ML-Implode News - PwC Fights $5.6 Billion Fraud Trial Over Taylor Bean's Collapse

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.
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Taylor Bean's accountant, Deloitte & Touche, settled similar allegations by the trustee three years ago for an undisclosed amount.
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Beginning in 2002, Farkas sent mortgage data to Colonial Bank for loans that didn't exist or that Taylor Bean had already committed or sold to other investors. By the end of 2007, the scheme, which involved executives at Colonial Bank, consisted of about $1.5 billion in fake or severely impaired residential mortgage loans.Â

PwC allegedly failed to spot the fraud when it audited the books of Colonial's parent, Colonial BancGroup Inc., even though Taylor Bean was the bank's largest client and a "stakeholder" in PwC's audits, according to court documents. PwC allegedly certified the fake mortgage assets as "true sales" to Colonial and tried to cover up its negligence when federal regulators questioned the accounting, according to the papers.
Colonial Bank, which became the sixth-largest bank failure in U.S. history, cost the Federal Deposit Insurance Corp.'s insurance fund about $4.2 billion.

Of course had Fannie/Freddie heeded our whistleblower tip in 2008, there would have been perhaps tens of millions (or more) less in damages.

Relevant:

PwC Fights $5.6 Billion Fraud Trial Over Taylor Bean's Collapse