Colonial Bank

From the e-Activity, identify the company, the accounting impropriety or illegality, how it was detected, the outcome and, and propose a strategy that might have prevented the situation. Indicate ho the strategy should be implemented.

Colonial Bank and Taylor, Bean & Whitaker found multiple executives to be very fraudulent in their jobs with the bank. Colonial Bank’s former senior vice president, Cathy Kissick, and TBW chief executive officer Paul Allen pled guilty and, in June 2011, were sentenced to eight years and 40 months in prison, respectively. In April 2011, after a 10-day trial, a jury found former TBW chairman Lee Farkas guilty on 14 counts of bank fraud, wire fraud, and securities fraud. Farkas was later sentenced to 30 years’ imprisonment. The Washington Field Office investigated a subprime-related conspiracy committed by senior executives at Colonial Bank and TBW, a major U.S. mortgage originator, who conducted a several-billion-dollar accounting fraud through back-dating of loans and the creation of fictitious loans, which inflated loan asset values. Colonial Bank fraudulently sought to acquire $553 million in TARP funds, which was prevented by the FBI in conjunction with the SIGTARP. In August 2009, TBW closed after it could no longer issue government-backed loans. In August 2009, the Alabama State Banking Department closed Colonial Bank due to liquidity problems. The failure of Colonial Bank represents the sixth- largest bank failure since the creation of the Federal Deposit Insurance Corporation (FDIC). What really made this case hard to detect was the senior vice president was behind this. Many times people don’t go behind the vice president and chief executive to see if they are doing their job correctly and not being fraudulent.

Assess the impact of the company’s financial performance based on the impropriety and the resulting effect to stakeholder confidence in management, recommending how the company