Miami Accounting Firm Sued For $7.6 Billion For Not Detecting Mortgage Fraud

Two giant lawsuits against nationally recognized accounting firm Deloitte & Touche LLP allege the company should pay $7.6 billion for not detective massive fraud at a Florida mortgage company despite looking through years of audits, the Associated Press reports.

The lawsuits were filed by a bankruptcy trustee for the mortgage firm Taylor Bean & Whitaker and by Ocala Funding LLC, a company that bought hundreds of millions of dollars’ worth of mortgages from that company. The trustee is seeking money to recover on behalf of creditors of Taylor Bean & Whitaker, the article states.
With the economy still slow to recover after the massive real estate bust both in Miami and nationwide, many investors and companies are turning to the court system to try to recover lost money. In many cases, they are alleging mortgage fraud in Miami and elsewhere in order to recoup money lost in investments.

Because South Florida is such a hotbed for mortgage fraud allegations, everyone is under suspicion. Whether a person ran a legitimate investment opportunity or not, if people lost money, they are automatically under suspicion.

And make no mistake, police and prosecutors are watching the court system as well. They often get tips from civil lawsuits that lead to criminal investigations. We have all heard the term “frivolous” when it comes to lawsuits. It also can apply to criminal investigations. If a bogus lawsuit tips off investigators to begin looking at a person for criminal charges, an aggressive Miami criminal defense lawyer with experience handling white collar and mortgage fraud cases must be called in to look at the situation. Not everyone accused is guilty.

According to this article, the plaintiffs in the two lawsuits allege the accounting firm looked over major issues of mortgage fraud in auditing the now-defunct Taylor Bean & Whitaker mortgage firm. The company calls the allegations “utterly without merit.”

Taylor Bean collapsed two years ago after allegedly conducting fraud going back to 2002, the Associated Press reports. The company shut down in 2009 after federal agents raided its Ocala office. It’s failure led to the failure of Colonial Bank — the sixth largest bank failure in U.S. history.

In 2009, Taylor Bean had 2,500 employees and $30 billion in loans. Seven executives were convicted of federal criminal charges. The former chairman is serving a 30-year prison term.

The lawsuits allege that the accounting company’s certification of Taylor Bean’s books were an important cog in the mortgage company’s appearance as a legitimate mortgage business. Taylor Bean was allegedly selling fake or overvalued mortgages, misstating liabilities and hiding bank accounts that were overdrawn, the story states.

The lawsuits allege that the accounting firm, which quit as its auditor in 2009 as the federal investigations were increasing, failed to do its job in auditing Taylor Bean and therefore is liable for losses.

It’s odd that an auditing company would be sued by investors who lost money from the misdeeds of a mortgage company, but that’s exactly what’s happened here. As stated above, investors who lost money are looking for anyone to blame and that includes anyone connected to a person who may have been charged criminally and convicted of mortgage fraud-related charges.

Sadly, sometimes outrageous lawsuits turn into criminal investigations, which can damage a person’s reputation and all they have worked for. They must be well-represented if criminal charges do crop up from baseless civil lawsuits.