* Judge says lacked jurisdiction to hear claims
* Case arose from $2.9 billion Taylor Bean mortgage fraud
By Jonathan Stempel
Aug 26 A federal judge on Monday threw out Bank
of America Corp's lawsuit against the Federal Deposit
Insurance Corp over $1.7 billion of investor losses stemming
from the collapses in 2009 of a large regional bank and a large
The lawsuit concerned the FDIC's role as receiver for an
banking unit of Alabama's Colonial BancGroup Inc and the
implosion of Taylor, Bean & Whitaker Mortgage Corp, home to what
federal prosecutors called a $2.9 billion mortgage fraud.
Bank of America, as trustee for notes issued by Taylor
Bean's Ocala Funding LLC unit, had contended that the FDIC
wrongly denied claims by Ocala noteholders to recover from
Colonial Bank. Among the buyers of Ocala's notes were Deutsche
Bank AG and France's BNP Paribas SA.
Last December, U.S. District Judge Barbara Rothstein in
Washington, D.C. dismissed some of Bank of America's claims but
let the Charlotte, North Carolina-based lender pursue claims on
behalf of itself, Deutsche Bank and BNP Paribas.
But on Monday, she dismissed those claims as well, saying
the FDIC determination that there were not enough assets in
Colonial's estate to pay general unsecured creditors deprived
her of jurisdiction.
"The No-Value Determination is a final agency action that is
binding on this court and is preclusive as to whether there are
now or ever will be assets sufficient to satisfy general
unsecured claims against the Colonial receivership," she wrote.
Rothstein said the only way for Bank of America to challenge
this determination is under the Administrative Procedures Act,
not through individual lawsuits against the FDIC. She dismissed
the lawsuit with prejudice, meaning it cannot be brought again.
Bank of America spokesman Bill Halldin declined immediate
The case arose from a scheme in which Taylor Bean sold fake
loans to Colonial Bank and diverted money from Ocala, and gave
Bank of America false collateral lists that misrepresented the
status of loans in which Ocala supposedly had an interest.
Former Taylor Bean Chairman Lee Farkas is serving a 30-year
prison term following his April 2011 conviction on 14 counts of
bank fraud, securities fraud, wire fraud and conspiracy.
Prosecutors accused him of masterminding the $2.9 billion
fraud, which they said occurred from 2002 to 2009.
Taylor Bean was based in Ocala, Florida, and Colonial in
Montgomery, Alabama. Colonial had $25 billion of assets when it
collapsed in August 2009 and was the largest U.S. lender to fail
The case is Bank of America NA v. FDIC, U.S. District Court,
District of Columbia, No. 10-01681.