Deloitte sued for $7.6 billion

Accounting firm facing two lawsuits alleging it failed to detect mortgage fraud in high-profile Taylor Bean case

If the bean counters can’t count, or choose not to report what they see, who can you trust? Accounting firm Deloitte Touche Tohmatsu Ltd. is now the defendant in a pair of lawsuits alleging it failed to detect (or report) massive fraud spanning nearly a decade at a now-defunct Florida mortgage provider that led to one of the largest prosecutions to come out of the financial crisis.

Mortgage company Taylor Bean & Whitaker and Ocala Funding LLC, a separate company that purchased mortgages from Taylor Bean totaling in the hundreds of millions of dollars, both filed suits against Deloitte in Miami-Dade Circuit Court. The companies filed the suits on behalf of the bankruptcy trustee attempting to appease Taylor Bean’s creditors.

The lawsuits, which are asking for $7.6 billion in damages, assert that Deloitte certified Taylor Bean’s books for years until it dropped the mortgage company in 2009 immediately prior to the company’s shutdown. Deloitte’s certifications allegedly were crucial to helping the mortgage firm to maintain its appearance as an upstanding, profitable business.

What may be particularly damning for Deloitte is that Ocala Funding’s suit reportedly includes emails in which Deloitte’s auditors raised hackles over financial transactions, including a $6 billion deal that was analyzed just hours prior to the audit’s completion.

The mortgage fraud at Taylor Bean began in 2002 and continued until the company shuttered its doors two years ago. Federal agents raided the firm in August 2009. At its height, Taylor Bean originated about $30 billion in loans and employed nearly 2,500 workers. At the time, seven Taylor Bean executives were convicted of criminal charges. Former chairman Lee Farkas was among them. He was sentenced in June to 30 years in federal prison.

For more, read coverage at the Huffington Post.

Contributing Author

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