At an arraignment proceeding in May, the DA had those people voluntarily reappear at the court building, where they were chained together as they entered the courtroom in front of invited media - an image that outraged many in Chinatown.Īt the time of the indictment, Vance announced at a press conference that Abacus was guilty of "a systemic and pervasive mortgage fraud scheme," which he said was emblematic of the kinds of loan abuses that had brought on the financial crisis. In April 2012, the DA brought charges against 19 low-level current and former Abacus employees, with officers making surprise pre-dawn arrests at their homes. launched an investigation into the bank's mortgage lending practices, ultimately subpoenaing some 900,000 documents. As one of his first actions on assuming office in January 2010, Manhattan District Attorney Cyrus Vance Jr. The bank reported the incident to its then-regulator, the Office of Thrift Supervision, which caught the DA's attention. She called a halt to a questionable closing in December 2009, and subsequently fired a loan officer who she found had coached a borrower to lie about her income and apparently to pay him a bribe in the process. It was one of Sung's daughters, bank director Vera Sung, who spotted the problem that prompted the DA's investigation and eventual prosecution. and there was no run, the regulators left." "The Chinese community had already read that morning that the indictment was coming and that we were going to fight the indictment," Sung says. Sung says the DA, expecting a run, had warned them.īut there was no run. waiting at his bank's doorstep - in case of a run on the bank, they told him. 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. That's because the bank wasn't a Wall Street firm, a global megabank or a subprime loan factory.
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