Deloitte has agreed to pay a $149m settlement to the USA Justice Department over independent audits from 2002 to 2008 for failed mortgage lender Taylor, Bean and Whitaker (TBW), the fourth settlement Deloitte has paid over the collapse.
During the same period as the audits the Florida-based company conducted seven year fraud schemes that grew to $2.3bn, including the sale of fake mortgage loans. The fraud led to its closure in 2009 and in 2011 Deloitte was sued $7.6bn by investors. The USA Justice Department stated that Deloitte “knowingly deviated from applicable auditing standards” and therefore failed to detect TBW’s fraud. Deloitte has neither admitted nor denied the allegations.
Justice Department’s Civil Division acting assistant attorney general Chad Readler said: “When auditors fail to exercise their professional judgment, and make false statements that allow bad actors to remain in government programs and submit false claims to the government, there will be consequences.”
TBW chairman Lee Farkas and five other executives pleaded guilty to participating in the scheme. Founder and chairman Farkas had also bought a private jet, vacation homes and vintage cars and was jailed in 2011 with a 30 year prison sentence.