Law360 (September 15, 2020, 11:37 PM EDT) -- A Virginia federal judge on Tuesday granted former Taylor Bean & Whitaker Mortgage Corp. Chairman Lee Bentley Farkas' emergency motion for compassionate release, ordering him to be freed after serving nine years of a 30-year conviction for a $2.9 billion bank and securities fraud scheme.
Farkas filed the emergency motion on Aug. 20 and argued that due to his diagnosed coronary artery disease, hypertension, hyperlipidemia and other health issues, he was vulnerable to severe symptoms if he caught COVID-19 at the FCI Coleman facility in Florida where he is incarcerated.
U.S. District Judge Leonie M. Brinkema said in her order that Farkas' sentence is reduced to time served, to be followed by three years of supervised release. The judge also ordered that he reside during the supervised release with his sister, Terri Huber, in Albuquerque, New Mexico, and be quarantined for 14 days by the Bureau of Prisons before his release from FCI Coleman.
Farkas said in his emergency motion that he "has served more than nine years of his sentence and has not been involved in a single infraction or disciplinary action during his incarceration. Because Mr. Farkas has a minimum risk of recidivating, he is, therefore, not likely to reoffend should he be released."
Farkas, whose bank and securities fraud undermined the former Taylor Bean & Whitaker Mortgage Corp., has tried numerous times to get his conviction overturned, with his most recent attempt denied by the Fourth Circuit in August.
"While incarcerated, Mr. Farkas has experienced a significant deterioration in his health undoubtedly exacerbated by the conditions of confinement," Farkas said in his emergency motion. "Mr. Farkas' health is now at an even greater risk in light of the global health crisis caused by the novel coronavirus and its deadly presence in our nation's correctional facilities."
Farkas argued he exhausted all administrative remedies with the Bureau of Prisons, including a request for compassionate release that was denied by the warden at FCI Coleman. This exhaustion is required under the federal compassionate release statute, as amended by the First Step Act of 2018, Farkas said. The First Step Act allows courts to modify or reduce sentences for "extraordinary and compelling" reasons, he added.
After a 10-day trial, Farkas was found guilty in 2011 of 14 counts of conspiracy and bank, wire and securities fraud for perpetrating a plot that U.S. Attorney Neil H. MacBride called one of the longest and largest bank fraud schemes in the country.
The scheme led to the downfall of Taylor Bean, one of the largest private mortgage lenders in the U.S., and Colonial Bank, once a major institution based in Montgomery, Alabama.
The scheme started in 2002, when Colonial Bank transferred money between Taylor Bean accounts in order to hide overdrafts, prosecutors said. In a second phase of the scheme, Farkas and other conspirators sold Colonial mortgage loan assets for more than a billion dollars, but they were worthless, U.S. attorneys said.
Taylor Bean also took $1.5 billion from Ocala Funding, a mortgage lending facility in Florida that it controlled, and the conspirators made false statements to Ocala's institutional investors — such as Deutsche Bank and BNP Bank and BNP Paribas Bank — that it had a sufficient amount of collateral, according to prosecutors.
"We appreciate the court's careful attention to the clear medical and scientific evidence establishing the need for swift and decisive action to protect Mr. Farkas from a severe risk of serious illness or death from COVID-19," Elliot S. Abrams of Cheshire Parker Schneider PLLC, who represents Farkas, said in an email to Law360 Tuesday.
The U.S. Attorney's Office for the Eastern District of Virginia did not immediately respond to a request for comment Tuesday.
Farkas is represented by David G. Barger, Elliot S. Abrams and Catherine S. Brown of Cheshire Parker Schneider PLLC .
The government is represented by Grace Hill of the U.S. Attorney's Office for the Eastern District of Virginia.
The case is U.S. v. Lee Bentley Farkas, case number 1:10-cr-00200, in the U.S. District Court for the Eastern District of Virginia.
--Additional reporting by Dave Simpson. Editing by Janice Carter Brown.
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