Abacus: Small Enough to Jail (full documentary) | FRONTLINE

tonight these defendants are charged with engaging in a systematic scheme to falsify and fabricate loan applications the little known story about the only Bank prosecuted for mortgage fraud after the financial meltdown at first you think that they're here to figure out what's going on for us we transition to wait a minute maybe we're the target a family business caught up in a national crisis I think Americans were upset that the security against which loans were made were often fictitious and in Abacus there was some truth to that too and fighting to survive Tom is not easy to be pushed around and My Girls they're tough smart capable women it's trying for us because it's our father's Legacy and he's passed that Legacy on to us tonight on front line from Steve James the director of hoop dreams and The Interrupters abacus small enough to jail [Music] I owe everything to George Bailey help him dear father first time I saw this wonderful life I had tremendous respect for George Bailey who was the main character he did so much good for the community professor and Mrs Martini welcome home George was lending money to the community resident to buy houses [Music] and that's exactly the same purpose that when we started the bank it was our motivation to help a lot of people a lot of immigrants this movie touches me so much the family the friends I always watch it every year I watch that makes me cry because that's the part [Music] yeah I wish the story could end the same way as it's wonderful life but in reality it is not that simple today we are announcing the indictment of 19 individuals on charges including mortgage fraud Securities fraud and conspiracy as well as the indictment of Abacus Federal Savings Bank a federally Chartered Bank that has been catering to the Chinese immigrant Community since 1984. if we have learned anything from the recent mortgage crisis it's that at some point these schemes unravel and taxpayers can be left holding the bag the D.A made such a big parade bringing people from Washington all these tough law enforcement officer and making such a big announcement that we are part of the cause of financial crisis of 2008. almost laughable Mr sung is entitled to his opinions but an abacus's loan department mortgages were based upon false documentation we have evidence of conspiracy larceny and systemic fraudible if that prosecution goes through that bank is going to go out of business there's no question about it they're going to lose their Charter and it's going to enormously impact that community [Music] too big to fail you know it turns into small enough to jail and Abacus is small enough to jail when I walk around here of course I feel very much at home this is a very uh Tasty Noodle Shop you go in there about it I was born in Shanghai in the year 1935 at the age of 16 I immigrated to the United States and I went to law school and I moved to Chinatown there was not many Chinese lawyers so I did a lot of pro bono work this this this building it was the Chinese national flag it's a Chinese Community Center and in there is the headquarter of Chinese Consolidated Panama Association I represented the association for years and years and years this Association sponsored a school and I obtained the charter from Department of Education [Music] and people in the community older people particularly remembers me knows what I've done [Applause] back when I was a lawyer there was no bank that was owned by Chinese and serving the Chinese this is Chinatown New York City warm colorful cheerful a wonderful place for sightseeing this man is on his way to the bank what is it about the bank that makes our man feel at home the very design beautifully bright with the primary Chinese colors and he sees home in the soft sweet smile of the teller at that time banks in this community has several hundred million dollars of Chinese deposit and I went to a bank to try to borrow money but they do not lend money and deal with the community he always told us stories that they were willing to take his deposits but they weren't willing to give him credit loans so that's why he started the bank because he felt that wasn't fair to the community I remember when we were children my dad was excited about this Venture that he was going to start and he involved Us in the decisions of what would be the symbol for the bank and I remember we would all try to design something Abacus you know is the Chinese calculator China regard abigus as a National Treasure so we say We'll name the bank Abigails hello can you open for me we serve people who've never even dealt with the banking system before and you try to bring them into the banking system an example of that is the safe deposit boxes have you ever seen so many models boxes they are 8 000 plus boxes in this vault eight thousand the Chinese people particularly the immigrants they rent houses in a very tight quarter there's no place for them to place their valuables except in a bank world so it starts with the safe deposit boxes then they really do put their money into the bank and then let the money grow and then later on they will take that money and use it to buy a home at the actual closing many of the borrowers bring their whole family with them and they bring their children their grandmother and by the time they walk out they're all super happy and you feel good to be a part of that process [Music] I never thought my girls would work in Chinatown because we lived in Greenwich Connecticut Tom would be commuting every day you know like an hour and a half each way so he didn't see them that much in those days they had no idea anything not a faintest idea about the Chinese community in fact Heather still doesn't she hates the city you know she she's like me we both have headaches and at home when we don't want them to understand we speak Chinese you always said to me if you come work for the bank the benefit will be you have a nine to four job because a long time ago people could leave at three for the bank he said you can have children you can have a family you know what he said to me he said if you wish to work with me remember this is your own choice and don't think it's going to be easy you gave me two different stories you know people ask me so why in the world you wanted to get into banking it's not because I needed a job I was practicing law I was busy but I said to myself it's time for me to do something for the society that started from year years time grandfather he always thought that was The Honorable thing to do a lot of people in Chinatown your generation they believe that was honorable to be entrusted to be trusted interested with the public funds yeah that's right this whole five-year ordeal began in December of 2009. at a closing that day involving one of our loan officers Ken you can you worked with us around four years the staff really liked him he was very popular he had some charisma it was a normal closing it was the seller's attorney and it was the buyers but there was a lot of tension in the closing they weren't getting along they were arguing over things the attorney asked me a question about additional monies that the borrower said that she was paying it didn't make sense to me so I called kenyu and I asked them what are these checks he just go oh blah blah blah hedging and not answering Vera was very upset this girl gave thousands of dollars I'm told to this loan officer and she thought they would be applied towards her closing costs and they weren't it was very shocking I said this loan cannot close that was Friday then on Monday Ken came in and I fired him that day because he was lying all over the place can you stole money that he was running a money laundering operation on his own unbeknownst to everybody here obviously committed fraud I referred the case to our compliance officer and then we hired an outside consultant a former Federal prosecutor who was a highly experienced in fraud and anti-money laundering investigations during our investigation we found two other loan officers who were engaged in wrongdoing nothing at the level can you but we fired them nonetheless and some other staff also resigned shortly after we notified Fannie Mae they actually not only fired the loan officer and canceled the closing they went straight to the office of thrift management which was their regulator and they told them about it so it was this perfect evidence of a bank finding out something that shouldn't be happening and taking steps to make sure this didn't happen again the couple unfortunately lost down payment on this house which was you know quite a chunk of money it was 10 percent of The house's price and they were very upset and at that point the borrower she calls me and she's like you know there's this money that he's taken from me so what are you gonna do and I said to her I remember I was Furious I'm like what am I gonna do because I'm thinking to myself maybe she's in cahoots with kenyu to defraud the bank I said if you have a problem you should go file a complaint at the police precinct [Music] foreign was filed with the local Precinct the initial DA's office investigation was focused solely on the employee who had been accused of a theft the DA's office started asking us questions everybody who asked us for something we gave them we thought we actually went beyond what we're supposed to do my compliance officer actually put together binders for her staff and so basically the beginning of the case was handed to her team in binder form you know at first you think that they're here to figure out what's going on for us because they're law enforcement I don't know where and at what point we transition to in their mind yet in their mind and then us realizing wait a minute you know maybe we're the target we spent a lot of time investigating and ended up absolutely convinced that the loan department was corrupt pretty much through and through Mr Wong ran the loan department and widespread fraud was occurring in front of him every day in July 2011. two of the policemen went to my house and I asked me to to go to The District Attorney office to to have an interview but I probably feels the office was convinced that the knowledge of that corruption went up to high enough people in the bank that the bank was legally responsible for it let me assure you that we do not take lightly the charges that we announced today now these defendants the bank and former employees and managers from its loan department are charged with engaging in a systematic scheme to falsify and fabricate loan applications to the Federal National Mortgage Association commonly known as Fannie Mae when the actual indictment occurred I think the greatest fear is that it would directly involve Jill and that was something that was incomprehensible to us just knowing how we were raised that she could ever be guilty of something like that I mean I think they definitely were looking trying to get us to get me yeah because I'm the CEO and president but they did not charge me individually because they did not have any evidence the support that I was involved in the wrongdoing we felt that the provable evidence stopped at a certain level but that the individuals who were charged were high enough of the corporation to charge the corporation I was at the District Attorney's office as a prosecutor for seven years the very division that was bringing this prosecution against the family Bank and when I found out what they were doing I had to go to my beer Chief to let him know that you know this was going on there's a potential conflict here and it made me so angry that that very same office where I had served and been trained could do that to know that they were doing this against my family who is me that's where I come from and then to know that my reputation in the office was one of utmost integrity it just made no sense [Music] [Music] what was especially interesting was the way the D.A pursued the public relations aspect of this prosecution reporters in this town were treated to this extraordinary photo opportunity this almost stalinous looking chain gang foreign [Music] prosecutor I'm not soft on crime I've never seen a spectacle like this these people were humiliated intentionally for no good reason is not attorney's office's decision whether or not to put people in handcuffs but people who were brought into court who have been charged with crimes are put into handcuffs that's a decision that's made by the court officers I won't go into it more than that because you know it's not something I'm involved with Court officers don't come outside of the courtroom they were LED down the hallway by district attorney investigators I got off the elevator and I saw what was happening I had never seen that in my entire time at the Dee's office I mean this was like the case of the century he never would have done that with with a black group of employees you know I mean everyone would see that for what it was and they actually staged it so much so that three of the people that were in that chain had already been around had already posted Bond and were out awaiting trial the D.A had added charges to Mr Wong's indictment usually you don't even have to go through the process again you they just add the charges you get a grained again the bail is transferred and that's that instead they had me turn them in and the next thing you know I see him chained to 15 other people being herded like cattle down the hallways of 100 Center Street I've been doing this for 25 years and I'd never seen that happen before there are security issues behind the decision but those decisions create feelings that are that don't reflect uh the view of the office or my view and I and and to the degree that happened here I think it was it was uh very unfortunate but it it happened in this humiliation [Music] immediation vote for me and that's where I saw incompetence combined with arrogance my Deputy bureau chief he's always so inspirational and he would always refer to the inscriptions outside 100 Center Street about having faith and justice but I don't I don't believe that anymore I decided to leave the DA's office it really angered the Chinese Community but so what they're not going to decide an election for Vance [Music] that's it you've done that many times my whole life this is the association where my great grandfather was my grandfather my my dad back in the days with the Exclusion Act people do not have the right this is where they would all come like Mr sung what drives me is that sense of community oh okay okay this case is about an attack on our community with easy prey I think that's what's going on people have reason to be fearful of Authority or what can happen to them you know the retribution the years of Oppression that happened from the street vendors from the small businesses from people just writing tickets because they can feel good for example foreign [Music] it's more than just Africa Savings Bank being clear is about exonerating our entire community no matter what we do be it the little guy selling vegetables or a bank that's doing business I told Mr song I'm glad they pick on you because you're a fighter family bank but he doesn't realize Tom is not easy to be pushed around and My Girls they're tough smart capable women so courageous although this is David versus Goliath David being Advocates Federal Savings Bank has a slingshot and that is you know their whole family of lawyers I was going to be able to fight this they're almost gleeful they're like we're gonna have our day in court now we're actually going to El to show that they were wrong they made a decision that they were not going to plead guilty to something that they didn't feel the bank was guilty of that is a courageous choice and it's an expensive Choice the DA's office has hundreds of lawyers and took five years to do their grand jury investigations and it is a daunting task to fight the government good morning ladies and gentlemen of the jury this is a simple case about a bank that was converted into a criminal conspiracy fueled by greed defendant Abacus Federal Savings Bank engaged in an ongoing mortgage fraud conspiracy they routinely falsified and faked mortgage documents and then deceived the Federal National Mortgage Association commonly known as Fannie Mae they took Fannie Mae's money for loans riddled with lies all the while promising that the loans contained truthful and verified information the defendants did this over and over and over again and between 2005 and 2010 the bank earned millions of dollars servicing and selling fraudulent loans to Fannie Mae the defendants conspired to steal money from Fannie Mae and did in fact steal money from Fannie Mae historians tell us that Abraham Lincoln loved riddles and one of his favorites went like this if you call a tail a leg how many legs does a dog have and the answer is four because calling a tail a leg doesn't make it a leg calling Fannie Mae a victim of grand larceny and fraud is like calling a dog's tail a leg we have no loss we have no harm we have no larceny we have no fraud [Music] Heather you're on speaker okay so how does everything go today it was very long day or exhausted long day I'm so tired I don't don't get me wrong I think the lawyer all did a very very good job but the feeding the emotion it was a little bit lacking a good strong touch the emotion presentation of your case requires emotions there were so many other things that could have been said or should have been said you got to let your attorney at this point who's been living with this case and feels very strongly about you gotta let him I think he would even be let him do it he spent the most time talking about how we stop that closing and he showed you what steps we took after that if you the jury is not convinced it's extremely extreme I agree with you the facts are brought out you know what I'm hanging up on you now okay let's go so there were 180 or so counts in this trial and let's also remember that there were I think 10 guilty pleas here the D.A his case was built basically on the fact that he arrested all these very low-level loan officers they started going to people's houses many people at six in the morning knocking on their door and demanding not forcing but demanding the people come down to the district attorney's office and speak to them and they got a lot of statements from a lot of people using that tactic we're talking about Chinese people many of them whom are have come from a police state that in China people are terrified of of that the knock on the door good morning Mr you good morning when the court officer swore you in he asked you your name you said she been you is there another name that you go by can you [Music] here's this gentleman can you who is how the bank found out about this misconduct in the first place the guy that the bank fired Not only was he falsifying documents in order to put through loans he was stealing money from customers that guy ends up being there the DA's office star Witness Mr you I'd like to direct your attention to the aerial cheat case Miss Chi was the borrower that you stole money from right yes sir isn't it true that you asked Miss Chi for a cash tip as well no I never asked her for a cash tip I don't remember that part Mr you you had a telephone conversation with Ariel Chi is that correct correct sir and at the time you didn't know that Miss G was actually tape recording that conversation with the assistance of the District Attorney's Office correct yes sir the DA's office was trying to get him to implicate the bank this recording was brought into trial through our attorneys on cross-examination of kenyu let's just get right into it who called me after closing then I'm supposed to do that but hey it's after the clothing not right so you know I think another one because I'm a written rule that is happening to every like every case that I see you know at the end and you're like you'd show some appreciation does this refresh your recollection that you did ask her for a tip yeah I noticed that he couldn't look at me that's very telling yeah he couldn't leave and look at me but I was like I'm gonna look at you I was like I'm burning myself I was looking at him intently as well too I dare you to say what you want to say he got on the stand and perjured himself over and over and over again in ways that that uh that a defense lawyer just doesn't get in a career more than once or twice the jury laughed at him multiple times ah because you told me that Abacus knew right you don't we don't say it to the fact it's Jesus and so is the other underwriter so then okay but like Abacus like the bank they know that everybody's uh thing is made up right I I will say that now you had a long pause there didn't you Mr you I was driving so that long pause is because you were driving you were distracted that's your testimony I cannot recall but I was definitely driving you'll say that if you get in trouble is that what you meant there I say that because that's a very Mr you I'm asking you it's a strange way to answer that question and I'm asking you what you meant by I I will say that I would say that I believe that well the jury can decide what your tone suggests it became quite clear that he had no trouble lying if that's how he's comfortable acting I would have thought that he would be comfortable saying much more to try to directly link Mr Taman and and Mr Wong and and Jill sung with with what had happened but even he didn't do that but you also had to not let go of the fact that he didn't get this way overnight he had years of this type of behavior that was just overlooked on numerous occasions what role did the bank's management play and what had happened how much they actually were not aware of what was happening versus turning a blind eye because things were going well and the results were good can you it was clearly a bad egg by using can you which is the worst the worst the DA's office is saying this is the face of the institution if the bank was in such kahoots with this person then why would we fire him we would want to save him what the D.A accused Abacus Bank have was ridiculous and really nothing considering what the big Banks were doing all the too big to fail Banks Morgan Stanley Goldman Sachs JP Morgan Chase and citicorp have admitted to massive crimes and they've been accused of even worse virtually every major financial company and big Bank in this country and many of the foreign Banks as well were engaged in a far-ranging fraud scheme whereby they were issuing huge numbers of Home Loans particularly at a middle and low income borrowers and then they were repackaging those loans and selling them to investors but disguising them as high rated securities [Music] foreign [Music] those were extremely dangerous toxic loans that were likely to blow up and did blow up in huge numbers after 2008. but there was this notion that we couldn't bring criminal action against them because the collateral consequences of an institution that was so large so internationally connected that indicting them or bringing criminal charges against them could wreck the entire Financial system so you have these enormous offenders and they commit crimes we'll just take money thank you no cut a check and make it all go away I think every American was upset at the crisis that we went through there was behavior that was less than ethical and I think Americans were upset that the security against which loans were made were often fictitious and an abacus there was some truth to that too it's clearly not a big big Bank and clearly it was not representative of the entire Financial community but I think the principle was the same it shows I think very graphically this difference in how we deal with a certain kind of offender versus everybody else Mr sung was not offered the same deal he wasn't offered a chance to just pay a fine he wasn't offered a chance to plead guilty to some minor thing he wasn't offered the chance even of deferred prosecution he didn't get any of that offered to him the D.A told us you had to accept a plea of guilty for felony plus a fine now what what is our choice they wanted a conviction and Vance was going to go after him I think if you were going to pick a a bank to pick on a family-owned company wedge between a couple of noodle shops and Chinatown is about as easy a Target as you could possibly pick I think the characterizations that this was somehow a cultural bias on the offices part entirely misplaced and entirely wrong we devote an enormous amount of effort into protecting immigrant communities and I felt that our handling of the bank was consistent with how we would have handled the bank if we were investigating a bank that that service the South American Community or the Indian Community there was nothing different that we did or purposely designed to treat this Bank differently [Music] it was important for prosecution to show how exactly loan managers knew what was happening I think the most compelling piece of evidence they had was this seating chart from the Abacus loan department the loan officers who had been indicted were scattered around the floor and somewhere in the middle was the loan office manager this was all happening around Mr Tam's desk how would he not be aware of this type of behavior when this was going on on a routine daily basis it's not so simplistic as they would like you to believe as a simple drawing as to where someone SAT but on top of that they brought Ken Yu who was a consummate liar and he speaks a different language than Mr Tam he conducts business outside of the bank actually at one point they cross-examined Ken because Ken said oh the guy gave me cash I was counting from my table when we when the borrower came to testify the borrower said no I met him in the lobby of the bank we were able to show that the loan officers were taking steps to hide their misconduct from the underwriters and the more senior levels of the bank they would stop talking when an underwriter would come to the floor they would forward signatures to make sure the signatures would match up when the underwriter looked at the file everything would look normal you had loan Originators that were going to make commissions by getting these loans through and then you had people like Mr Wong who had no incentive whatsoever financially to do this so they did everything they could to hide their crimes from Mr Wong because they knew he wasn't involved and that he would deny loans which he did many times he would deny people where the income couldn't be verified or where it seemed like the income was out of line there was one denial he did where it were fraudulent documents that he uncovered and his denial of loans cost the original's Commission ers [Music] I think the people who went to the bank and got the loan didn't fully understand perhaps that what they were doing was lying but I think that ultimately the unintended losers here were the borrowers in the community we're actually contributing to the Revival of the community it is absolutely mind-boggling for him to say that when the indictment came down soon saw it as a existential threat to his bank and rightly so because so many institutions fail just just from having that indictment we already went through a crisis in 2003 that almost closed down the bank the FBI is looking for Carol Lim who ran the Canal Street branch of Abacus Federal Savings word of the alleged scam sent off Panic waves among Bank customers so in 2003 I happened to be doing a story in Chinatown my photographer at the time said to me something going on up the block Chinatown as thousands of investors make a run on Abacus Federal Savings Bank demanding their money after hearing that a former bank manager was being investigated for embezzling a million dollars when the rumors spread in the Asian Community the Run for the doe was on well take a walk go elsewhere do something else today in that short period of time people withdraw that something like 44 million dollars putting us in the liquidity crisis Associated Press report that we have not seen this type of run since the 30s since the depression you have to understand something about Thomas song to me he's like Jimmy Stewart out of It's a Wonderful Life [Music] he's the small town Banker but the town is Chinatown [Music] I went to the police department asked and gave me a bull horn I went on the line and I said to them I'm here you're thinking of this place all wrong as if I had the money back on a safe well your money's in Joe's house that's right next to yours and in the Kennedy house on Mrs Maitland's house and a hundred others and I actually went out and Shake hand with them feel my warm hand I'm here I'm the real person after I did that the Run subsided relative calm in Chinatown in sharp contrast to Tuesday's mad rush on the Abacus Federal Savings Bank the CEO of the bank assuring investors they knew that everything was okay the people came back they came in deposited money they thank us if I did not have that report with the people then I would have been much more worried that the D.A indicted the bank but if verdict is guilty there is the possibility that Abacus will not survive I never supported him with the bank I have to be honest I told my husband I said banking is not good I felt this troubles business there are too many banks you know not everyone is successful and not everyone will really appreciate what happens you know if something wrong with the bank when you have a false document you enhances the ability of anime to ask you to take back the loan I really felt my girls should go to do something else that they like to do I didn't want them to work at the bank but they went in you know because they want to help their father they have fiercely loyal to Tom you agree that income and assets is a material fact that has to be accurately represented so I had never until now found a motivation really to come work for the bank and this year when the trial started I just I was having nightmares myself I mean Vera and I were sharing a room back at my parents house Connecticut and we were both waking each other up and I and I realized I was like I can't go on in my own career right now anymore as like I have to help my family now because I think I'm saying the dog represents a material fact I'm saying if it is truly material listen to me if it is truly material the long we're going default different initiation may not may fall I get really frustrated sometimes this is probably a factor of being the youngest but sometimes I just like whatever I say it's just not heard you are not convinced if that's the form that you choose to use tongue and cheeks that's the form never said that hold on I have a question I didn't say that if that's the formula you choose to use to represent if that is the form that's not that's not true I I just told you there is harm it's very difficult okay nothing more for me to say this is my office sorry as you can see at my desk is now piled extremely high but I think it's always been a mess that's just my personality my father has always said as an attorney you should be neat and organized maybe I'm just not cut out to be an attorney Tracy on your desk anything urgent I need to get done before the weekend we haven't been having many closings because of the effect of the trial I've been waking up at five in the morning getting work done banging out all these emails and then go to court did you ever tell the person that you spoke to at Abacus bank that you were a manager at Becky's Nail Spa well I was not a manager the person told me that my income was very low so it's better I have to be a manager otherwise I can't get a loan the prosecution over and over tried to suggest that the borrowers were innocent that it was the loan officers who were inducing the borrowers to falsify documents to qualify their loans on this loan file why does it say you're a manager I don't know did you tell anyone that you were a manager nope but we were able to show with witness after witness that it was not just the loan officers borrowers were trying to fool the bank in order to put through loans Mr Lynn you had your employer sign the verification of employment form for the loan file is that correct yeah he signed as the co-owner of the China sign did anybody co-own the restaurant with Mr pan I don't really know you don't know if Shu Ken Lin was also a co-owner of the China Sun restaurant I only meet this person a few times I don't know if this person is a co-owner of the restaurant or not shoe can land you only met a few times and you don't know if she's a co-owner they didn't tell me I didn't ask okay Shu Ken Lin spelled s h u q i n l i n you don't know who that is I know who that is you do know who that is so who is that you can say it's just like a sister is she like a sister or is she your sister she's my sister [Music] there was a string of witnesses who were just abject Liars to the point where it became a concern of ours that the jury is going to think that that everyone that the bank deals with former employees and customers are just full of so the trial has been going on for the ninth weeks now right is it nine day 52 yeah yeah it's around David I've been keeping track of the number of days since since the jury was yes since January 12th I just cannot believe how this uh thing could be tracked out so long the weeks in trial and the expenses involved the millions of dollars that spent to defend yourself and witness after witness of course they will know they're alive so you bring these people out day after day for nine weeks and what is the effect on the community people get the wrong impression that Chinese are not law abiding that that's that's just too bad we can hopefully win this case and make a statement well even if you win the case the damage well to us the strength on the community is done foreign Chinese immigrants come from a culture in which so many Financial transactions are based on trust and Trust that's not underwritten by a piece of paper and Trust that's an intimate understanding you know between members of a community or between family members I don't think any of the borrowers think that they are really committing a crime even if some of these loan documents are falsified one particular individual had been approved for the 800 000 mortgage loan but on their tax return they were earning only twenty four thousand dollars a year I think this was as a couple there were a lot of gas across the jury panel how does this even happen tax evasion I think lurks in the background of this case because they work primarily in a cash economy a lot of the borrowers had money that they did not report to the IRS only when they're purchasing a house did it become necessary for them to prove how much money they had but then they were trapped in this position of not having the paper trail maybe folks in that Community don't don't pay you know 100 of their taxes these are issues that if they have a problem with a you know with any immigrant community that that operates in cash okay that they have the the wherewithal to do something about that the IRS does too Abacus isn't the FBI there's no Bank regulations that require the bank to basically serve as a police force against its own customers there'd be chaos you have your bank basically with the IRS no one will want to bank with any Bank you can say that our responsibility was to provide credit to the community not to be a policeman and I remember Mr sung said this to me the guy comes to him to modernize his restaurant and he said I don't even need to ask him his his income because I eat at that restaurant and I see how full it is so you know when he comes in and asks me for a loan I'm ready to give him the money that's the kind of thing a Community Bank can do and in the Chinese Community that's what they were doing they knew their Community they were making these loans the prosecution had insisted since the beginning of the trial that many of the documents that were part of the mortgage package were fraudulent and that included in many cases gift letters gift letters written by relatives or friends there was knowledge throughout the loan department that what was being put forward as unencumbered gifts were in fact loans and the source of those loans Money that came from who knows where in Chinese culture the line between a gift and a loan is very blurry to the extent where there isn't even really Extinction when it's coming from your parents or your relatives this is what immigrants have always done Jewish families did it Irish families did Italian families did it Chinese families do it if I receive you know fifty thousand dollars from my mother there isn't a paper document that says I must return that sum but you know if I end up caring for her in her old age that's a form of payment and I remember sitting in the courtroom hearing how perplexed they were when they were answering this question when you know repeatedly they were being badgered you know is this a gift or is this a loan can you clarify they said well you know if I can't pay it back I will but you know if I if I can't we're a family so GIF letters actually had to be from a relative or spouse but it came to surface that these loan officers sometimes were listed as the gift owners [Music] Mr you at the top of this gift letter certification it reads that you are making a gift of nine thousand dollars to your cousin cheese and Chen is chi Zen Chen your cousin no did you make a gift of nine thousand dollars to jizen Chen he gave me nine thousand dollar in cash and we went downstairs and got the certified Bank check in his name tell us how it came to be that cheese and Chen gave you nine thousand dollars and then you gave him a check this particular customer did not have any credit scores can you tell us from this document who approved this loan that would be Miss Ware's song if King Yu is signing a gift letter can you that would be disturbing that's not what happened the Chinese name Kim is not known but people just call him Ken Ken you clearly knew that and purposely put his Chinese name on that check for that reason to obfuscate that it was him who had given quote gift to the borrower Mr you what is the commitment letter that the bank agrees to give this borrower a loan if all the conditions were met right and gift letters for example have to be in the file before you close but not before the commitment letter goes out isn't that right you're right sir so the verification of employment that you help fake the gift letters that you helped fake were done after the arasang approved this loan on behalf of the board of directors isn't that right in this case yes [Music] it's trying for us because it's our father's Legacy exactly and he's passed that Legacy on to us and Vera always when she was born she wants to be very mean to me she'll point out it happened under your watch right so she's gonna be very mean to me foreign so much time has gone by our following 75 and now he's 80. people don't understand there's some long-term effects from going through such a traumatic experience this bank will surely continue to seek Vindication not simply for the ultimate acquittal of the bank itself but for the larger Chinese immigrant community that it has served for 31 years the raw Display of Power by the D.A will always remind this in other minority communities that our human rights can easily be trampled upon it's a little bit counterintuitive the way you write it you want to tell people that you cannot allow something bad exactly and so you're saying human rights can easily be trembled upon it and I don't read it I don't want people think you're saying that it can be in other words it should be a normative sentence No No it should not be trampled upon the cost has been great but it's very different per each member of the family because we all handle stress in a very different way Siege General this is all in here but he changed my words again and then he didn't put it in properly in here a little bit dry because that's the chicken no mayo that's why right but there's cheese my father especially is able to handle stress in an incredible way if you if you don't like your sandwich are you okay fine I use it as dry yes he's gotten older I think he feels that he's done what he's wanted to do um he's a little more philosophical and to know that he's done the best that he can do is good for him if it's too much chicken you don't have to eat all of it he complained he said it's dry oh they didn't put mayonnaise they did put yeah but they put avocado they put avocado but he says it's dry but I'm easy this is how he is he's very calm and I'm very I'm like a jumping beans I'm always running around you know that's how I am and drives me nuts my mother I think probably feels things the strongest she's a very emotional person and I think defines herself to a large degree by the perceptions that others have so it hurts her I felt I lost my face you know Chinese always want to save their face I was embarrassed to even see my friends because nobody know I really don't know too much about the banking and how I'm gonna explain everything all I can say is we did not do it I just couldn't stand people thinking of my children that bad you know the prosecutor is saying that Jill lied so that really bothered me I felt like screaming of course Vera always tell me don't talk don't move so I have to sit there with just suppress myself you know that's why I couldn't even eat lunch yesterday I had stomachache Miss Roma is the Federal National Mortgage Association otherwise known as Fannie Mae in the business to make money Fannie Mae is in the business of providing home ownership and as a result of that Fannie Mae does make money yes this cold case ultimately came down to Fannie Mae Fannie Mae was the alleged victim in the case the prosecution's premise was that the 30 loans that were in the indictment that we had sold to Fannie Mae were not good because the documentation themselves were not what they were supposed to be the bank can do whatever it wants the bank could keep those loans it could service those loans and care not a wit about the documentation that was the bank's choice keep them or sell them it chose to sell them and selling the loans to Fannie Mae they simply passed the risk off to unknowing purchasers Miss Roma Fannie Mae doesn't want to lose money does it absolutely not and it doesn't want our lenders to lose money either and you are familiar with the default rate of Abacus loans during the indictment period correct yes I am during the five-year period of the alleged fraud Abacus sold a little over 3 000 mortgages to Fannie Mae the number of defaults of those 3 000 totaled nine nine would you say that that was a low default rate the default rate is low would you say it's microscopically low objection to the characterization sustained as to the word microscopic Abacus Federal Savings Bank had one of the nation's lowest default rates not the highest the one of the lowest but that's not what we're looking at we're looking at you know was there you know falsified information and was it sold and it was these loans had not lost any money they're performing it was clear financially who was benefiting was Fannie Mae from that transaction people got their loans they got their houses it was it was almost ridiculous it was almost literally ridiculous Larson is about stealing to bring larceny charges against the bank when the supposed victim actually made hundreds of millions of dollars it just it's outrageous my view is if I take five dollars out of your wallet uh I've taken your money if I ultimately if I give that back to you or if you don't at the very end actually have any loss because the money gets back to you that's still in our view of larceny if I sold Fannie Mae alone for five dollars not only do they get their five dollars back on time as what they thought they were going to get it they also got three to four or five dollars back in interest which makes it ten dollars so tell me how that is considered larceny [Music] thank you there are two types of mortgage fraud that generally occur we call them fraud for profit and fraud for home there are a certain number of people who commit the crime of mortgage fraud because they lie on their application to get a loan for the home that they want to live in is it technically a crime absolutely is it a crime that is worth the resources of a state or federal government absolutely not these are low default rates on these types of loans the losses are relatively minor the other types of fraud fraudware there really was never any intention to pay the mortgage it was just about reaping profit as quickly as possible or fraud that went into these complex Securities that were built when the knowledge that there was little to no chance that these loans are going to get repaid that's where the resources need to go and throwing your hands up the air and suggesting that well gee any time a crime is committed we put all of our resources in to prove it it's just not true I mean today walking over to my office the light was red and I confessed I walked across the street against a red light I am absolutely guilty of jaywalking and I could have gotten ticket did I get one no it would have been a complete waste of the nypd's resources to issue me a ticket and divert them of the real crime that's going on in the city and regulators and prosecutors have to act with the necessary discretion of when to bring charges and when not to bring charges Neil is certainly entitled to his opinion I disagree with the characterization that this was jaywalking because I think it was systemic and over a long term and ultimately the risk was passed without notice to you know two third parties there should probably be regulatory punishment for that type of behavior without a question but who are the the the taxpayers that got hurt who are the investors that got hurt who are the individuals that lost their homes who are the people that got tricked into mortgages they couldn't afford and got thrown out on the street who lost their life savings what Financial system collapsed what GDP took a hit because of the actions that Abacus did and as far as I can tell none frankly if every bank had had underwritten as well as Abacus during the indictment period we wouldn't have had a financial crisis we really need to talk about one issue right now which is whether or not we should have Jill testify it's really difficult like we keep switching back and forth um as of yesterday Rusty believed that she should testify Kevin took a different position he was a little bit more hesitant and papa feels so far that Jill should actually Rusty and Papa have the same opinion no yeah I don't want her to you know pressure her to testify at night but rest issue was that the jury always wondering why if you are so innocent why would you not testify right a jury might not feel much towards a corporate institution if you put a personal face to it such as Jill they'll they'll begin to see and and realize that the consequence of conviction are are serious however nothing has been truly said of Jill right to implicate her in anything right I feel like I have yet to hear a reason to put Joe on Twitter on it's not because you're trying to hide anything but because there's nothing to defend to defend yeah excuse me to avoid yeah yes the mother is speaking that's a very good question she's not here right now she didn't even want to have this conversation the feeling that we got from her was that if she needs to testify she will but she would feel terrible if she somehow she didn't testify well and that would would result and and a negative um outcome yeah and she would she would blame herself I just wanted to probably because I know you feel strongly about Jill testifying and what and I had felt the same way so how would we feel that Jill didn't take the stand and we did not win the case would we have regrets I can't answer that I have given a careful and sorrow if the outcome is not for me I do not I should not feel regretful foreign they have said that these kinds of documents are so obviously false that Mr Tam and Mr Wong and the banks on their Underwriters should have caught that and the fact that they didn't catch them suggested that they were involved in the fraud that's what they are telling you ladies and gentlemen but here's the problem Fannie Mae the best Underwriters in the country all they do all day every day is look at loan files from all over the country they are the gold standard and they didn't see anything wrong with these documents so if the best there is doesn't see anything wrong how can that be Criminal it's not and here I'm going to show you again Fannie Mae's email from 2012. we recognize that you have very unique needs that are closely linked to the borrowers you serve while doing anything customized in this environment is very difficult the team is committed to doing whatever we can to develop solutions that meet the needs of your culturally unique clientele ladies and gentlemen Fannie Mae itself is conceding here that this is Chinatown it's a thousand small businesses first generation special needs and the bank serves that community does that pose challenges to the bank absolutely it would be a lot easier to deal with a bunch of investment bankers who have W-2s and tax returns all the time that would be easier but the bank has chosen to serve this community challenges and all abacus's own narrative that they are trying to give you is that they are trying to assist hard-working first-generation immigrants live the American dream as a community service that's admirable and it's great and Abacus Federal Savings Bank is free to do that and then hold the risk on their own books what they are not free to do is take risks with other people's money and not tell them they cannot take those risks and pass it off to somebody else without telling the truth thank you and then she tried to say that these loans seem to be representative of our entire loan portfolio which is not true she literally rolled her eyes at your mission and and building this bang for the community to serve the community and tell these people Serve American Dream she just cast it aside isn't the fortunate at my age alcohol they hear everything that's said that's because that's a blessing Did You observe in the beginning that The Honorable Side Dance himself attended the beginning [Music] yeah and he is much smaller in person as a family we've always been very close but we've unified even more during this time which is great why are you laughing it was just in tears and now she's bursting out laughing you know the judge says he said he has to save his voice for the jury charge because that's going to be a few hours probably are you not eating any rice are you on the diet [Music] jurors your responsibility in this case is extremely important however it is limited to this case you have not been asked to make some general assessment of corporate governance in America or whether banks are good or not you're not here to send a message to anyone you're here to determine whether the people have proven Beyond a reasonable doubt that the defendants here on trial are guilty of one or more of the crimes charged in this case foreign [Music] if they were going to vindicate all of us we would hope that it happened quickly you know what I mean they're like oh we heard this evidence it's not worth it just vindicate everybody foreign this is a really nerve-wracking time not knowing what the jury is going to decide and wondering how come they didn't come back already foreign [Music] at this point now I think it's really bothering me it's like why can't they see what seemed so apparent in the trial [Music] hate waiting in court it's boring and annoying I'd rather be doing work but our lawyers want us to be here in court case or jury have questioned they want the jury to see we're still here and we can help pick out the documents so I'll have to bring a lot of work picnic basket of work day after day the jury did not come back and in fact the jury was asking for various documents some you know unfavorable for that prosecution some unfavorable for the defense the first note came back and they said they wanted a list of the loans that the DA's office was claiming were bad and then they wanted all the loan files for those loans and then they wanted all the denial files it got to the point when we were actually trying to analyze the handwriting on the notes we all knew we didn't do anything it's that's that's it's it's it's it's impossible that we're Frontier on all cons this is impossible we're driving ourselves mad trying to speculate oh this person must be thinking this and maybe they're thinking quite the opposite there was three different occasions where we were a hung jury everyone felt very strongly in their view on it and had good substantial enough evidence to why where we had the toughest time was the falsified business records again because there was too many hands that were it was touched throughout the bank for the loan approval process for things to go unnoticed there was one specific juror not Jessica who felt that we as a jury had a sort of broader responsibility given the context of the financial crisis in 2008 to make an example out of this bank that we were somehow doing a disservice to to the public to maybe the criminal justice system by allowing them to walk free we sent a note on June 3rd to the judge that we were hopelessly deadlocked eight were on the not guilty side four was on the guilty I was one of the four on the guilty [Music] they were dismissed today they came back with a note again saying that they are deadlocked and that they're that both sides are adamant so the judge gave them what they call an Allen charge which basically said go back and try to do this so that means that by the end of tomorrow either there will be a verdict or there'll be a mistrial tomorrow will be the last day whether or not there's a relation unanimous verdict LS five bands is infinite wisdom decides to retry the case [Music] about Papa's well-being he's 80 years old he's been up since 5 30 a.m he has nothing to eat for dinner we need to get you home so let's let's get you some food Papa you do can you hear mom so we're gonna put him on a tree he will go home now mommy you got to go home Papa mommy's worried okay we'll eat [Music] foreign such a long trial and so many charges against them it's going to be very little possibility that the bank will be completely exonerated the jury is going to find them guilty of something [Music] if we go down on one it's a it's a defeat you know it's got to be 80 to nothing if you're convicted on one felony it would be very serious ramifications for the bank foreign New York Times article on Friday June the 5th 2015 after a four months trial a jury found Advocate federalism bank and two of his senior officers not guilty of grand larceny and other charges on Thursday rejecting the Manhattan District Attorney's attempt to prove that the bank systematically lied for years to the Federal National Mortgage Association after the call clerk read the 240 counts and repeated words not guilty after each one members of the sun family wept and embrace one another [Music] so many emotions of course but I was told not to express any feelings now you can express your feelings my father we had to text him and actually you've got it he didn't respond to the text so then I called him he answered the phone and he just sort of took a step back and started microwaving his vegetables elephant said um what there's there's a verdict oh should I come like you're not processing I didn't feel great about it but I wouldn't have felt great if the verdict had been guilty the way that the law was read to us is that under each charge all of the different elements had to be met in my mind they were quite a significant few that three of the four requirements were met but not all of them and that's where the change came for the four of us to move over to the not guilty side it was doing the right thing Abacus was not exonerated it was not exonerated exoneration is when a person is proven innocent I don't think there's anything here that says that Abacus was proven innocent poor loser comes to mind there's a right thing to say when a prosecution office loses a case we respect although we disagree with the verdict we respect the jury's verdict exactly period of course I'm very happy at it I'm very happy I feel relief because it it has been a long time and I I I just won one to resume my normal life the bank's founder Thomas sung 79. said this wrongful prosecution has exhausted a small Community Bank such as ours this is a gross Injustice not only to a small bank but is casting a shadow on our community this is totally prejudicial and incorrect we Chinese have to learn from other minorities when it comes to the community's interests you must let those who are in power know that this shall never happen again super imposed on you yes that's it I'm so glad you are all here in a very happy occasion and I want to thank everybody's support and dedication this last five years and let's look for happier days to come okay let us eat cake it's green tea black bean green there's many different flavors it's not really celebrate I mean we're vindicating that's great but our goal was never to go through a criminal trial and be Vindicated our goal was to serve our community right so this is such a waste tragedy we have a lot of cake we may have too much cake the fact that they find innocent give all of us hope that the America that we believe in still you still have a chance but it'll cost you 10 million dollars the Chinese has a saying if you want a really hard sharp Steel make a sword you have to go through fire this experience should make my daughters stronger make them better person I had a text from a friend and she said that she looked at the news this morning and felt proud of being a chinese-american so that actually makes all of this worthwhile [Music] foreign [Music] thank you [Music] foreign programs visit our website at pbs.org Frontline [Music] frontline's Abacus small enough to jail is available on DVD to order visit shop pbs.org or call 1-800 play PBS Frontline is also available for download on iTunes foreign [Music]

Channel: FRONTLINE PBS | Official

Views: 896,716

Keywords:

Id: GKPa4OIVN4U

Length: 83min 16sec (4996 seconds)

Published: Tue Sep 27 2022

Reddit Comments

[u/TheGrandExquisitor]

Wells Fargo literally settled yet ANOTHER case where they were blatantly stealing from people. They literally have been committing a series of thefts from customers, clients, and employees for years.

And they always get away with it.

[u/andddmiller]

Fun fact, the apartment I used to rent in Chinatown was owned by this bank. They were excellent landlords and I felt so lucky to have them. I don't know many people who could say they loved a landlord (or a bank,) but even now that I've bought a house and moved out, I still think of them fondly.

[u/IntentionalTexan]

The truth is so much worse than the misconception. Most people think that so few went to jail for the financial crisis because they were too big to jail. So few went to jail, because the things they did were not technically illegal. Congress gutted most of the regulation on the finance industry, which is what led to the crisis. Remember that when you hear someone complaining about, "burdensome regulations."

[u/ok123jump]

This is what makes this regulatory regime such a corrupt joke. Sure, they did wrong, but not near the level of the large banks.

Who was prosecuted there?

Did they even claw back the bonuses from the executives at the big banks that architected this scheme?

No one and no.

[u/CraftyRole4567]

I watched this and it was so incredibly infuriating. None of the Wall Street bankers that caused the crash go to jail but these folks do… No other reason than that they’re Chinese. And the way the police and the media treated them… cruel and laughably unjust.

[u/KeiraSelia]

Blocked everywhere, Only available on US (territories):
https://polsy.org.uk/stuff/ytrestrict.cgi?ytid=https%3A%2F%2Fyoutu.be%2FGKPa4OIVN4U&auth=af14e3ddbe75492f6c7c0e3c41deb358

[u/geistmeister111]

great documentary

[u/Balderdashing_2018]

Steve James is one of the documentary greats; awesome filmmaker. The production company he works with, Kartemquin, has a ton of great work too (Minding the Gap being among the most notable).

[u/towerninja]

Worth the watch