The next morning, Sung found representatives from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. press conference, alerted them about the indictment and said he planned to fight the charges. for getting stories in the next day's papers, he called a 4:30 p.m. Knowing that most of the local Chinese-language press had a deadline of 5 p.m. The rail-thin and energetic 81-year-old - who still serves as chairman of the privately held Abacus - sprang into action so he could break the news to his community himself. "Very few small banks that have been charged with a felony have survived," he says. Hanging up the phone that day, Sung feared that the aggressive action would, as he puts it, "kill" his bank. The DA declined to comment on the case for this story. Justice Department - such as a settlement with no admission of guilt or perhaps a deal with a deferred prosecution agreement to assure compliance with required reforms. Sung says that the DA never offered his bank a deal like those routinely offered to larger banks facing prosecution by both the DA and the U.S. That call from the Manhattan District Attorney's Office told him to be at the courthouse the next morning, where Abacus would be indicted for mortgage fraud and for grand larceny against Fannie Mae, the mortgage securities packager taken over by the government in 2008. Though gratified with the outcome, Thomas Sung, an immigrant from China who started the bank back in 1984, takes the prosecution personally.Įver since the ordeal began - with a phone call on the afternoon of Sung has felt that he never got a fair shake from prosecutors. With six offices, four of them in New York, Abacus hardly qualifies as a systemically important financial institution, arguably making it an easier target than those that some would say have a "too big to jail" label. "Of all the banks to choose, why this one?" asks William Black, a former bank regulator who is a professor of economics and banking law at the University of Missouri. The case has puzzled many observers, given the government's lack of criminal prosecution of much larger potential cases of mortgage fraud leading up the financial crisis. It was the $250 million-asset Abacus Federal Savings Bank, which primarily serves New York's Chinatown community. They claimed the bank and its managers trained and directed the routine falsification of documents.That's because the bank wasn't a Wall Street firm, a global megabank or a subprime loan factory. Prosecutors claimed the defective loans falsely represented applicants' credit worthiness, employment, income and source of downpayments. The charges against Abacus and its executives were over the sale of allegedly fraudulent loans to Fannie Mae between 2005 and the beginning of 2010. Several banks, including JPMorgan Chase & Co and Bank of America Corp, have paid multi-billion dollar penalties. prosecutors have been criticized by investors and politicians for not bringing criminal charges against senior bank executives and major financial institutions for mortgage fraud. As loans became delinquent, mortgage-backed securities collapsed, helping to trigger wider problems in the financial system. Loan defaults greatly contributed to the financial crisis. Unlike other banks, however, Abacus's loans did not have a high default rate rather its loans are still performing, meaning monthly mortgage payments are being made by borrowers.
#Abacus federal savings bank mortgage fraud trial
Deliberations are scheduled to continue on Thursday morning.Ībacus is believed to be the only bank to face a criminal trial in the United States on charges of mortgage fraud in the run-up to the financial crisis. The jury in New York state court in Manhattan is still mulling charges of mortgage fraud and falsifying business records against the bank, the lawyers said. Yiu Wah Wong, the bank's chief credit officer, and Wai Hung "Raymond" Tam, the loan origination supervisor, were found not guilty of about 80 counts each, the lawyers said. Two executives at the bank were acquitted on all charges.
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