Bank of America (BAC) filed suit against the Federal Deposit Insurance Corp. to recover $1.75 billion for Ocala Funding investors allegedly swindled by Colonial Bank, Platinum Community Bank and Taylor, Bean & Whitaker. Ocala Funding was a wholly owned subsidiary of TBW formed to finance TBW mortgage originations by issuing short-term notes and purchasing the loans. BofA was the trustee of those notes. Colonial Bank was the primary lender to the bankrupt mortgage originator TBW, and was taken into receivership by the FDIC when it failed as was Platinum Community Bank, which was owned by TBW before it failed as well. According to the lawsuit, TBW executives allegedly conspired with Colonial and Platinum to divert funds away from its borrowing facilities such as Ocala to cover up “significant liquidity problems.” BofA attorneys allege TBW and Colonial created false mortgage loan data in order to create the appearance that those loans had been sent to the facilities. This then, allegedly allowed funds to come back to TBW. According to the lawsuit, TBW also allegedly hid REO properties and defaulted mortgages as collateral for trades sold to the facilities. A spokesman for the FDIC declined to comment. The suit was filed in the U.S. District Court in Washington, D.C. on Oct. 1. Write to Jon Prior.