"The unanswered question is why should this small minority bank be singled out for prosecution relating to the financial crisis of 2008," Thomas Sung, founder and chief executive officer of Abacus, said in a statement after the verdict. "While today's verdict is disappointing, we are confident that, as a result of this prosecution and enhanced supervision," the fraud has been terminated, Vollero said in a statement. Joan Vollero, a spokeswoman for the Manhattan District Attorney's office that prosecuted the case, noted that eight people from the bank's loan department had pleaded guilty. "Right case, wrong bank," Abacus attorney Kevin Puvalowski told Reuters after the verdict. Its loans are still performing, with monthly mortgage payments being made by borrowers. Unlike other banks, however, Abacus' loans did not have a high default rate. Abacus 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 2008 financial crisis. The executives and the bank each faced about 80 counts. The jury also found two executives at the bank not guilty of charges against them on Wednesday. A day earlier, the jury acquitted the bank of conspiracy and grand larceny charges. A jury in New York state court in Manhattan acquitted the bank of mortgage fraud and falsifying business records after a three-month trial, prosecutors and defense counsel said. The bank’s default rate was 0.3 percent during the period covered by the indictment, from May 2005 to February 2010 - far below the national average.By Karen Freifeld NEW YORK (Reuters) - Abacus Federal Savings Bank, which caters to the Chinese-American community in New York, New Jersey and Pennsylvania, was found not guilty on Thursday of all charges related to the sale of allegedly fraudulent mortgages to Fannie Mae. Yet few of the bank’s loans went into default. Loan originators and borrowers testified they had colluded on loan after loan - evidence related to 32 mortgages was presented - to overstate the income and exaggerate the job titles of mortgage applicants. They argued at trial that they were unaware of the fraudulent documents being created by loan originators, who earned commissions and had a financial incentive to burnish the borrower’s credentials.Īccording to the Times report, Abacus is a small bank that has a “major presence” among New York City’s Chinese population.įrom the start, it was a difficult case for prosecutors to prove. Tam were found not guilty of all charges against them, including grand larceny, conspiracy, falsifying business records and mortgage fraud. Seven former employees still await trial. Ten of the defendants pleaded guilty, and some of those agreed to testify for the prosecution against their superiors.īut the bank’s chief credit officer, Yiu Wah Wong, and Raymond Tam, who was the loan origination supervisor, went to trial in late January, along with the bank itself, as a corporate entity. The bank and its employees stood accused of inflating the income of loan applicants and falsifying documents.Īccording to a report from the New York Times, a New York jury found Abacus not guilty of charges including grand larceny, conspiracy, falsifying business records and residential mortgage fraud. Just over two years ago, Manhattan District Attorney Cyrus Vance filed charges against Abacus Federal and 19 individuals associated with the bank, accusing the bank of selling fraudulent loans to Fannie Mae. A jury ruled that New York-based Abacus Federal Savings Bank and two of its senior officers are not guilty of defrauding Fannie Mae, bringing some closure to a case that began in 2012 and a trial that began four months ago.
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