A federal judge sentenced a former senior vice president at Colonial Bank to eight years in prison after the executive pleaded guilty to helping a $2.9 billion fraud scheme that brought down the bank along with mortgage lender Taylor, Bean & Whitaker Mortgage Corp.
Catherine Kissick, 50, was the head of Colonial's mortgage-warehouse lender, a short-term lender for mortgage banks. The Securities and Exchange Commission alleged she enabled the sale of fictitious and impaired mortgage loans and securities from the unit to Taylor, Bean & Whitaker, the bank's biggest customer at the time. The agency also said she falsely characterized the securities as high-quality, liquid assets to investors.
In March, Kissick pleaded guilty to conspiring to one count of bank, wire and securities fraud, which carries a maximum prison sentence of 30 years.
"As a senior executive at Colonial Bank, Catherine Kissick helped execute one of the largest bank frauds in history," Assistant Attorney General Lanny Breuer said. "For years, she used her position within the bank to buy hundreds of millions of dollars in worthless assets from TBW, deceiving shareholders, investors and regulators."
BB&T Corp. later bought the operations of Colonial Bank as part of a deal with the Federal Deposit Insurance Corp. after it seized the bank in 2009. Parent company Colonial BancGroup and Taylor, Bean & Whitaker both filed for bankruptcy.
Teresa Kelly, 35, was also sentenced Friday to three months in prison after she pleaded guilty in March to the same charge. Kelly was a former operations supervisor who worked under Kissick.
Former TBW Chairman Lee Bentley Farkas was convicted in April on 14 counts of fraud. He is scheduled to be sentenced on June 27.
