A Tiny Bank’s Surreal Trip Through a Fraud Prosecution
In the heart of New York’s Chinatown, a mortgage closing at the Abacus Federal Savings Bank was just about complete. All had gone smoothly: identifications verified, documents signed, checks exchanged. Only one set of papers still required signatures.
Eight mortgage loans had been scheduled for closing that day in mid-December 2009, and Vera Sung — a director at Abacus Bank and a daughter of Thomas Sung, its immigrant founder — was on hand. She was happy to be there. After all, while many larger institutions had pulled back from residential lending after the financial crisis, Abacus was keeping its loan spigot open.
But as the paperwork was being completed, Ms. Sung noticed something odd. Ken Yu, the loan officer handling the mortgage, had asked that extra checks be made out to the borrower. Ms. Sung called Mr. Yu, requesting that he come to the closing office to explain what the checks were for. Waiting for Mr. Yu, she saw him outside the office talking furtively with the borrower. After confronting the two, Ms. Sung grew suspicious and called off the deal.
Although she didn’t know it immediately, Ms. Sung had stumbled on a fraudulent scheme involving false borrower income verifications and documentation. The bank began investigating, and Mr. Yu was fired the following Monday.
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