ABSTRACT
Lee Farkas bought Taylor, Bean & Whitaker (TBW), the company’s handful of employees, working in a single office, processed approximately 40 loan applications per month. In 2003, TBW began to experience operating losses, causing it to overdraw its main checking account at Colonial Bank. By late 2008, Colonial Bank was in poor financial shape due to operating losses and declining asset values independent of its transactions with TBW. William W. Deloitte & Touche Ross’s legal troubles were predictable given that the firm blessed TBW’s books during the entire seven years that Farkas was committing fraud. More surprising were the lawsuits against Colonial Bank’s auditor PricewaterhouseCoopers (PwC). Rothstein said PwC could have discovered the fraud perpetrated on Colonial by TBW if the auditors had inspected some of the underlying documents for the mortgages—a procedure they failed to perform. After a separate three-day hearing to determine damages, Judge Rothstein ordered PwC in a July 2018 to pay $625.3 million for their negligence.
