“This scheme is plotted on the chart to my left –the smallest demonstrative exhibit that I’ve ever seen used in the DA’s office,” said Manhattan District Attorney Cy Vance Jr.
The exhibit Mr. Vance was referring to during a press conference in the 8th floor Library at One Hogan Place earlier today was indeed small, just barely large enough to be read from a generous distance.
The scheme, however –in which Abacus Federal Savings Bank, a bank with predominantly Chinese clientele, allegedly helped its customers submit fraudulent mortgage applications that resulted in approximately a billion dollars worth of mortgages issued out by Fannie Mae– was infinitely larger in size, scope and relevance.
Nineteen individuals, all former employees and managers of Abacus Federal Savings Bank, were indicted as a result of the scam. Seven of those people already entered guilty pleas, while the remainder of them were set to face arraignment –and Judge Renee White– in state court in Manhattan throughout the day.
By also indicting Abacus itself, the bank became the first financial institution to be charged by the Manhattan D.A.’s office since the Bank of Credit and Commerce International was indicted in 1991 for paying large bribes to bank regulators and central bankers in 10 countries like Pakistan and Nigeria.
Between May 11, 2005 to February 3, 2010, Abacus, Mr. Vance alleges, encouraged its applicants to fudge its personal information –like immigration and employment status– to secure these mortgages.
“These borrowers primarily work in cash-only businesses in the Tri-State area –restaurants, nail salons, and the like,” said Mr. Vance, as he read from a prepared statement. Without Abacus’ help in fudging the information in their mortgage applications, these applicants would have never qualified for Fannie Mae’s assistance.
“[T]he managers and employees charged today knew it,” said Mr. Vance.
Several of those charged, which include Abacus’ chief credit officer and many of its loan officers, had punchy American nicknames: Wen Fang “Fanny” Wang, Qibin “Ken” Yu, Yuk Yin “Loretta” Lam Cheng, to name a few.
Ms. Cheng and colleague Wai Ching “Alice” Wong are accused of helping originators embellish their incomes for borrowers. Loan originators like “Fanny” Weng and Ying Chuan “Shelley” Wang are accused of instructing borrowers how to lie in their applications, like falsifying Verification of Employment forms.
“Today’s charges allege that with respect to its loan department, mortgage fraud became institutionalized at Abacus Bank,” said Mr. Vance.
Ironically enough, many of these borrowers are making their monthly mortgage payments, Mr. Vance admitted.
The bank, which is headquartered at 6 Bowery Street in Chinatown, has seven branches throughout the city, Pennsylvania and New Jersey.
In a statement sent out moments following Mr. Vance’s presser, Abacus said it was “greatly disappointed” by the District Attorney’s office’s decision to indict them.
“We never imagined our bank would be the target of this investigation, since it is indisputable that the bank itself discovered, investigated and reported the results of its investigation to law enforcement authorities, its regulator, and Fannie Mae. Senior executives at the bank took the immediate, decisive action that initiated this investigation, and there is no evidence that any senior executive at the bank engaged in illegal behavior. Moreover, the only victim in this matter is the bank itself. Neither Fannie Mae nor the borrowers were ever harmed.”
Back at the press conference, Mr. Vance called for “on-topic” questions (read – nothing regarding Etan Patz).
Karen Freifeld of Reuters raised her hand, saying that it “seemed sort of odd that you’re (Mr. Vance) going after a bank where these loans have not defaulted –there are so many major banks out there where loans have defaulted in great numbers.”
“Karen, you can’t have a banking mortgage operation that’s predicated upon creating loans where people do not qualify under the standards required by Fannie Mae, and then selling to Fannie Mae, when ultimately the tax payers and the public are at risk,” said Mr. Vance in reply. “Why in this case? It’s because it had to be done.”
Mr. Vance would not comment if there were other investigations being conducted on larger banks.
Later, Jonathan Dienst, the hoarse-voiced correspondent for WNBC, raised his hand to ask if this was a sign if “the Justice Department has failed to do its job?”
“We have been waiting and asking questions of US Attorneys in this town for years and we have not seen a single prosecution like this,” Mr. Dienst added, his voice growing perceptibly edgier as he went deeper into his question. “Now you’re office comes along and brings this case.”
Mr. Vance called out Jonathan’s first name in reply, as he did with many of the reporters whom he fielded questions from.
“I think this office is not criticizing our federal counterparts,” Mr. Vance said. ” I expect, Jonathan, that other people are working on other cases. But I don’t stand here in criticism of any other prosecuting agency. I stand here thanking our Federal partners for their hardwork, thanking the lawyers in my office for their good work, and bringing to the public and revealing a systematic pattern of fraud that I think is important for us at this point of time.”
Shortly afterwards, Laura Italiano, The NY Post’s dogged courts reporter, raised her hand and apologetically asked that dreaded off-topic question.
“There’s been some, uh, wonder, I think, in the… community of people that look at crimes like this (Etan Patz), in the legal community, uh, and elsewhere, I guess in the press, about how this case will ever be proven, given that it seems to rest of the confession of a man with serious mental illness,” said Ms. Italiano. “Any light you can shed on why this is a viable case?”
Without missing a beat, Mr. Vance turned to Ms. Italiano –who was sitting on the floor, not too far from his right– and started his answer by mentioning her first name.
His office commenced a cold case unit in 2010 that he said was “to make sure that justice is brought to victims and their families in cases that may have remained unsolved, and cold.”
“We now have a case that we are working on with an enormous amount of resources, care and attention,” said Mr. Vance, when answering to another reporter’s follow-up question.
How confident was he that Pedro Hernandez’s confession sealed his guilt? he was asked.
“I am not going to answer that question, and not because I am afraid to answer it, it’s just because it’s really premature for me to answer at this point in time,” Mr. Vance replied.
“Thank you all for being here,” he said, sharply, and ended the press conference.
Follow Daniel Edward Rosen via RSS.