TARP Bank FRAUD: Two Senior Execs Indicted. *A First*.

[chill_wind]

Execs of TARP-Supported Bank Charged with Hiding Millions in Losses
Carrie Bay
10/11/2011

A federal grand jury in San Francisco has indicted two former bank executives of the now-defunct United Commercial Bank for misrepresenting loan losses to federal agencies as the bank took money from taxpayers through the Troubled Asset Relief Program (TARP).

Specifically, the charges include conspiracy to commit securities fraud, securities fraud, falsifying corporate books and records, and lying to auditors.

The indictment alleges that beginning in September 2008, Shabudin and Yu, along with others, used fraudulent accounting maneuvers and techniques to hide the bank’s true financial condition from the U.S. Department of Treasury, investors, depositors, regulators, and the bank’s independent auditor.

“Shabudin and Yu are the first senior executives of a TARP bank charged in connection with a scheme to defraud investors, which included the Treasury, and by extension the American taxpayer, Christy L. Romero, acting Special Inspector General for the Troubled Asset Relief Program (SIGTARP) said in a statement.


(snip)

After the bank failed in November 2009, the FDIC became the receiver and, to date, has paid out approximately $397 million as a result of the seizure. The indictment estimates total losses to the FDIC will be approximately $2.5 billion, and further alleges that none of the TARP funds have been repaid. United Commercial Bank was the first TARP recipient bank to fail.

Read more: http://www.dsnews.com/articles/execs-of-tarp-supported-bank-charged-with-hiding-millions-in-losses-2011-10-11


Here's another write-up:

Ex-execs of failed United Commercial Bank indicted

Bob Egelko, Chronicle Staff Writer

Wednesday, October 12, 2011

Federal authorities filed criminal and civil fraud charges Tuesday against former executives of San Francisco's United Commercial Bank, accusing them of hiding losses that led to the bank's multibillion-dollar collapse in 2009.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/10/11/BU551LG7G2.DTL


Again, these are not allegations of wayward bankers' "creative loopholes." Conspiracy to commit fraud and FRAUD. They were given $298 million in TARP. Allegedly had understated their operating losses in Sept 2008 by 50 percent. The indictment was unsealed last Tuesday. One of them was arrested . The other surrendered in court, and both are scheduled to be back in court on October 20.

I want to see jail time.

:nuke: :nuke:

[Greybnk48]

1. Jail's not enough. Where's the money? Trace where the

money went and get it back. Otherwise I think some of these grifters launder it and have it waiting for them after they serve their 20 months or whatever.

[nc4bo]

2. I agree. nt

[vets74]

30. When the Manhattan prosecutor charges for Common Law Fraud and convicts Wall Street embezzlers...

then I'll believe we're going in the right direction.

They embezzle on behalf of their companies and get bonuses as reward.

Kinda like smash-and-grabs with a fence taking the swag, a 10%-of-retail deal.

Common Law protections ??? Where ?

[Pacifist Patriot]

3. +1,000

[MedicalAdmin]

4. Sieze ALL assets

Toss them in jail and make sure everyone knows they are a chomo. Letthem out on permanent probation with an ankle bracelet and a job cleaning streets with a broom. Supply them with a permanent 8 x 12 room to live in and a hit plate and case of ramen for food.

Fuck em forever. They have ruined thousands or more lives and caused thousands of deaths. They deserve worse than death.

And the same should happen to their families. If any of their relative, kids, etc. Benefited from any other dirty stolen money they should suffer too until that money ( billions ) is repaid at minimum wage. Buts that after serving maximum security time as a chomo.

[chill_wind]

6. Starting with the mansion

in Hillsborough.


He and his wife bought a mansion in the tony San Francisco suburb of Hillsborough and ingratiated themselves to the city's high society. They donated generously to the San Francisco Symphony and Wu served on its board of governors until August 2010. They appeared often in publications chronicling the rich and famous at Symphony openers, fundraisers and other civic causes.

http://www.cbsnews.com/stories/2011/10/16/ap/business/main20121059.shtml

[barbtries]

31. i agree!

seize their assets! jeez if a poor person gets pulled over with expired tags they seize the only thing in the world he has that is worth anything, namely his car...rich people just skate and skate. it's so unjust.

[MedicalAdmin]

34. That is so true.

It has never happened to me but I've managed though luck and connections to keep my head just above the middle class line. Or maybe not. I have no health insurance, no savings, and no real future. At this time both my wife and I are skating by but we are one emergency away from DEAD.

Still life is lived where and when one lives. And for all of the downsides, I am pretty happy most of the time.

[mod mom]

19. absolutely!

[chill_wind]

5. CBS: Each faces 25 years max if convicted.

October 16, 2011 11:41 AM

United Commercial bank's spectacular rise and fall
(AP) SAN FRANCISCO

(see intro)

Regulators charge Wu's pursuit of the Chinese bank and worldwide acclaim is at the center of United's spectacular collapse — a failure that will cost taxpayers more than $3 billion and has led to the first criminal prosecutions of senior executives of banks that received part of the federal government's $700 billion bailout of financial institutions. The nearly $300 million government bailout United received is gone and federal regulators estimate the bank's failure will cost taxpayers another $2.5 billion in deposit insurance.

The Securities and Exchange Commission said United is one of the 10 largest bank failures during the financial crisis.

(snip0

Two of Wu's former subordinate executives — Ebrahim Shabudin and Thomas Yu — were indicted this past week with fraud for allegedly covering up bad loans and lying to auditors and government regulators about the bank's health. Each faces a maximum prison sentence of 25 years if convicted.

more; http://www.cbsnews.com/stories/2011/10/16/ap/business/main20121059.shtml

They got bailed out. WE got sold out.

[chill_wind]

10. ETA- FBI Press Release (I might not be right about max penalties)

As I don't know anything about how these all would actually work together

The maximum statutory penalty for each count of conspiracy to commit securities fraud and securities fraud, in violation of 18 U.S.C. §§ 1349 and 1348, is 25 years, plus a fine of up to $250,000 or twice the gain or loss, whichever is higher. The maximum statutory penalty for falsifying corporate books and records, in violation of 15 U.S.C. §§ 78m(b)(2)(A), 78m(b)(5), 78ff, and 17 C.F.R. § 240.13b2-1, is 20 years. The maximum statutory penalty for making false statements to accountants of a publicly traded company in violation of 15 U.S.C. § 78ff, and 17 C.F.R. § 13b2-2, is 20 years.

Any sentence following conviction, however, would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of sentence, 18 U.S.C. § 3553.

http://www.fbi.gov/sanfrancisco/press-releases/2011/former-united-commercial-bank-officials-charged-with-securities-fraud

[myrna minx]

7. Where's the money? n/t

[kestrel91316]

8. Sacrificial lambs. They will get off. And they will be the only indictments,

but then DOJ will be able to claim they went after the crooks.

[FedUp_Queer]

36. Can't say that didn't occur to me.

We are after all talking about $2.5 billion out of nearly $1 trillion in spending + $16 trillion in 0% interest loans.

[chill_wind]

9. Separate SEC charges against 3 of them.

The Securities and Exchange Commission (SEC) filed separate civil charges Tuesday accusing Shabudin, Yu, and United Commercial Bank’s former CEO Thomas Wu of misleading investors about the bank’s mounting loan losses.

http://www.dsnews.com/articles/execs-of-tarp-supported-bank-charged-with-hiding-millions-in-losses-2011-10-11

[Dont call me Shirley]

11. Jail time is necessary for those who engineered the economic crisis.

[sulphurdunn]

12. Where's your compassion

you dirty hippie peasants? These hard charging entrepreneurs may have been overzealous, but didn't they use capitalism's creative destruction mode to create wealth for themselves? Isn't that the American Dream thingy? These poor job creators and their families will probably not be able to renew their country club memberships now. Does that make any pull-yourself-up-by your-own-bootstraps-with-a-little-help-from-the-suckers, freedom loving American happy? It shouldn't, becasue these Horatio Algers have suffered at the avaricious hands of unscrupulous borrowers and government inquisitors. They have suffered enough! :cry: :cry: They really have! I am serious about this! :rofl: :rofl: :evilgrin:

[chill_wind]

13. Oh man.

I'm so looking forward to the next installment on Oct 20.

:toast:

When Neil Barofsky got sick of crossing swords with Geithner and left (or was asked to leave)in April, he reportedly had something like 153 investigations underway. I'm hoping there's a few more big surprises for Banksters like this ready to blow up yet. Really, really hoping.

http://finance.fortune.cnn.com/2011/04/05/how-to-lose-friends-in-washington-be-tarp-cop/#more-13356

[truedelphi]

25. Barofsky along with Elliot Spitzer are my two personal heroes.

I cannot imagine someone with Barofsky's integrity having to deal with a Scumbag like Geithner.

And the fact that the government had to use Homeland Security money tracking techniques to get Spitzer brought down tells me how important it was to the people who run our government to make sure that Spitzer was dealt with.

[chill_wind]

32. His audits were harsh warning bells

(Barofsky's) and I remember when one of the first of them went after Geithner himself in a very open way.

Brutal.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4149384&mesg_id=4149450

Also remember how the report about that audit made the front pages of NYT. But the beltway establishment paper of record buried it on page 24. Very telling.

Can you imagine if someone put a few people, like Spitzer, Barofsky, Bill Black, Eric Schneiderman, Elizabeth Warren. Alan Grayson and maybe throw in an Earl Devaney, all in one room and tasked them with the actual solutions and authority to kick regulatory ass, what would happen?

[midnight]

35. I just google Neil Barofsky... Can you imagine him working with Elizabeth

Warren, and Allen Grayson.

[chill_wind]

14. LOL-- I just saw THIS:

“Hundreds of banks have failed in the financial crisis and the regulators need to blame someone,” attorney Steven Bauer told Bloomberg News. “Thomas Wu is counting on our justice system to clear his good name.”

Read more at the San Francisco Examiner: http://www.sfexaminer.com/local/crime/2011/10/fraud-charges-filed-against-sf-bank-execs-who-accepted-millions-bailout#ixzz1b5lCovUZ

[TroglodyteScholar]

15. MORE, please!

End ALL these crooked bastards and make examples of them so that nobody for generations would be foolish enough to ever walk down the same path....

[quaker bill]

16. *not a first*

Colonial Bank officials have already been sentenced to prison for TARP fraud here.

[chill_wind]

21. First bust (so far) among a bank that had actually received TARP funds, apparently.

"first criminal prosecutions of senior executives of banks that received part of the federal government's $700 billion bailout of financial institutions."

(per links upthread)


Thanks for pointing out Colonial. It sounds like they conspired fraud but didn't quite get to pull it off past the SIGTarp to the further tune of TARP millions, if this is right, below:

It appears it was certainly huge costs all the same, though.

Colonial and two other major banks - Deutsche Bank and BNP Paribas - were collectively cheated out of nearly $3 billion, prosecutors estimated. Farkas and his cohorts - six of whom entered guilty pleas to related charges and testified against him at the two-week trial in U.S. District Court - also tried to fraudulently obtain more than $500 million in ta all taxpayer-funded relief from the government's bank bailout program, the Troubled Asset Relief Program (TARP).

While TARP at one point gave conditional approval to a payment of roughly $550 million, ultimately neither Taylor Bean nor Colonial received any TARP money, and investigators from that office, along with the FBI and other agencies, helped uncover the fraud.

Neil Barofsky, who recently resigned as TARP's special inspector general, has called the Farkas case "the most significant criminal prosecution to date rising out of the financial crisis."

http://blog.al.com/press-register-business/2011/04/jury_convicts_farkas_on_fraud.html

[quaker bill]

28. I knew it was TARP fraud

but was not aware they never actually got the money. A co-worker's wife is one of the 6 who turned State's evidence, the plea deal got her a 7 year prison sentence. The coverage was clear that there was no evidence that she personally made even a nickle on the entire deal, but will do time regardless, for knowing and not spilling the beans.

[burrowowl]

17. About time!

Keep going.

All the 1% and complicit others should be housed in a huge brightly lit building and have to play Monopoly 24/7. The FED can print all the Monopoly play money they want.

[ecstatic]

18. It's not "a first." Get your research together. nt

[chill_wind]

22. Sorry, but that's a statement by Christy Romero, SIGTarp, in the OP

DSNews (above)

“Shabudin and Yu are the first senior executives of a TARP bank charged in connection with a scheme to defraud investors, which included the Treasury, and by extension the American taxpayer, Christy L. Romero, acting Special Inspector General for the Troubled Asset Relief Program (SIGTARP) said in a statement.

http://www.justice.gov/usao/can/press/2011/2011_10_11_shabudin.yu.charged.press.html

CBS (above):

First *criminal prosecutions* of senior execs of a bank that had actually received TARP funds:

Regulators charge Wu's pursuit of the Chinese bank and worldwide acclaim is at the center of United's spectacular collapse — a failure that will cost taxpayers more than $3 billion and has led to the first criminal prosecutions of senior executives of banks that received part of the federal government's $700 billion bailout of financial institutions.

SF Examiner (above)

They now have the distinction of being the first senior executives of a bank that received federal bailout funds to be criminally charged in connection with a scheme to defraud the government and American taxpayers.

Are there others, and how did they all get this wrong?

[upi402]

20. That's a good start !

An ember of hope even if only a tiny spark.

[bertman]

23. This is called 'tossing a bone to the curs', meaning us. Show trial. REC. nt

[canuckledragger]

24. K & R

[Rex]

26. If any of the 99% 'lost' 2.5 billion dollars they would be infamous overnight.

Called the biggest criminal in history and thrown in jail forever.

[xchrom]

27. Get the MONEY! Damn it. Nt

[BR_Parkway]

29. Were they growing weed somewhere to get DOJ's attention?

I'm still astounded at how many civil settlements the banks have paid out because of their fraud yet there's never criminal charges. So different than when they crashed the S&L's

[salib]

33. The exception that proves the rule

Unfortunately, it is "a first" and probably pretty much the last.

We should not simply get excited that something is finally happening.

We need to hold EVERYONE accountable for this disaster. And that means our "friends" in office, as well.