A federal judge on Monday said PricewaterhouseCoopers must pay the Federal Deposit Insurance Corp. $625.3 million in damages for failing to uncover a fraud scheme between its client Colonial Bank and the mortgage lender Taylor, Bean & Whitaker.
She had ruled in December that PwC was liable, without setting damages.
Colonial and Taylor Bean both failed in August 2009.
PwC did not immediately respond to requests for comment. An FDIC spokeswoman declined to comment.
Colonial, based in Montgomery, Ala., had been among the 25 largest US banks, while Ocala, Fla.-based Taylor Bean was the nation’s 12th-largest mortgage lender.
The FDIC, which was Colonial’s receiver, said Colonial reported owning significant stakes in mortgages, including some bought from Taylor Bean, when they had been sold to other investors or had other problems, including defaults.
It said the fraud began in 2002 when Taylor Bean began overdrawing its accounts and Colonial, at the urging of Taylor Bean Chairman Lee Farkas, began manipulating those accounts to conceal the overdrafts.
The FDIC accused PwC of negligently auditing Colonial from 2003 to 2005 and in 2008.
In Monday’s decision, Rothstein found it more likely than not that PwC’s negligence was the proximate cause of the FDIC’s damages, and that the auditor “is responsible for the full measure of damages resulting from its negligence.”
Farkas is serving a 30-year prison term following his 2011 conviction on 14 fraud and conspiracy charges.
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