almost $2 BILLION in losses to my company and its subsidiaries, all of which was collateral supporting loans from Colonial Bank and others. Then, they blamed me and prosecuted me for the loss. They proudly spoke before, during and after my trial about the "multi-billion dollar fraud".

The theory of government's case was that TBW sold worthless and non-existent loans and securities to Colonial Bank. I tried to explain, to no avail, that if you viewed the facilities as loans to TBW from Colonial, which is what they really were, then there was no fraud at all.

After the dramatic and unnecessary "perp walk" arrest (unnecessary, because my lawyers had been dealing in good faith with the prosecutors and I would have surrendered to them), a detention hearing was held in Ocala, Florida. At that hearing, Mr. Stokes, the prosecutor, lied to the magistrate about my having an offshore bank account and got caught. He also lied about the fact that $22 Million was unaccounted for. He got caught lying about the bank account and had to backtrack, but the judge didn't know that he was lied to about the $22 Million. Mr. Stokes also told the magistrate that if he let me out on bond, that the judge in Virginia would lock me up anyway. It didn't work. I was allowed out on pretrial release and had no issues.

The choice of venue in my case was unfair. It should have been an 11th Circuit case. The government selected the Eastern District of Virginia for reasons outlined in the Book, Bailout, by Neil Barofsky, and because the Fourth Circuit has a unique rule about "substitute assets" which allowed the court to freeze virtually ALL of my assets before I was even arrested. The judge's ruling on the topic was unfair. The Eastern District of Virginia had nothing to do with the case. The government said that the servers for the Bank that sent wires that made up substantive counts in the case were located there. But, everything happened in Florida, the witnesses, the defendant and all the evidence was located in Florida. It was an unfair decision that directly affected the outcome of the trial.

The court forced CJA counsel on me. I was trying desperately to work out a way to pay lawyers, after the court froze my assets. My ex company, TBW was fighting my use of the insurance policy I had purchased for my defense. The same district court judge was able to effectively keep the insurance company from helping me defend myself. Then, the judge appointed a lawyer, 72 years old, and barely computer literate. The government electronically posted over 59 MILLION PAGES of evidence in the case. The judge allowed the older lawyer two part time paralegals to help him. When I finally got the insurance straightened out, the judge ordered me to pay back every cent that the CJA had paid the court appointed lawyer before any private lawyers were paid the first dollar, under threat of incarceration. It made it difficult, in fact, almost impossible to mount a defense in this massive case.

During the trial, the judge would not allow my lawyers to "fill the hole". That is, she stopped us from presenting any testimony or proof of the ."size of the loss. Yet she allowed the government to describe the "multi-billion dollar" losses multiple times in the trial, and indeed sentenced me based on the size of the loss that I was not allowed to disprove.

The government's summary witness offered testimony regarding each count in my indictment. Unfortunately, he was mistaken about GNMA's purpose. He said many times that GNMA owned hundreds of millions of dollars in loans, which is incorrect. GNMA is not allowed to own loans. It simply guarantees securities. The district court judge admitted the mistake, but termed it "harmless." It was hardly harmless. Had the loss actually been zero or less, then, even if I was found guilty, which is not likely, my sentence would have been 30 years shorter. Harmless?

Curiously, a week before the trial, prosecutors called my lawyers and said they had "found" $400 Million of loans that they didn't know about. Then, they glossed over it at the trial. Neil Barofsky, in his book, "Bailout" brags about my indictment and conviction as the biggest achievement of his agency, SIGTARP. See Exhibit "A" attached hereto.

BOOK popup

Mr. Barofsky describes SIGTARP and its quest to investigate and charge me:

1. (Page 1) "it was going to be a full-fledged law enforcement agency, a mini-FBI" (describing SIGTARP)

2. (Page 136) "Treasury officials described me as 'an overreaching zealot...he thinks he's Elliot Ness." (Barofsky)

3. (Page 210) "We had no jurisdiction over criminal activity that predated TARP's enactment."

4. (Page 105) "I told Sharpley to issue SIGTARP's first subpoenas to TBW and Colonial for documents."

5. (Page 106) "We soon uncovered a massive multi-billion dollar accounting fraud that had somehow gone undetected and uninvestigated for seven years... We sent two of our best and most experienced agents down to Florida along with a more junior agent on loan to SIGTARP from the FBI. They almost immediately started flipping and wiring up accomplishes and quickly worked their way up the criminal food chain...within weeks we had gathered overwhelming evidence against Farkas and other co-conspiritors."

6. (Page 107) "The best way to stop the fraud was to lock up Farkas...We also knew that getting the case charged would be a great win for SIGTARP but until there were changes we couldn't demonstrate to the public what we had done."

7. (Page 106) "I was sitting on an enormous case...I knew I had to be careful in deciding where to go. All the potential criminal acts appeared to have occurred in Florida (where TBW is located and Colonial has a major presence)...I decided to keep the case close to home and take it to DOJ's Washington-based fraud section."

8. (Page 108) "We eventually did convince DOJ to seek court authorization to raid TBW... By the time that DOJ indicted Farkas...we had built an impressive case that involved billions of dollars in losses from different frauds perpetrated by of early 2012, it was the most significant case to arise from the financial crisis."

9. (Page 229) "President Obama, Attorney General Holder and Geithner have all answered this question by suggesting in different public comments that it was greed and bad judgment, not criminal conduct that contributed to the crisis."