A federal grand jury in San Francisco has charged Ebrahim Shabudin, of Moraga, Calif., and Thomas Yu, of San Ramon, Calif., with conspiracy to commit securities fraud, securities fraud, falsifying corporate books and records, and lying to auditors, United States Attorney Melinda Haag announced.
“The indictment alleges that UCBH bank officials conspired to hide loan losses, lie to their outside auditors, and mislead regulators and the investing public,” said United States Attorney Melinda Haag. “These charges demonstrate the Department of Justice’s continuing commitment to pursue corporate wrongdoers to the fullest extent of the law.”
According to the indictment, which was unsealed this morning, United Commercial Bank was a commercial bank headquartered in San Francisco, Calif., with branch offices throughout the United States as well as in China and Taiwan. Its holding company, UCBH Holdings, Inc., was publicly traded on NASDAQ. The defendants held the following positions at the bank:
Shabudin, 63, was an executive vice president. From approximately September 2008 through April 2009, Shabudin served as the bank’s chief credit officer and chief operating officer.
Yu, 48, was a senior vice president. From approximately June 2008 through June 2009, Yu served as the bank’s manager of credit risk and portfolio management.
The indictment charges that, between 2004 and 2007, the bank’s loan portfolio increased from approximately $4.4 billion to more than $8 billion. By September 2008, the bank’s loan portfolio faced growing losses. In November 2008, the bank received approximately $298 million from the Troubled Asset Relief Program (TARP).
The indictment also alleges that, beginning in approximately September 2008, Shabudin and Yu, along with others, participated in a fraudulent scheme to hide the bank’s true financial condition from the Department of Treasury, investors, depositors, regulators, and the bank’s independent auditor. Specifically, the indictment charges that the defendants used a variety of fraudulent accounting maneuvers and techniques to conceal the true financial condition of the bank, including that they:
fraudulently concealed information showing that the bank’s loan collateral and repossessed assets had declined in value;
fraudulently understated the risk of certain loans;
fraudulently delayed downgrading the risk ratings of certain loans;
falsified the bank’s books and records so that they falsely described, and omitted material information necessary to accurately describe, the likelihood that certain loans would be repaid and the value of the bank’s loan collateral and repossessed assets; and
lied to and misled the bank’s outside auditor.
http://www.fbi.gov/sanfrancisco/press-releases/2011/former-united-commercial-bank-officials-charged-with-securities-fraud
Happened a week ago.