It’s unquestionably true that there have been virtually no major prosecutions stemming from the financial crisis. But yesterday we found the exception that proves the rule.

The majority owner of what had been one of the nation’s largest mortgage companies was convicted Tuesday on all 14 counts in a $3 billion fraud case that officials have called one of the most significant prosecutions to arise from the nation’s financial crisis.

Prosecutors said the defendant, Lee Farkas, led a fraud scheme of staggering proportions as chairman of the Florida-based company, Taylor Bean & Whitaker. The fraud not only caused the company’s 2009 collapse and the loss of jobs for its 2,000 workers, but also contributed to the collapse of Alabama-based Colonial Bank, the sixth-largest bank failure in United States history.

This was a nearly $3 billion scheme, and it perhaps puts the fraud at the heart of the financial crisis in even more perspective. Taylor Bean & Whitaker overdrew on its main account at Colonial Bank back in 2002. Colonial executives would fill the gap in the Taylor Bean account to avoid overdraft fees. When the cost of this became unbearable, Taylor Bean came up with an idea, with the full knowledge of some Colonial executives. They would cover the cost by selling Colonial mortgage pools – many of which had already been sold to other investors. Colonial put these worthless, fake mortgages on their balance sheet and Taylor Bean kept selling them.

But that was only one of the schemes. Taylor Bean also misappropriated additional funds from Colonial Bank to cover losses on mortgage-backed securities sold to investors. And then a Taylor Bean subsidiary sold commercial paper to major international banks with worthless collateral that couldn’t be collected on when Taylor Bean went under.

And then, after all of these fraud schemes, the company tried to obtain $500 million in TARP funds, and actually got initial approval for them before the FBI stepped in. So there were multiple interlocking fraud schemes, and then when they all went down, a scheme to defraud the government for good measure. All in all, Farkas’ company committed an estimated $2.9 billion in fraud. And he was personally held responsible.

Farkas could face up to 30 years in prison on each of the 14 counts. The Washington Post puts in perspective this guy’s life prior to conviction:

Prosecutors said Farkas used the stolen money to augment a life of luxury. Farkas owned as many as 40 cars, including a vintage collection; a company jet and a plane he used to fly to a lake house in Maine; and an 8,000-square-foot house in Florida and other houses along the East Coast.

Farkas testified that he didn’t know he had done anything wrong, which I’m sure is the perspective of a lot of the Masters of the Universe. They either claim that they were unaware of the schemes at their companies or that they were unaware that the scheme they managed to pull off was illegal.

Two things are notable here. First, the series of fraudulent activities matches up with the notion that fraud was rampant throughout the financial industry during the bubble years. From the originators who sold the mortgages to the big banks who packaged them to the investors who bought them, everyone was in on the take. Second, the way in which Farkas was brought to justice is a model for how this could be done at practically every company on Wall Street. They went after the midlevel executives first, had them plea bargain to ensnare the bigger fish, and built their case. The notion that these cases are somehow impossible to perform is proven wrong by the Lee Farkas conviction.

Maybe the other cases aren’t so clear cut, critics would say. Without rigorous investigation, we won’t know that answer.