NYC Grand Jury Indicts Bank for Mortgage Fraud

The New York Law Journal reports today (under a pay wall) that the Manhattan DA has indicted Abacus Federal Savings Bank and 11 of its former employees for “residential mortgage fraud” in addition to other alleged criminal acts arising from mortgage loan originations and sales.

The indictment (available here) alleges that the bank and former employees “participated in a systematic and pervasive mortgage fraud scheme” by falsifying mortgage applications to allow “otherwise unqualified borrowers” to obtain mortgages backed by Fannie Mae.

According to the 95-page indictment, the alleged fraud was perpetrated at every level of the bank’s application process – origination, processing and underwriting. The alleged fraud included the creation of applicants’ false employment, asset and income documents, which netted the bank “many millions of dollars in commissions” and fees. In addition to these allegations, the indictment alleges that the bank “specifically trained [its employees] to carry out the fraud in a manner to avoid suspicion.”

According to Abacus Federal Savings Bank’s website, it has six branches in New York City, Long Island, New Jersey and Philadelphia.

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Donald Maurice provides counsel to the financial services industry, successfully litigating matters in the state and federal courts in individual and class actions. He has successfully argued before the Third, Fourth and Eighth Circuit U.S. Courts of Appeals, and has represented the financial services industry before several courts including as counsel for amicus curiae before the United States Supreme Court. He counsels clients in regulatory actions before the CFPB, and other federal and state regulators and in the development and testing of debt collection compliance systems. Don is peer-rated AV by Martindale-Hubbell, the worldwide guide to lawyers. In addition to being a frequent speaker and author on consumer financial services law, he serves as legal counsel to DBA International and as chair of the ABA's Bankruptcy and Debt Collection Subcommittee. He serves on the governing Board of Regents of the American College of Consumer Financial Services Lawyers and on the Governing Committee of the Conference on Consumer Finance Law .