A federal jury on Tuesday found the flamboyant founder and CEO of bankrupt Florida mortgage lender Taylor Bean and Whitaker guilty of fraud. Lee Farkas appears to be the first CEO convicted of a crime in the five-year-old mortgage crisis. He faces life in prison at his July sentencing. Farkas, a college dropout, founded Taylor Bean--TBW for short--in 1991 with $75,000. Despite sloppy accounting and lax underwriting that moved Fannie Mae to stop buying its loans in 2002, the company grew to become the 12th largest mortgage originator in the United States, with 2,400 employees and a corporate jet, before collapsing under the weight of alleged accounting frauds totaling at least $2.9 billion. In the end, prosecutors alleged, the company sold the same mortgages to three different entities. "It's very common in our business to sell loans that don't exist," Farkas said on the witness stand last week, according to the Ocala Star Banner. "It happens all the time. Mortgage banking is more an art than a science sometimes." Freddie Mac, Fannie's smaller brother, kept the company afloat during the housing bubble. In May, 2008 it called TBW its "number one lender in affordable housing products." Fannie and Freddie are now owned by the U.S. government. Before their takeover in August 2009, their businesses were only implicitly backed by taxpayers. Standard and Poors, the bond rating agency, estimated last fall (pdf) that Fannie and Freddie's cost to the government could approach $700 billion. As larger and more reckless subprime lenders collapsed in the 2006-2008 period, TBW expanded wildly, in three years tripling its loan volume to $35 billion in the fiscal year ending April 30, 2008. Though most of its borrowers were not technically subprime, meaning their credit scores were above 620, many were players in the Ponzi-like scheme the house-flipping business became in the mid-2000s, in search of the "greater fool" who would pay more than they had for a home even as the market was sinking. During that crucial time, in Baltimore's burgeoning Southeast neighborhoods, distressed home-flippers facing a tightening credit market could go to Joshua Goldberg to refinance their already-underwater investment properties. Goldberg, an independent mortgage broker working for his family's "boutique"-style lending business, and TBW, one of several non-bank lenders he worked with, appear to have specialized in dodgy loans. In a series of transactions beginning in 2007, a group of friends and (alleged) relatives borrowed more than $1 million through Goldberg in order to shuffle half a dozen houses from Goldberg's life partner, Bayardo Alvarez, and Ken Koehler and his life partner to brothers George and Emmanuel Agelakis. The homes were worth a small fraction of the selling prices, and the Agelakises quickly defaulted on all of them. As far as City Paper can determine, none of the participants in those transactions have been charged with any mortgage-related crimes. (The Agelakises are wanted on several unrelated criminal warrants, online court records indicate.) By 2009 TBW's foreclosure rate on FHA (government)-backed loans topped 9 percent—nearly 30 percent higher than FHA's then-eye-popping average. With losses mounting, Farkas ordered underlings to hide them in myriad ways, six subordinates testified at trial. All had pleaded guilty and cooperated with prosecutors in exchange for potentially lighter sentences. As the Star Banner reported, Farkas shrugged off those witnesses and their statements: "I know how scared I've been with all that's happened to me. I can only imagine how scared they were," he said, elaborating just a few minutes later by saying, "I don't think they did anything wrong and I don't think they think they did anything wrong."