The loan department at ABACUS consisted of three separate units: loan origination, processing, and underwriting. The Bank operates seven branches across New York City, New Jersey, and Pennsylvania, and primarily serves the Chinese-American community. As a result of the hundreds of millions of dollars in charged fraudulent loans, ABACUS earned many millions of dollars in loan origination, purchasing, and servicing fees over the five-year period covered by the indictment.ĪBACUS is a federally-chartered deposit and lending institution headquartered at 6 Bowery Street in Chinatown. After purchasing these fraudulent mortgages, Fannie Mae repackaged them into mortgage-backed securities and sold them to outside investors. The defendants falsified these documents so that they could earn commissions and fees by ensuring that otherwise unqualified borrowers would receive loans, which ABACUS then sold to Fannie Mae pursuant to an ongoing agreement. The indictment, representing the culmination of a two-and-a-half-year investigation, charges that ABACUS, its employees, and its managers engaged in a conspiracy involving the regular and systematic falsification of residential mortgage application documents. The protection of the nation's financial system remains a top priority for IRS-Criminal Investigation." Pine, Director of Field Operations for IRS-Criminal Investigation, said: "The public has the right to expect security and integrity from the banks they entrust their money to, regardless of their size. My office is committed to ferreting out fraud throughout the housing system, and partnering with law enforcement agencies making a similar commitment."Ĭharles R. Linick, Inspector General of the Federal Housing Finance Agency, said: "We are proud to have contributed to this effort, which to date has produced multiple indictments of individuals who allegedly engaged in this significant fraud scheme. Today's indictment re-affirms our commitment to transparency and straight dealing in the financial markets. "Loan schemes based on fraud inevitably will unravel, as this one did. "The public must have confidence that when a bank issues a loan that it later re-sells to Fannie Mae,and by extension the nation's investors, it will engage in honest and ethical practices and follow the rules set by regulators," said District Attorney Vance. "The lessons of the financial crisis are still being learned," said District Attorney Vance. Each defendant faces charges related to his or her involvement in the criminal conspiracy, which the indictment charges occurred between May 2005 and February 2010. The defendants include former senior managers, as well as former employees who worked in various capacities for the Bank's lending business. The 184-count indictment charges eleven individuals and ABACUS itself with residential mortgage fraud, securities fraud, grand larceny, conspiracy, and falsifying business records,among other related charges. Vance, Jr., today announced the indictment of ABACUS FEDERAL SAVINGS BANK ("ABACUS" or the "Bank") and eleven of its former employees in a false document mortgage fraud scheme resulting in the sale of hundreds of millions of dollars worth of fraudulent loans to the Federal National Mortgage Association, commonly known as"Fannie Mae." The District Attorney also announced that an additional eight former employees have already waived indictment and admitted their guilt in connection with this conspiracy. Prosecution Marks the First Time a Bank Has Been Indicted in Manhattan Since 1991 The New York County District Attorney's OfficeĪBACUS BANK AND 19 INDIVIDUALS CHARGED IN LARGE-SCALE MORTGAGE FRAUD CONSPIRACYĮmployees and Managers Charged With Routinely Submitting False
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