Business Week Questions Why Prosecutors Are Going After Chinatown’s Abacus Bank

Abacus Bank, 6 Bowery. Photo by Robert K. Chin.

Business Week has filed a lengthy piece on Abacus Federal Savings Bank, the Chinatown-based institution that is the target of a very rare mortgage fraud prosecution.   Last spring, The bank and 19 former employees were charged with mortgage fraud and other offenses, in connection with the falsification of Fannie Mae loan documents.   The Business Week story, titled “Mortgage Fraud Prosecutors Pounce on a Small Bank,” suggests that the decision by the New York City District Attorney to go after Abacus is, at least, curious and possibly misguided.

The report notes that Abacus, a fixture in Chinatown since the mid-80’s, has not lost business as a result of the prosecution, but has not picked up many new customers, either.  The indictments, Business Week says, could eventually force Abacus out of business.  The story features interviews with the bank’s founder, Thomas Sung, and his daughters Jill and Vera.  They have not been personally indicted.

Chinatown Bank Charged With Mortgage Fraud; Owner is Prominent LES Property Owner

Abacus Federal Savings Bank, 6 Bowery.

Very few banks nationwide have been prosecuted as a result of the 2008 mortgage crisis that sent the American economy into a tailspin. Yesterday, however, New York City District Attorney Cy Vance came down hard on Chinatown-based Abacus Federal Savings Bank, headquartered at 6 Bowery.

The bank and 19 former employees were charged with mortgage fraud and other offenses, in connection with the falsification of Fannie Mae loan documents.   The bank, prosecutors alleged, made millions of dollars by making loan applicants seem to be credit-worthy when they really weren’t.

The DA first became aware of the situation at Abacus in 2009, after a bank customer went to the 5th Precinct claiming that the institution had stolen her deposit.  Vance said borrowers are continuing to pay almost all of the loans.  The bank is not believed to be at risk and borrowers have no reason for concern about their accounts, prosecutors said.