Smart, capable women. Its trying for us because its our fathers legacy, and hes passed that legacy on to us. Narrator tonight on frontline, from steve james, the director of hoop dreams and the interrupters, abacus small enough to jail. Frontlinis made possible by contributions to your pbs station from viewers like you. Thank you. Major support is provided by the john d. And catherine t. Macarthur foundation, committed to building a more just, verdant, and peaceful world. More information is available at macfound. Org. Additional support is provided by ford foundation, working with visionaries on the front lines of social change worldwide. At fordfoundation. Org. The park foundation, dedicated to heightening Public Awareness of critical issues. The john and Helen Glessner family trust, supporting trustworthy journalism that informs and inspires. And by the frontline journalism fund, with major support from jon and jo ann hagler, and Additional Support from scott nathan and Laura Debonis and william and helen pounds. Major support for frontliand for abacus small enough to jail was provided by the corporation for public broadcasting. I owe everything to george bailey. Help him, dear father. First time i saw its a wonderful life, i had tremendous respect for george bailey, who is the main character. He did so much good for the community. Mr. And mrs. Martini, welcome home george was lending money to the Community Residents to buy houses. Me, Giuseppe Martini i own my own house and thats exactly the same purpose that when we started the bank, it was our motivation to help a lot of people, a lot of immigrants. Here you are, george Merry Christmas this movie touches me so much the family, the friends. I always watch it. Every year, i watch. singing Auld Lang Syne that makes me cry. Thats the part. I wish this story could end the same way its a 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, its 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 officers, and making such a big announcement that we are part of the cause of the financial crisis of 2008. Almost laughable. Mr. Sung is entitled to his opinions, but in abacuss Loan Department, mortgages were based upon false documentation. We have evidence of conspiracy, larceny, and systemic fraud. reporter speaking chinese if that prosecution goes through, that bank is going to go out of business, theres no question about it. Theyre going to lose their charter and its 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. music ends people chattering when i walk around here, of course i feel very much at home. This is a very tasty noodle shop, if you go in there. 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 building with the Chinese National flag, this is the Chinese Community center, and in there is. I represented the association for years and years and years. This association sponsored a school, and i obtained the charter from the department of education. singing in chinese and people in the community, older people, particularly, remember me, know what ive done. Very good. 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 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. He always told us stories that they were willing to take his deposits, but they werent willing to give him credit, loans. So thats why he started the bank, because he felt that wasnt 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 abacus as a national treasure, so we say, well name the bank abacus. Hello, can you open for me . We serve people whove 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. Have you ever seen so many boxes . There are 8,000plus boxes in this vault. 8,000. The chinese people, particularly the immigrants, they rent houses in a very tight quarters. Theres no place for them to place their valuables except in a bank vault. So it starts with the safe deposit boxes, then theyre willing to 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. They bring their children, their grandmother, and by the time they walk out, theyre all superhappy, and you feel good to be a part of that process. family chatting do you have the chicken feet in there . Yes. Oh, okay. Thats always special. Theres chicken butt. Thats the butt. You dont want to eat that. I like it. laughs 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 didnt see them that much in those days. They had no idea, anything, not the faintest idea about the Chinese Community. In fact, heather still doesnt. She hates the city, you know, shes like me, we both have headaches. And at home, when we dont 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 9 00 to 4 00 job. 9 00 to 4 00, he said that . Yeah, because a long time ago, people could leave at 3 00 from the bank. He said, you can have children, you could 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 dont think its going to be easy. You gave two different stories. You know, people asked me, so why in the world you wanted to get into banking . Its not because i needed a job. I was practicing law, i was busy, but i said to myself, its time for me to do something for the society. That started from yeyes time. Grandfather. My grandfather, your father. He always thought that was the honorable thing to do. Thats not unusual. A lot of people in chinatown, your generation, they believe that was honorable, to be entrusted. To be trusted. Entrusted with the public funds. Yeah, thats right. Do you have a copy of the payoff letter . This whole fiveyear ordeal began in december of 2009. I had a closing that day involving one of our Loan Officers, ken yu. Ken yu worked with us around four years. The staff really liked him, he was very popular, he had some charisma. It was a normal closing. There was the sellers attorney and there was the buyer. But there was a lot of tension in the closing. They werent 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 didnt 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. Vera was very upset. This girl gave thousands of dollars, im told, to this loan officer, and she thought they would be applied towards her Closing Costs and they werent. 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. Ken yu stole money and he was running a moneylaundering 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 highly experienced in fraud and antimoneylaundering 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. Then 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 shouldnt be happening and taking steps to make sure this didnt happen again. The couple, unfortunately, lost the down payment on this house, which was quite a chunk of money. It was ten percent of the houses price, and they were very upset. And at that point, the borrower, she calls me and shes like, you know, theres this money that hes taken from me, so what are you going to do . And i said to her. I remember i was furious, im like, what am i going to do . Because im thinking to myself, maybe shes 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. A complaint was filed with the local precinct. The initial d. A. s Office Investigation was focused solely on the employee whod been accused of a theft. The d. A. 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. You know, at first you think that theyre here to figure out whats going on for us because theyre Law Enforcement. I dont know where, and at what point, we transitioned to. In their mind, yeah. In their mind, and then us realizing, wait a minute, you know, maybe were 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. yiu wah wong speaking english 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 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. 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. I mean, i think they definitely were looking, trying to get us, to get me, yeah, because im the c. E. O. 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. 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. I was at the District Attorneys 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, theres 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 thats where i come from and then to know that my reputation in the office was one of utmost integrity, it just. Made no sense. woman speaking chinese man speaking chinese 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 stalinistlooking chain gang. Im a former prosecutor. Im not soft on crime. Ive never seen a spectacle like this. These people were humiliated intentionally for no good reason. It is not the District Attorneys Offices 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. Thats a decision thats made by the Court Officers. I wont go into it more than that because, you know, its not something im involved with. Court officers dont 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 d. A. s office. I mean, this was like the case of the century. You never would have done that 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 were out awaiting trial. The d. A. Had added charges to mr. Wongs indictment. Usually, you dont even have to go through the process again. They just add the charges, you get arraigned again, the bail is transferred, and thats 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. Ive been doing this for 25 years and id never seen that happen before. There are Security Issues behind the decision, but those decisions create feelings that are. That dont reflect the view of the office or my view, and to the degree that happened here, i think it was very unfortunate, but it. It happened. wong speaking english it is a humiliation for me, you see. And thats where i saw incompetence combined with arrogance. My Deputy Bureau chief, he was always so inspirational, and he would always refer to the inscriptions outside 100 Centre Street about having faith in justice. But i dont believe that anymore. I decided to leave the d. A. s office. It really angered the Chinese Community, but so what . Theyre not going to decide an election for vance. music playing thats it. laughs youve done that many times . My whole life. This is the association where my greatgrandfather was, my grandfather, my dad. Back in the day, with the exclusion act, people did not have rights. This was where they would all come. Like mr. Sung, what drives me is the sense of community. conversing in chinese this case is about an attack on our community. Were easy prey, i think thats whats going on. People have reason to be fearful of authority, of what could 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. Its more than just abacus savings bank being clear; its about exonerating our entire community no matter what we do, be it the little guy selling vegetables or a bank thats doing business. I told mr. Sung, im glad they pick on you, because youre a fighter. Cyrus vance just felt this is easier to attack, especially as a family bank. But he doesnt realize tom is not easy to be pushed around. And my girls, theyre tough, smart, capable women. So courageous. Although this is david versus goliath, david, being Abacus Federal Savings Bank, has a slingshot, and that is, you know, theyre a whole family of lawyers. I was going to be able to fight this. They were almost gleeful. They were, like, were going to have our day in court now. Were actually going to be able to show that they were wrong. They made a decision that they were not going to plead guilty to something that they didnt feel the bank was guilty of. That is a courageous choice, and its an expensive choice. The d. A. 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 maes money