WASHINGTON -- A federal grand jury has indicted the head of what was once among the largest privately held mortgage lending companies for allegedly scheming to steal over half a billion dollars from the government's Troubled Assets Relief Program.

The indictment in Virginia alleges that Lee Bentley Farkas and co-conspirators carried out the alleged plot at their company, Taylor, Bean & Whitaker Corp. of Ocala, Fla., where Farkas was chief executive officer.

The attempt to get TARP funds was just one part of a scheme that was "truly stunning in its scale and complexity" and that resulted in losses of more than $1.9 billion, Lanny Breuer, the Justice Department's assistant attorney general for the criminal division, told a news conference Wednesday.

The co-conspirators even gave a name to their alleged effort to defraud the TARP: they called it Project Squirrel, said Neil MacBride, the U.S. attorney for the eastern district of Virginia.

Neil Barofsky, special inspector general for TARP, told reporters that investigators uncovered the alleged conspiracy over TARP funds before the theft could occur.

Farkas was arrested Tuesday night while working out in a gym that he owns in Ocala, said Shawn Henry, head of the FBI's Washington field office.

Besides conspiracy, Farkas is charged with bank fraud, wire fraud and securities fraud.

TBW, which originated and purchased billions of dollars in new residential loans annually, began to experience cash flow problems in 2002.

In an effort to cover the shortfalls, the company devised a scheme to misappropriate funds from Colonial Bank and from Ocala Funding LLC, controlled by TBW and financed by large banks, according to the indictment. Colonial's parent company, ColonialBancGroup headquartered in Montgomery, Ala., filed for bankruptcy last August.

The conspirators referred to the solution to covering the shortfalls as "Plan B," according to the indictment.