NEW YORK / WASHINGTON (Reuters) – Deloitte & Touche [DLTE.UL] has agreed to pay the U.S. government $ 149.5 million to settle claims it failed to uncover fraud at bankrupt Taylor, Bean & Whitaker Mortgage Corp, the Department of Justice said on Wednesday. Justice.

Taylor Bean was the 12th largest US mortgage lender before US regulators shut it down in August 2009. Its former chairman, Lee Farkas, is serving a 30-year prison sentence following his conviction in 2011 on 14 counts of fraud and conspiracy.

In a statement, Deloitte said it was happy to settle, to avoid the risk and uncertainty of litigation.

Deloitte had been the external auditor of Taylor Bean and had published audit reports for its fiscal years 2002 to 2008.

The Justice Department said Deloitte’s audits “knowingly deviated” from applicable standards and failed to detect how Taylor Bean was hiding his growing financial distress by selling non-existent or worthless mortgages.

He said this allowed the Ocala, Florida-based lender to continue to provide Federal Housing Administration-insured mortgages, resulting in losses for taxpayers. The settlement resolved Deloitte’s potential liability under the False Claims Act.

“When auditors fail to exercise professional judgment and make false statements that allow bad actors to stay in government programs and submit false statements to government, there will be consequences,” the Deputy Attorney General said by interim Chad Readler in a statement.

In December, U.S. District Judge Barbara Rothstein found auditor PricewaterhouseCoopers liable to the Federal Deposit Insurance Corp for failing to uncover a fraud scheme between her Alabama-based client Colonial Bank and Taylor Bean.

A lawsuit for damages is scheduled for March 20, according to court records. Colonial also failed in August 2009.

“Members of the management of Taylor Bean & Whitaker, including its CEO, have been convicted of engaging in complex and collusive fraud with a counterpart bank aimed specifically at deceiving our organization and our investors,” said Deloitte . “Deloitte & Touche is deeply committed to the highest standards of professionalism and we support this work that dates back over a decade.