Ex-TBW executive has mortgage fraud plea hearing

* One of biggest fraud cases from mortgage crisis

* Hearing right before scheduled trial of former chairman

WASHINGTON, April 1 (Reuters) – The former chief executive
officer of bankrupt Taylor, Bean & Whitaker Mortgage Corp is
expected to plead guilty on Friday over his role in a fraud
scheme, according to court documents and legal sources familiar
with the case.

The executive, Paul Allen, was charged in federal court in
Alexandria, Virginia, with one count of conspiracy to commit
bank, wire and securities fraud and one count of false
statements, according to the documents filed on Friday.

One source said a plea hearing for Allen was scheduled for
Friday before Judge Leonie Brinkema, who already has heard a
number of other TBW executives admit wrongdoing in one of the
biggest fraud cases so far in the U.S. mortgage meltdown.

Another source said Allen was expected to plead guilty. The
charges both carry a maximum sentence of five years in prison.

The latest case became public right before the scheduled
start next week of a trial of former TBW Chairman Lee Farkas,
who faces criminal charges of 16 counts related to the losses
at the company.

Federal prosecutors have said the scheme involved some $1.9
billion in losses related to fraud so far.

The collapse of TBW also contributed to the downfall of one
of the 50 largest U.S. banks, Alabama-based Colonial Bank
(CBCDQ.PK: Quote, Profile, Research), which had sought funds from the federal bank
bailout program, the Troubled Asset Relief Program.

Both firms filed for bankruptcy protection in August 2009.

Other TBW executives who have pleaded guilty include former
President Raymond Bowman; former Treasurer Desiree Brown; and
Sean Ragland, a former senior financial analyst. Executives
from Colonial Bank also have pleaded guilty.

The case is USA v. Allen, No. 11-cr-165, in U.S. District
Court for the Eastern District of Virginia.
(Reporting by James Vicini and Jeremy Pelofsky, Editing by
Lisa Von Ahn)

Ex-TBW executive has mortgage fraud plea hearing