* Kissick accused of helping Taylor, Bean cover up losses
* Executive cooperating with prosecutors in fraud case
* Conspiracy charge carries maximum sentence of 30 years
By Jeremy Pelofsky
WASHINGTON, March 2 (Reuters) - A former Colonial Bank executive pleaded guilty on Wednesday for her role in covering up one of the largest frauds stemming from the recent mortgage crisis, which contributed to the collapse of the institution and Taylor, Bean & Whitaker Mortgage Corp.
Catherine Kissick, 50, who was head of Colonial Bank’s Mortgage Warehouse Lending Division, pleaded guilty to one count of conspiracy to commit bank, securities and wire fraud in a federal court in Virginia.
“Although the defendant did not personally receive funds paid out by Colonial Bank to TBW as a result of the scheme to defraud, she knowingly and intentionally placed Colonial Bank and Colonial BancGroup at significant risk of incurring losses,” U.S. prosecutors said in a court document.
Colonial Bank, a unit of Colonial BancGroup CBCDQ.PK, was one of the 50 largest U.S. banks before it collapsed. It and mortgage company TBW filed for bankruptcy in August 2009.
Former TBW Chairman Lee Farkas has been charged with 16 counts involving losses of $1.9 billion at the mortgage company. Investigators have said the fraud could include billions of dollars more in losses to federal housing programs.
Kissick, whose plea comes just weeks before Farkas goes on trial, is the second individual to plead guilty related to the fraud at the two institutions. Last week former TBW Treasurer Desiree Brown pleaded guilty to one count of conspiracy.
Both agreed to cooperate with prosecutors, and Kissick said there were other unnamed co-conspirators at the bank and TBW who participated in the scheme. Kissick faces up to 30 years in prison and is scheduled for sentencing in June.
Beginning as early as 2002, TBW began running overdrafts at its main account at Colonial Bank, and Kissick was accused of helping cover them up by transferring funds back and forth from another account, according to the court documents.
She was also was involved in helping facilitate the sale of mortgages to Colonial Bank by TBW that were either already sold or did not exist, as well as other fictitious trades at a cost to the bank of more than $400 million, the documents said.
The statement of facts filed with the court also said that in May 2009 she deleted electronic communications from her BlackBerry and instructed members of her staff to do so as well to evade subpoenas from regulators and auditors.
TBW came under scrutiny as Colonial Bank sought to obtain more than $550 million from the federal bank bailout project, the Troubled Asset Relief Program. (Editing by Lisa Von Ahn)