PwC settles $5.5 billion Taylor Bean suit

by Ryan Smith30 Aug 2016
PricewaterhouseCoopers has settled a lawsuit that claimed it failed to detect the fraud that caused the collapse of a major mortgage company.

The lawsuit concerned Taylor, Bean & Whitaker, which collapsed in 2009. The mortgage lender’s bankruptcy trustee had sought more than $5.5 billion in damages from PwC, according to a Reuters report. The terms of the settlement are confidential.

“It was settled to the mutual satisfaction of the parties,” Steven Thomas, the trustee’s attorney, told Reuters.

The lawsuit concerned PwC’s auditing work for Alabma=based Colonial BancGroup, where Taylor Bean was a customer. Taylor Bean head Lee Farkas and other executives hid the company’s losses by moving money among Colonial accounts and by selling worthless or nonexistent mortgages, Reuters reported. The lawsuit said that PwC should have caught such a massive fraud in its audits.
In August 2009, both Taylor Bean and Colonial filed for bankruptcy. Colonial’s collapse was the sixth-largest bank failure in US history.

Farkas was convicted on fraud charges and sentenced in 2011 to 30 years in federal prison, according to Reuters.