Abacus: Small Enough to JailView film
[“It’s a Wonderful Life”] I owe everything to George Bailey. Help him, dear Father.
THOMAS SUNG, Founder & Chairman, Abacus Federal Savings Bank: First time I saw It’s A Wonderful Life, I had tremendous respect for George Bailey, who is the main character. He did so much good for the community.
[“It’s a Wonderful Life”] Mr. and Mrs. Martini, welcome home!
THOMAS SUNG: George was lending money to the community residents to buy houses.
[“It’s a Wonderful Life”] Me, Giuseppe Martini, I own my own house!
THOMAS SUNG: 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.
[“It’s a Wonderful Life”] Here you are, George. Merry Christmas!
HWEI LIN SUNG: This movie touches me so much─ the family, the friends. I always watch it. Every year, I watch. That makes me cry. That’s the part.
THOMAS SUNG: I wish this story could end the same way as It’s a Wonderful Life. But in reality, it is not that simple.
CYRUS VANCE, Jr., District Attorney, New York County: [May 31, 2012] 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.
THOMAS SUNG: The DA made such a big parade, bringing people from Washington, all these tough law enforcement officers, and making such a big announcement that we are part of the cause of the financial crisis of 2008. Almost laughable.
CYRUS VANCE, Jr.: Mr. Sung is entitled to his opinions, but in Abacus’s loan department, mortgages were based upon false documentation. We have evidence of conspiracy, larceny and systemic fraud.
MATT TAIBBI, Journalist and Author, The Divide: 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. Too big to fail, you know, turns into, small enough to jail. And Abacus is small enough to jail.
THOMAS SUNG: When I walk around here, of course, I feel very much at home. Anyway, this is a very tasty noodle shop if you go in there! [laughs]
I was born in Shanghai in the year 1935. At the age of 16, I immigrated to the United States and 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 with the Chinese national flag, this is the Chinese Community Center, and in there is the headquarter of Chinese Consolidated Benevolent 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.
And people in the community, older people particularly, remembers me, knows what I’ve done.
MAN ON STAIRS: [subtitles] Mr. Sung, I’m so thankful you came.
THOMAS SUNG: Back when I was a lawyer, there was no bank that was owned by Chinese and serving the Chinese.
BANK COMMERCIAL: 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.
THOMAS SUNG: At that time, banks in this community had several hundred millions of dollars of Chinese deposits. And I went to the bank to try to borrow money, but they do not lend money and deal with the community.
JILL SUNG, Abacus President & CEO: 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.
HEATHER SUNG: I remember when we were children and 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 all tried to design something.
THOMAS SUNG: Abacus, you know, is the Chinese calculator. China regard abacus as a national treasure. So we say, “We’ll name the bank Abacus.”
[to vault guard] Hello. Can you open for me?
JILL SUNG: We serve people who’ve never even dealt with a banking system before, and you try to bring them into the banking system. An example of that is the safe deposit boxes.
THOMAS SUNG: Have you ever seen so many boxes? There are 8,000-plus boxes in this vault─ 8,000. The Chinese people, particularly the immigrants, they rent houses in very tight quarters. There’s no place for them to place their valuables except in a bank vault.
JILL SUNG: So it starts with the safe deposit boxes. And then they’re willing to put their money into the bank and they’ll let the money grow. And then later on, they will take that money and use it to buy a home.
VERA SUNG, Abacus Director: At the actual closing, many of the borrowers bring their whole family with them. 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.
Do you have the chicken feet in there? Oh, OK. That’s always special. That’s the butt. You don’t want to eat that.
CHANTERELLE SUNG, Former Assistant DA Under Cy Vance: That’s OK. I like it.
HWEI LIN SUNG: 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’s like me, we both have headaches. And at home, when we don’t want them to understand, we speak Chinese.
JILL SUNG: You always said to me, “If you come work for the bank, the benefit will be you have a 9-to-4 job”!
OTHERS: [laughing] 9 to 4?! He said that?
JILL SUNG: Yeah, because a long time ago, people could leave at 3:00 from the bank. He said, “You can have children, you can have a family.”
VERA SUNG: 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 us two different stories.
THOMAS SUNG: 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 Ye-Ye’s time.
SUNG DAUGHTER: Grandpa. Grandpa, my grandfather, your father.
THOMAS SUNG: He always thought that was the honorable thing to do.
JILL SUNG: But that’s not unusual. A lot of people in Chinatown, your generation, they believe that was honorable, to be entrusted.
THOMAS SUNG: To be trusted.
JILL SUNG: Entrusted with the public funds.
THOMAS SUNG: Yeah, that’s right.
VERA SUNG: This whole five-year ordeal began in December of 2009. I had a closing that day involving one of our loan officers, Ken Yu.
JILL SUNG: Ken Yu worked with us around four years. The staff really liked him. He was very popular. He had some charisma.
LINDA HALL, Title Closer: It was a normal closing. There was the seller’s attorney and there was the buyer. But there was a lot of tension in the closing. They weren’t getting along. They were arguing over things.
VERA SUNG: 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 Ken Yu and I asked him “What are these checks?” He just got, “Oh,” blah, blah, blah, blah, hedging, and not answering.
LINDA HALL: 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.
JILL SUNG: It was very shocking. I said the 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. Ken Yu stole money, and 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 formal federal prosecutor who was 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 of Ken Yu, but we fired them nonetheless. And some other staff also resigned during the investigation. Shortly after, we notified Fannie Mae.
DAVID LINDORFF, Investigative Journalist: 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.
JIAYANG FAN, Staff Writer, The New Yorker: The couple, unfortunately, lost the 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.
VERA SUNG: 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 going to do?” And I said to her─ I remember I was furious, I’m, like, “What am I going to do?” Because, I’m thinking to myself maybe she’s in cahoots with Ken Yu to defraud the bank. I said, “If you have a problem, you should go file a complaint at the police precinct.”
POLLY GREENBERG, Chief, Major Economic Crimes Bureau, NY DA’s Office: A complaint was filed with the local precinct. The initial DA’s office investigation was focused solely on the employee who’d been accused of a theft.
JILL SUNG: 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 were 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.
VERA SUNG: 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 transitioned to-
JILL SUNG: In their mind, yeah. In their mind, and then us realizing, “Wait a minute.” You know, “Maybe we’re the target.”
POLLY GREENBERG: 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.
YIU WAH WONG, Abacus Chief Credit Officer: In July, 2011, two of the policemen went to my house and asked me to go to the district attorney’s office to have an interview, but I refuse.
POLLY GREENBERG: 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.
CYRUS VANCE, Jr.: Let me assure you that we do not take lightly the charges that we announce 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.
HEATHER SUNG, Physician: When the actual indictment occurred, I think the greatest fear was 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.
JILL SUNG: 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 to support that I was involved in the wrongdoing.
CYRUS VANCE, Jr.: We felt that the provable evidence stopped at a certain level, but that the individuals who were charged were high enough in the corporation to charge the corporation.
CHANTERELLE SUNG, Former Assistant DA Under Cyrus Vance: 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 bureau 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! [weeps]
NTDTV CHINESE NEWS: [subtitles] Mr. Sung says that Abacus has cooperated with the DA’s investigation, submitting over 600,000 pages of documents.
THOMAS SUNG: [subtitles] The DA is now asking us to plead guilty, which is unacceptable to us.
MATT TAIBBI: What was especially interesting was the way the DA pursued the public relations aspect of this prosecution. Reporters in this town were treated to this extraordinary photo opportunity, this almost Stalinist-looking chain gang.
KEVIN PUVALOWSKI, Attorney for Abacus: I’m a former prosecutor. I’m not soft on crime. I’ve never seen a spectacle like this. These people were humiliated intentionally for no good reason.
POLLY GREENBERG: It is not the district attorney’s office’s decision whether or not to put people in handcuffs, but people who are 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.
CHANTERELLE SUNG: 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 DA’s office. I mean, this was like the case of the century.
DAVID LINDORFF, Investigative Journalist: You 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 arraigned, had already posted bond and that were out awaiting trial.
SAM TALKIN, Attorney for Mr. Wong: The DA had added charges to Mr. Wong’s indictment. Usually, you don’t even have to go through the process again, they just add the charges, you get arraigned again, the bail is transferred, and that’s that. Instead, they had me turn him in. And the next thing you know, I see him chained to 15 other people being herded like cattle down the hallways of 100 Centre Street. I’ve been doing this for 25 years, and I’ve never seen that happen before.
CYRUS VANCE, Jr.: There are security issues behind the decision, but those decisions create feelings that are─ that don’t reflect the view of the office or my view. And I─ and to the degree that happened here, I think it was─ it was very unfortunate. But it─ it happened.
YIU WAH WONG, Abacus Chief Credit Officer, 2002-2011: It is a humiliation. It is a humiliation for me, you see.
CHANTERELLE SUNG: 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 Centre Street about having faith in justice. But I don’t─ I don’t believe that anymore. I decided to leave the DA’s office.
DAVID LINDORFF: It really angered the Chinese community, but so what? They’re not going to decide an election for Vance.
DON LEE, Community Activist: That’s it.
STEVE JAMES, Filmmaker: You’ve done that many times?
DON LEE: My whole life.
This is the association where my great-grandfather was, my grandfather, my dad. Back in the days, with the Exclusion Act, people do not have rights. This where they would all come. Like Mr. Sung, what drives me is the sense of community.
[subtitles] Hey, how are you?
MAN ON STREET: [subtitles] You look younger, and fatter and more handsome! [laughter]
DON LEE: [subtitles] Hey, good morning. How is it going?
This case is about an attack on our community. We’re easy prey. I think that’s what’s going on. People have reason to be fearful of authority, of 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.
VENDOR: Now you see, just a little bit over 10 feet and it’s $1,000. How can I earn money? I’m just working for nothing!
DON LEE: So the reason for the ticket?
VENDOR:: The total feet.
DON LEE: Just a little bit over?
VENDOR:: Yeah, just a little.
DON LEE: The law enforcement car parked on the sidewalk is fine, but your one inch─
VENDOR: Yes, my one inch. And then we have trouble. If I move it closer, my scale will hit the car. If scale hits the car, they charge me again. Please tell them about this in court. How can a victim make the right choices?
DON LEE: It’s more than just Abacus Savings Bank being clear, it’s 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. Sung, “I’m glad they pick on you because you’re a fighter.”
HWEI LIN SUNG: Cyrus Vance just felt this is easier to attack. Especially, it’s a 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.
TI-HUA CHANG, TV Reporter: Although this is David versus Goliath, David, being Abacus Federal Savings Bank, has a slingshot. And that is, you know, their whole family of lawyers.
VERA SUNG: I was going to be able to fight this
JILL SUNG: They’re almost gleeful. They’re, like, “We’re going to have our day in court now. We’re actually going to be able to show that they were wrong.”
KEVIN PUVALOWSKI, Attorney for Abacus: 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.
PROSECUTOR: [February 23, 2015] [prosecutiont opening statement] [trial reenactment, edited for clarity] 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.
RUSTY WING, Attorney for Abacus: [defense opening statement] 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.
HEATHER SUNG: [on the phone] Hello?
JILL SUNG: Heather? You’re on speaker.
HEATHER SUNG: OK. So how did everything go today?
ALL: It was a very long day.
VERA SUNG: We’re exhausted. I’m so tired!
THOMAS SUNG: Don’t get me wrong, I think the lawyer all did a very, very good job. But the feeling, the emotion, was a little bit lacking. A good, strong─
HWEI LIN SUNG: He did not touch the emotion.
THOMAS SUNG: ─presentation of your case─
VERA SUNG: I will agree with you─
THOMAS SUNG: ─requires emotion.
VERA SUNG: Of course, 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 it─ you got to let him─
JILL SUNG: I think he─
VERA SUNG: ─et him─ leave him be. Let him do it.
JILL SUNG: He spent the most time talking about how we stopped that closing, and he showed you what steps we took after that. If you─ if the jury is no─ has to be convinced by document evidence. [crosstalk]
SUNG DAUGHTER: ─extremely thorough─
THOMAS SUNG: I agree with you. The facts are brought out, the laws are brought out. [crosstalk]
SUNG DAUGHTER: ─this 30-year business─
HWEI LIN SUNG: Let him finish it. You keep on interrupting him. Let him express his feelings. He has to.
JILL SUNG: We let him express his feelings─
HWEI LIN SUNG: Yeah, but then you─
JILL SUNG: We’d like to express our feeling, too.
HWEI LIN SUNG: Yeah, but you don’t have to be jumping around like─ [crosstalk]
HWEI LIN SUNG: You’re talking back to me again!
JILL SUNG: OK. I got to do work. I have to sign off on loans. That loan has been sitting on my desk for three days now. [crosstalk]
HWEI LIN SUNG: Don’t get so excited.
JILL SUNG: I’m not! I’m just saying I got to get things done. Heather, I’m hanging up on you now, OK? Rocket─ let’s go, get out, get out, get out.
VERA SUNG: OK, Jill, we’ll leave you be. We have to work now.
JILL SUNG: Let’s go!
[Charges against Abacus Bank─ Falsifying business records, residential mortgage fraud, grand larceny, conspiracy]
POLLY GREENBERG, Chief, Major Economic Crimes Bureau, NY DA’s Office: So there were 180 or so counts in this trial. And let’s also remember that there were, I think, 10 guilty pleas here.
DAVID LINDORFF, Covered story for Crain’s NY Business and American Banker Magazine: The DA, his case was built basically on the fact that he arrested all these very low-level loan officers.
SAM TALKIN, Attorney for Mr. Wong: They started going to people’s houses, many people at 6:00 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.
DAVID LINDORFF: We’re talking about Chinese people, many of whom are─ have come from a police state. And in China, people are terrified of that, the knock on the door.
[Trial Day 5]
PROSECUTOR: Good Morning, Mr. Yu
KEN YU: Good morning.
PROSECUTOR: When the court officer swore you in, he asked you your name. You said Qui Bin Yu. Is there another name that you go by?
KEN YU: Ken Yu.
KEVIN PUVALOWSKI: Here’s this gentleman, Ken Yu, who was 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 their─ the DA’s office’s star witness.
Mr. Yu, I’d like to direct your attention to the Ariel Chi case. Ms. Chi was the borrower that you stole money from, right?
KEN YU: Yes, sir.
KEVIN PUVALOWSKI: Isn’t it true that you asked Ms. Chi for a cash tip, as well?
KEN YU: No, I never asked her for a cash tip. I don’t remember that part.
KEVIN PUVALOWSKI: Mr. Yu, you had a telephone conversation with Ariel Chi, is that correct?
KEN YU: Correct, sir.
KEVIN PUVALOWSKI: And at the time, you didn’t know that Ms. Chi was actually tape-recording that conversation with the assistance of the district attorney’s office, correct?
KEN YU: Yes, sir.
VERA SUNG: 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 Ken Yu.
KEVIN PUVALOWSKI: Let’s just get right into it.
ARIEL CHI: You told me after closing, then I’m supposed to go and give you cash, right?
KEN YU: To make things─ I mean, it’s legally, you’re not supposed to do that, but hey, it’s after the closing.
ARIEL CHI: I mean, everything else is legally not right, so you know─
KEN YU: It’s just an unwritten rule that─ it happens in every─ like, every case that I see. You know, at the end, you─ like, you show some appreciation.
KEVIN PUVALOWSKI: Does this refresh your recollection that you did ask her for a tip?
KEN YU: Yeah.
JILL SUNG: I noticed that he couldn’t look at me.
VERA SUNG: That’s very telling.
JILL SUNG: Yeah, he couldn’t─ he couldn’t look at me, but I was, like, “I’m going to look at you.” I was like, “I’ll burn you with my eyes.”
VERA SUNG: And so I was looking at him intently as well, too. “I dare you to say what you want to say.”
KEVIN PUVALOWSKI: He got on the stand and perjured himself over and over and over again in ways that─ that a defense lawyer just doesn’t get in a career more than once or twice. The jury laughed at him multiple times.
ARIEL CHI: Abacus─ you told me that Abacus knew, right?
KEN YU: You don’t─ we don’t say it to the bank. It’s just the individuals, the people who work for the bank. I’m an employee of the bank, and so is the other underwriter.
ARIEL CHI: So then─ OK, but, like─ Abacus, like the bank, they know that everybody’s thing is made up, right?
KEN YU: I will─ I will say that.
KEVIN PUVALOWSKI: Now, you had a long pause there, didn’t you, Mr. Yu.
KEN YU: I was driving.
KEVIN PUVALOWSKI: So that long pause is because you were driving? You were distracted? That’s your testimony?
KEN YU: I cannot recall, but I was definitely driving.
KEVIN PUVALOWSKI: You’ll say that if you get in trouble, is that what you meant there?
KEN YU: I say that because─
KEVIN PUVALOWSKI: That’s a very─ Mr. Yu, I’m asking you─ it’s a strange way to answer that question, and I’m asking you what you meant by─
KEN YU: I will say that. I will say that. I believe that.
KEVIN PUVALOWSKI: Well, the jury can decide what your tone suggests.
ROMAN FUZAYLOV, Juror: 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. Tam and Mr. Wong and Jill Sung with what had happened, but even he didn’t do that.
JESSICA WOODBY-DENEMA, Juror: 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.
ROMAN FUZAYLOV: What role did the bank’s management play in 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?
JILL SUNG: Ken Yu was clearly a bad egg. By using Ken Yu, which is the worst of the worst, the D.A.’s office is saying, “This is the face of the institution.” If the bank was in such cahoots with this person, then why would we fire him? We would want to save him.
DAVID LINDORFF: What the DA accused Abacus Bank of was ridiculous, and really nothing, considering what the big banks were doing. All the too big to fail banks─ Morgan Stanley, Goldman Sachs, JPMorgan Chase and CitiCorp─ have admitted to massive crimes, and they’ve been accused of even worse.
MATT TAIBBI: Virtually every major financial company and big bank in this country, and many of the foreign banks as well, were engaged in a far-reaching fraud scheme whereby they were issuing huge numbers of home loans, particularly to middle and low income borrowers, and then they were repackaging those loans and selling them to investors, but disguising them as high-rated securities.
[Big Banks issued $4.8 trillion in fraudulent loans]
Those were extremely dangerous, toxic loans that were likely to blow up and did blow up in huge numbers after 2008.
[555 percent increase in home foreclosures]
NEIL BAROFSKY, Former Head of Mortgage Fraud at U.S. Attorney’s Office, NY: 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.
[$700 billion government bailout]
MATT TAIBBI: So you have these enormous offenders, and they commit crimes. “We’ll just take money.”
[Big banks paid $110 billion in fines]
They’ll cut a check and make it all go away.
[Loss to US economy, over $22 trillion]
CYRUS VANCE, Jr.: 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 at 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.
[6 Abacus branches, the 2,651st largest bank in the U.S.]
And clearly, it was not representative of the entire financial community. But I think the principle was the same.
MATT TAIBBI: It shows, I think very graphically, this difference in how we deal with a certain kind of offender versus everybody else.
DAVID LINDORFF: 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.
THOMAS SUNG: The DA told us, “You have to accept a plea of guilty for felony plus a fine.” Now, what is our choice?
DAVID LINDORFF: They wanted a conviction, and Vance was going to go after it.
MATT TAIBBI: I think if you were going to pick a bank to pick on, a family-owned company wedged between a couple of noodle shops in Chinatown is about as easy a target as you could possibly pick.
CYRUS VANCE, Jr.: I think the characterizations that this was somehow a cultural bias on the office’s 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 serviced the South American community or the Indian community. There was nothing different that we did or purposefully designed to treat this bank differently.
JIAYANG FAN, Writer, The New Yorker: 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 the seating chart of 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.
JESSICA WOODBY-DENEMA: 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 a routine daily basis?
VERA SUNG: It’s not so simplistic as they would like you to believe, as a simple drawing as to where someone sat.
JILL SUNG: But─ 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 the borrower came in to testify, the borrower said, “No, I met him in the lobby of the bank.”
KEVIN PUVALOWSKI: 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 forge signatures to make sure the signatures would match up. When the underwriter looked at the file, everything would look normal.
SAM TALKIN, Attorney for Mr. Wong: 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 there were fraudulent documents that he uncovered, and his denial of loans cost the originators commission.
YIU WAH WONG, Abacus Chief Credit Officer, 2002-2011: [subtitles] Of course, as I watched my old colleagues lie about me, I was very unhappy. But as a defendant, I couldn’t do anything. The only thing I could do was just sit there and watch.
CYRUS VANCE, Jr.: 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 and the community.
THOMAS SUNG: We’re actually contributing to the revival of the community. It is absolutely mind-boggling for him to say that.
DAVID LINDORFF: When the indictment came down, Sung saw it as an existential threat to his bank, and rightly so, because so many institutions fail just for having that indictment.
THOMAS SUNG: We already went through a crisis in 2003 that almost closed down the bank.
NEWSCASTER: The FBI is looking for Carol Lim, who ran the Canal Street branch of Abacus Federal Savings. Word of the alleged scam set off panicked waves among bank customers.
TI-HUA CHANG, TV Reporter: So in 2003, I happened to be doing a story in Chinatown. My photographer at the time said to me, “Something’s going on up the block.”
NEWSCASTER: Chaos in 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 dough was on.
WOMAN ON STREET: [subtitles] I believe they have some money. But with so many people in line, I don’t think they have enough for everyone.
POLICE OFFICER: Take a walk! Go elsewhere! Do something else today.
THOMAS SUNG: In that short period of time, people withdrawed something like $44 million, putting us in a liquidity crisis. Associated Press report that we have not seen this type of run since the ‘30s, since the Depression.
TI-HUA CHANG: You have to understand something about Thomas Sung. To me, he’s like Jimmy Stewart out of It’s a Wonderful Life. He’s the small town banker, but the town is Chinatown.
THOMAS SUNG: I went to the police department, ask them gave me a bullhorn. I went on the line and I said to them, “I’m here.”
JIMMY STEWART: [“It’s a Wonderful Life”] You’re─ you’re thinking of this place all wrong, as if I had the money back in a safe. Why, your money’s in Joe’s house. That’s right next to yours, and then the Kennedy house and Mrs. Maiklan’s house, and a hundred others!
THOMAS SUNG: 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.
NEWSCASTER: 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─
THOMAS SUNG: They knew that everything was OK. The people came back. They came in, deposited money. They thank us. If I did not have that rapport with the people, then I would have been much more worried that the DA indicted the bank. But if verdict is guilty, there is the possibility that Abacus would not survive.
HWEI LIN SUNG: I never supported him with the bank. I have to be honest. I had told my husband, I said banking is not good. I felt it’s a troubled 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.
THOMAS SUNG: When you have a false document, you enhances the ability of Fannie Mae to ask you to take back the loan.
HWEI LIN SUNG: 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 are fiercely loyal to Tom.
CHANTERELLE SUNG: 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 in Connecticut, and we were both waking each other up. And I─ I realized─ I was, like, I can’t go on in my own career right now anymore. I was, like, “I have to help my family now.”
If the document presents a material fact─
THOMAS SUNG: I’m saying that if it is truly material─ listen to me. If it is truly material, the loan will go in default.
CHANTERELLE SUNG: I get really frustrated sometimes. This is probably a factor of being the youngest, but sometimes, I just─ like, whatever I say is just not heard.
THOMAS SUNG: You are not convincing.
CHANTERELLE SUNG: Papa, if that’s the form─ if that’s the form that you choose to use─
VERA SUNG: I’ll tell you what is tongue and cheek. She said no harm, no foul.
CHANTERELLE SUNG: If that’s the form─
THOMAS SUNG: I never said that.
CHANTERELLE SUNG: Hold on, I have a question, Papa.
THOMAS SUNG: I didn’t say that.
CHANTERELLE SUNG: If that’s the form that you choose to use to represent─
VERA SUNG: She used that word.
CHANTERELLE SUNG: If that is the form─
THOMAS SUNG: That’s not true. I just told you there is harm.
CHANTERELLE SUNG: It’s very difficult to─
THOMAS SUNG: OK, nothing more for me to say.
VERA SUNG: This is my office . As you can see, 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.
[on the phone] Tracy, on your desk, anything urgent that 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 5:00 in the morning, getting work done, banging out all these emails and then go to court.
[Trial Day 23]
PROSECUTOR: Did you ever tell the person that you spoke to at Abacus Bank that you were a manager at Becky’s Nail Spa?
BORROWER: [through interpreter] 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 the loan.
KEVIN PUVALOWSKI: 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.
PROSECUTOR: On this loan file, why does it say you’re a manager?
DONG LIN, Borrower: I don’t know.
PROSECUTOR: Did you tell anyone that you were a manager?
DONG LIN: No.
KEVIN PUVALOWSKI: What 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.
DEFENSE ATTORNEY: Mr. Lin, you had your employer sign the verification of employment form for the loan file, is that correct?
DONG LIN: Yes.
DEFENSE ATTORNEY: And he signed as the co-owner of the China Sun. Did anybody co-own the restaurant with Mr. Pen?
DONG LIN: I don’t really know.
DEFENSE ATTORNEY: You don’t know if Shu Qin Lin was also a co-owner of the China Sun restaurant?
DONG LIN: I only meet this person a few times. I don’t know if this person’s a co-owner of the restaurant or not.
DEFENSE ATTORNEY: Shu Qin Lin you only met a few times, and you don’t know if she’s a co-owner?
DONG LIN: They didn’t tell me. And I didn’t ask.
DEFENSE ATTORNEY: OK, Shu Qin Lin, spelled S-H-U Q-I-N L-I-N─ you don’t know who that is?
DONG LIN: I know who that is.
DEFENSE ATTORNEY: You do know who that is. So who is that?
DONG LIN: You can say she’s like a sister.
DEFENSE ATTORNEY: Is she like a sister, or is she your sister?
DONG LIN: She’s my sister.
KEVIN PUVALOWSKI: There was a string of witnesses who were just abject liars, to the point where it─ it became a concern of ours that─ that the jury’s going to think that─ that every one that the bank deals with, former employees and customers, are just full of [expletive]
THOMAS SUNG: So the trial’s been going on for the ninth weeks now, right?
JILL SUNG: Is it nine?
CHANTERELLE SUNG: Day 52. It’s around day 52.
VERA SUNG: You’ve been counting?
CHANTERELLE SUNG: I’ve been keeping track of the number of days since the jury as─
JILL SUNG: Is that from the time that the jury─
CHANTERELLE SUNG: Yes. Since January 12th.
THOMAS SUNG: I just cannot believe how this thing could be dragged out so long, the weeks in trial and the expenses─
JILL SUNG: [sighs] The expenses ─
THOMAS SUNG: ─involved, the millions of dollars that’s spent to defend yourself ─ and witness after witness, of course, they would know if they are lying. So you bring these people up 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’s just too bad.
VERA SUNG: Well, we can hopefully win this case and make a statement.
THOMAS SUNG: Well, even if you win the case, the damage─
VERA SUNG: Well, to us─
THOMAS SUNG: ─on the community, is done.
JIAYANG FAN: Chinese immigrants who 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. On 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.
JESSICA WOODBY-DENEMA, Juror: One particular individual had been approved for an $800,000 mortgage loan, but on their tax return, they were earning only $24,000 a year. And I think this was as a couple. There were a lot of gasps across the jury panel. How does this even happen?
JIAYANG FAN: 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.
KEVIN PUVALOWSKI, Attorney for Abacus: Maybe folks in that community don’t pay, you know, 100 percent of their taxes. These are all issues that if they have a problem with a─ you know, with any immigrant community that operates in cash, OK, they have 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.
JILL SUNG: There’d be chaos if your bank basically was the IRS. No one would want to bank with any bank.
THOMAS SUNG: You can say that our responsibility was to provide credit to the community, not to be a policeman.
DAVID LINDORFF: 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 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.
JIAYANG FAN: 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.
POLLY GREENBERG, Chief, Major Economic Crimes Bureau, NY County DA’s Office: 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.
JIAYANG FAN: In Chinese culture, the line between a gift and a loan is very blurry, to the extent where there isn’t even really a distinction when it’s coming from your parents or your relatives.
DAVID LINDORFF: This is what immigrants have always done. Jewish families did it. Irish families did it. Italian families did it. Chinese families do it.
JIAYANG FAN: If I receive, you know, $50,000 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 pay it back, I will. But you know, if I─ if I can’t, we’re a family.”
JESSICA WOODBY-DENEMA, Juror: So gift letters actually had to be from a relative or a spouse. But it came to surface that these loan officers sometimes were listed as the gift donors.
PROSECUTOR: Mr. Yu, at the top of this gift letter certification, it reads that you are making a gift of $9,000 to your cousin Qi Zen Chen. Is Qi Zen Chen your cousin?
KEN YU: No.
PROSECUTOR: Did you make a gift of $9,000 to Qi Zen Chen?
KEN YU: He gave me $9,000 in cash, and we went downstairs and got the certified bank check in his name.
PROSECUTOR: Tell us how it came to be that Qi Zen Chen gave you $9,000 and then you gave him a check.
KEN YU: This particular customer did not have any credit scores.
PROSECUTOR: Can you tell us from this document who approved this loan?
KEN YU: That would be Ms. Vera Sung.
VERA SUNG: If Ken Yu is signing a gift letter ─ Ken Yu ─ that would be disturbing. That’s not what happened.
JILL SUNG: The Chinese name Ken is not known. People just call him Ken. Ken Yu clearly knew that and purposely put his Chinese name on that check for that reason, to obfuscate that it was him who had given a, quote, “gift” to the borrower.
KEVIN PUVALOWSKI, Attorney for Abacus: Mr. Yu, what is the commitment letter?
KEN YU: That the bank agrees to give this borrower a loan if all the conditions were met.
KEVIN PUVALOWSKI: 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?
KEN YU: You are right, sir.
KEVIN PUVALOWSKI: So the verification of employment that you helped fake, the gift letters that you helped fake were done after Vera Sung approved this loan on behalf of the board of directors, isn’t that right?
KEN YU: In this case, yes.
JILL SUNG: It’s trying for us because it’s our father’s legacy, and he’s passed that legacy on to us. And Vera always─ when she wants to be very mean to me, she’ll point out, “It happened under your watch, right?” [laughs] So she can be very mean to me!
BARBER: A haircut does indeed make you look more spirited.
THOMAS SUNG: Yes, I do need a haircut to make me feel more energetic, especially as I grow older.
BARBER: Your hair is still good. It can still stand erect. Other people’s hair cannot get erect any more. Many have lost it and become bald.
THOMAS SUNG: My son-in-law is also losing hair, becoming bald.
BARBER: Your son-in-law is a Chinese or a foreigner?
THOMAS SUNG: Foreigner.
BARBER: We are all getting old.
JILL SUNG: So much time has gone by. Our father was 75 and now he’s 80.
VERA SUNG: People don’t understand there’s some long-term effects from going through such a traumatic experience.
THOMAS SUNG: [subtitles] Just think about it. Our bank was doing so well, wasn’t it?
BARBER: [subtitles] Such good business messed up by them! They should pay the bank for the reputational damage. They are trying to make fun of us Chinese people.
CHANTERELLE SUNG: [reading proposed press release] “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 DA will always remind us and 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 to go on─
VERA SUNG: Exactly. That’s what I told him─ [crosstalk]
CHANTERELLE SUNG: And so you’re saying human rights can easily be trampled upon, and I don’t read it─ I don’t want people to think you’re saying that it can be. In other words, it should be a normative sentence not─ it should not be trampled upon.
THOMAS SUNG: No, no.
HEATHER SUNG: 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.
VERA SUNG: See, Chanterelle, this is all in here, but he changed my words again, and then he didn’t put it in properly in here.
THOMAS SUNG: It’s a little bit dry.
VERA SUNG: Because that’s the chicken. No mayo, that’s why, right? But there’s cheese.
HEATHER SUNG: My father, especially, is able to handle stress in an incredible way.
VERA SUNG: If you don’t like your sandwich─ are you OK?
THOMAS SUNG: I’m fine.
VERA SUNG: But you said it’s dry.
HEATHER SUNG: As he’s gotten older, I think he feels that he’s done what he’s wanted to do. He’s a little more philosophical, and to know that he’s done the best that he can do is good for him.
CHANTERELLE SUNG: If it’s too much chicken, you don’t have to eat all of it.
VERA SUNG: He says it’s─ he complained. [crosstalk] He said it’s dry.
CHANTERELLE SUNG: Did it come with avocado? Oh, they didn’t put mayonnaise.
VERA SUNG: They didn’t put─ yeah, but they put avocado. They put avocado. But he says it’s dry. He said it’s dry, but I’m easy.
HWEI LIN SUNG: This is how he is. He’s very calm, and I’m very─ I’m like a jumping bean. I’m always running around. You know, that’s how I am. And it drives me nuts.
HEATHER SUNG: 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.
HWEI LIN SUNG: 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 going to 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 had to sit there with just─ suppress myself, you know? That’s why I couldn’t even eat lunch yesterday. I had a stomach ache.
[Trial Day 64]
RUSTY WING, Attorney for Abacus: Ms. Roma, is the Federal National Mortgage Association, otherwise known as Fannie Mae, in the business to make money?
SUSAN ROMA, Fannie Mae Risk Director: Fannie Mae is in the business of providing home ownership, and as a result of that, Fannie Mae does make money, yes.
RUSTY WING: This whole case ultimately came down to Fannie Mae. Fannie Mae was the alleged victim in the case.
JILL SUNG: 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.
CYRUS VANCE, Jr.: The bank can do whatever it wants. The bank could keep those loans. It could service those loans and care not a whit about the documentation. That was the bank’s choice, keep them or sell them. It chose to sell them. In selling the loans to Fannie Mae, they simply passed the risk off to unknowing purchasers.
RUSTY WING: Ms. Roma, Fannie Mae doesn’t want to lose money, does it?
SUSAN ROMA: Absolutely not. And it doesn’t want our lenders to lose money, either.
RUSTY WING: And you are familiar with the default rate of Abacus loans during the indictment period, correct?
SUSAN ROMA: Yes, I am.
RUSTY WING: During the 5-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 9─ 9!
Would you say that that was a low default rate?
SUSAN ROMA: The default rate is low.
RUSTY WING: Would you say it’s microscopically low?
PROSECUTOR: Objection to the characterization!
JUDGE: Sustained as to the word “microscopic.”
KEVIN PUVALOWSKI: Abacus Federal Savings Bank had one of the nation’s lowest default rates─ not the highest, one of the lowest.
JESSICA WOODBY-DENEMA: 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.
JILL SUNG: 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!
KEVIN PUVALOWSKI: Larceny 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.
CYRUS VANCE, Jr.: My view is if I take $5 out of your wallet, I’ve taken your money. 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, a larceny
JILL SUNG: if I sold Fannie Mae a loan for $5, not only did they get their $5 back on time, as what they thought they were going to get it, they also got $3 to $4, $5 back in interest, which makes it $10. So tell me how that is considered larceny.
NEIL BAROFSKY, Former Head of Mortgage Fraud at U.S. Attorney’s office, NY: 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, fraud where 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 in the air and suggesting that, “Well, gee, any time a crime is committed, we put all of our resources in to prove it,” is just not true. I mean, today, walking over to my office, the light was red. And I confess I walked across the street against a red light. I am absolutely guilty of jaywalking and I could have gotten a 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.
CYRUS VANCE, Jr.: 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─ to third parties.
NEIL BAROFSKY: There should probably be regulatory punishment for that type of behavior, without a question. But who are 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’s 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.
KEVIN PUVALOWSKI: Frankly, if every bank had─ had underwritten as well as Abacus during the indictment period, we wouldn’t have had a financial crisis.
[Final week of trial] [family conference call]
VERA SUNG: We really need to talk about one issue right now, which is whether we should have Jill testify.
CHANTERELLE SUNG: it’s really difficult. Like, we keep switching back and forth. 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 testify.
VERA SUNG: Actually, Rusty and Papa have the same opinion.
THOMAS SUNG: Yeah, but I don’t want to, you know, pressure her to testify.
VERA SUNG: And I-
THOMAS SUNG: But Rusty’s view was that that the jury is always wondering why─ if you’re so innocent, why would you not testify.
CHANTERELLE SUNG: Right, a jury might not feel much towards a corporate institution. If you put a personal face to it, such as Jill, they’ll begin to see and realize that the consequences of a conviction are serious.
VERA SUNG: However, nothing has been truly said of Jill to implicate her in anything.
HEATHER SUNG: Right. I feel like I have yet to hear a reason to put Jill on. In fact, if you don’t put her on, it’s not because you’re trying to hide anything, but because there’s no─
CHANTERELLE SUNG: There’s nothing to defend.
HEATHER SUNG: There’s nothing to defend.
HWEI LIN SUNG: Excuse me! Excuse me! Am I in the voice or what?
CHANTERELLE SUNG: Yes. Yes. The mother is speaking.
HWEI LIN SUNG: Does Jill have no opinion of her own?
VERA SUNG: That’s a very good question. She’s not here right now.
CHANTERELLE SUNG: She didn’t even want to have this─ this conversation yesterday.
VERA SUNG: The feeling that we got from her was that if she needs to testify, she will, but she would feel terrible if somehow, she didn’t testify well and that would result in a negative outcome.
CHANTERELLE SUNG: Yeah, and she would blame herself. I just wanted to, Papa, because I know you feel strongly about Jill testifying and I had felt the same way, but one-
THOMAS SUNG: No, I actually am not─ no longer am strongly insisting on─
CHANTERELLE SUNG: OK.
VERA SUNG: Have changed your mind.
THOMAS SUNG: Yes, changed my mind.
VERA SUNG: So how would we feel if Jill didn’t take the stand and we did not win the case? Would we have regrets?
THOMAS SUNG: I can answer that. I can answer that. I have given the matter a careful and thorough analysis. If the outcome is not for me, I do not and should not feel regretful.
[May 19, 2015, Trial Day 67]
[Defense closing argument]
[Trial reenactment, edited for clarity]
DEFENSE: They have said that these kinds of documents are so obviously false that Mr. Tam and Mr. Wong and the bank’s other 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’re 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 W2s and tax returns all the time. That would be easier. But the bank has chosen to serve this community, challenges and all.
[Prosecution closing argument]
PROSECUTOR: 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.
VERA SUNG: And then she tried to say that these loans seemed to be representative of our entire loan portfolio, which is not true.
CHANTERELLE SUNG: She literally rolled her eyes at your mission and building this bank for the community, to serve the community, and tell these people [unintelligible] She just cast it aside.
THOMAS SUNG: Isn’t it fortunate, at my age, I can hardly hear everything that’s said in the court?
CHANTERELLE SUNG: That’s a blessing!
THOMAS SUNG: [laughs] That’s a blessing!
VERA SUNG: Did you observe in the beginning that the honorable Cy Vance himself attended the beginning part?
THOMAS SUNG: I did not see it.
HWEI LIN SUNG: I have seen him on TV, and he’s much smaller in person.
CHANTERELLE SUNG: 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 at me?
VERA SUNG: She was just in tears and now she’s bursting out laughing.
HWEI LIN SUNG: The judge sounds like The Godfather.
CHANTERELLE SUNG: No, he says he has to save his voice for the jury charge because that’s going to be a few hours.
HWEI LIN SUNG: Are you not eating any rice? Are you on a diet?
CHANTERELLE SUNG: No, I’m not.
[Judge’s instructions to the jury]
JUDGE: 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.
[Jury Deliberation Day 3]
JILL SUNG: If they are going to vindicate all of us, we would hope that it would happen quickly, you know what I mean? It’s like, “Oh, we heard this evidence. It’s not worth it.” Just vindicate everybody.
[Jury Deliberation Day 5]
VERA SUNG: This is a really nerve-wracking time, not knowing what the jury’s going to decide and wondering how come they didn’t come back already.
[Jury Deliberation Day 7]
CHANTERELLE SUNG: 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?
JILL SUNG: I 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 in case the jury have questions, 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, a picnic basket of work.
JIAYANG FAN, Staff Writer, The New Yorker: Day after day, the jury did not come back. And in fact, the jury was asking for various documents, some, you know, unfavorable for the prosecution, some unfavorable for the defense.
JILL SUNG: The first note came back, and they said they wanted the 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.
VERA SUNG: It got to the point when we were actually trying to analyze the handwriting on the notes!
CHANTERELLE SUNG: We all know we didn’t do anything. It’s that─ that’s─ it’s─ it’s─
THOMAS SUNG: I mean, it’s impossible that we’re found guilty on all counts. It’s just impossible.
VERA SUNG: We’re driving ourselves mad trying to speculate, “Oh, this person must be thinking this,” and maybe they’re thinking quite the opposite.
JESSICA WOODBY-DENEMA: 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, and because there was too many hands that were─ that it was touched throughout the bank for the loan approval process for things to go unnoticed.
ROMAN FUZAYLOV, Juror: 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.
JESSICA WOODBY-DENEMA: 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, and I was one of the four on the guilty.
[Jury Deliberation Day 10]
JILL SUNG: [on the phone] Hi. OK, so they were dismissed for the day, and they came back with a note, again, saying that they are deadlocked and that they─ 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’ll be a verdict, or there’ll be a mistrial.
CHANTERELLE SUNG: Tomorrow will be the last day, whether or not there’s a unanimous verdict.
JILL SUNG: Unless Cy Vance in his infinite wisdom decides to re-try the case.
VERA SUNG: Jill?
JILL SUNG: Mommy’s concerned about Papa’s wellbeing. He’s 80 years old, and he’s been up since 5:30 AM, and he’s had nothing to eat for dinner. We need to get you home, so let’s get you some food. Papa! You do!
HWEI LIN SUNG: Tom, Tom, Tom─
VERA SUNG: Can you hear Mom? So we’re going to put him on a train. He will go home now, Mommy. You got to go home, Papa. Mommy’s worried.
HWEI LIN SUNG: You’ve got to eat! And then take a cab, don’t take the subway!
VERA SUNG: OK, we’ll eat.
HWEI LIN SUNG: You’ve got to eat now! You’re an old man, OK? You’re not a young kid anymore! I’ve seen you every day for the last five years. This case is killing you, killing you!
JIAYANG FAN, Staff Writer, The New Yorker: After such a long trial and so many charges against them, there’s going to be very little possibility that the bank will be completely exonerated. The jury’s going to find them guilty of something.
KEVIN PUVALOWSKI, Attorney for Abacus: If we go down on one, it’s a defeat. You know, it’s got to be 80 to nothing. If you’re convicted on one felony, there will be very serious ramifications for the bank.
THOMAS SUNG: New York Times article on Friday, June the 5th, 2015. [reading] “After a four-month trial, a jury found Abacus Federal Savings Bank and two of its 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 court clerk read the 240 counts and repeated words ‘Not guilty’ after each one, members of the Sung family wept and embraced one another.”
JILL SUNG: How do we feel? I feel relieved.
VERA SUNG: So many emotions.
HWEI LIN SUNG: Very, very happy. But I was told not to express any feelings.
ALL: No, no, no. During the trial. Now you can express your feelings.
VERA SUNG: My father─ we had to text him. And actually, you called him─
CHANTERELLE SUNG: I ─ he didn’t respond to the text, so then I called him. He answered the phone and just sort of took a step back and started microwaving his vegetables, and said, “Um, what? There’s a verdict? Oh. Should I come?” I’m, like, “You’re not processing!”
JESSICA WOODBY-DENEMA: I didn’t feel great about it. But I wouldn’t have felt great if the verdict been guilty. The way that the law was read to is that under each charge, all of the different elements had to be met. In my mind, there 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.
POLLY GREENBERG, Chief, Major Economic Crimes Bureau, NY DA’s Office: Abacus was not exonerated─ 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.
KEVIN PUVALOWSKI: “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─ the verdict, we respect the jury’s verdict─
RUSTY WING, Attorney for Abacus: Exactly.
KEVIN PUVALOWSKI: ─period.
YIU WAH WONG, Abacus Chief Credit Officer, 2002-2011: Of course, I am very happy, very happy. I feel relief because it has been a long time. And I just want─ want─ want to resume my normal life.
VERA SUNG: [reading newspaper article] “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.”
THOMAS SUNG: We Chinese have to learn from other minorities. When it comes to the community’s interest, you must let those who are in power know that this shall never happen again.
[subtitles] The litigation alone exceeded 10 million dollars.
CHINESE JOURNALIST: [subtitles] American justice has become American injustice superimposed on you. Superimposed! You had the revenge for us. Ha-ya!
THOMAS SUNG: 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.
ALL: Hear, hear!
VERA SUNG: Let us eat cake.
JILL SUNG: It’s green tea, black bean green tea. There’s many different flavors.
It’s not really a celebration. I mean, we were vindicated, and 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. It’s a tragedy.
We have a lot of cake. We may have too much cake!
DON LEE, Community Activist: 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 will cost you $10 million.
THOMAS SUNG: 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.
VERA SUNG: I got 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.
[The Manhattan DA revoked Ken Yu’s plea agreement. He was sentenced to six months in jail and five years probation for grand larceny, scheme to defraud and falsifying business records.]
[No other Abacus employee served time. The DA’s office dropped charges on eight of them.]
[Abacus has been under federal oversight and now has stronger compliance practices.]
[According to bank records, all the loans cited in the case have been paid off or continue to perform.]
[Abacus remains the only U.S. bank indicted for mortgage fraud related to the 2008 crisis.]