An accounting firm agreed to pay nearly $150 million to the U.S. government to settle potential liability related to the audits of a failed mortgage lender. The settlement agreement with Deloitte & Touche LLP ("Deloitte") will resolve alleged False Claims Act liability for failing to meet applicable auditing standards while serving as the independent outside auditor for Taylor, Bean & Whitaker Mortgage Corp. ("TBW"). TBW formerly acted as an originator of Federal Housing Administration-insured mortgage loans.
The DOJ claimed that, as a result of Deloitte's inadequate auditing practices, the company failed to detect a fraudulent scheme in which TBW sold mortgage loans that either were fictitious or pledged multiple times to different buyers. TBW's scheme was allegedly executed in order to conceal its severe financial distress. The DOJ alleged that Deloitte's audit failures allowed TBW to continue originating mortgage loans despite its financial difficulties and ongoing fraudulent conduct.
Several former TBW officials have been criminally convicted for related misconduct.
In resolving the potential liabilities, Deloitte made no admissions as to the DOJ allegations.
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