PricewaterhouseCoopers LLP failed to spot for seven years a multibillion fraud that led to the demise of Taylor Bean & Whitaker Mortgage Corp., a lawyer for the lender’s bankruptcy trustee told a Miami jury yesterday, Bloomberg News reported. At issue is PwC’s work for Colonial Bank, which bought mortgages that Taylor Bean originated. Had PwC adequately vetted documents that Taylor Bean gave to the bank, it would have spotted a multiyear fraud by executives at both firms far earlier and put an end to it, the trustee claims. Instead, federal regulators uncovered it in 2009 and Taylor Bean and Colonial went bankrupt. The bankruptcy trustee sued in 2013 seeking $5.6 billion in damages. “Year after year, Pricewaterhouse didn’t do their job, they didn’t follow the rules and they failed to detect the fraud,” Steven Thomas, an attorney for the trustee, said in opening statements. PwC maintains it complied with auditing standards in the Taylor Bean case and accused the mortgage issuer of being responsible for its own losses. Taylor Bean, once the 12th-largest U.S. mortgage lender, collapsed after federal regulators uncovered a $3 billion scheme involving fake mortgage assets. Six Taylor Bean executives were convicted and jailed for their roles in the fraud, including former chairman Lee Farkas, who was sentenced to 30 years in prison.
