Abacus Bank Charged With Mortgage Fraud John Marshall Mantel for The New York Times Cyrus R. Vance Jr., the Manhattan district attorney, announced on Thursday the indictment of Abacus Federal Savings Bank and employees on charges of mortgage fraud. Abacus Federal Savings Bank, a small bank with a major presence in the city's Chinese community, and 19 of its former employees have been charged in Manhattan with inflating the qualifications of mortgage applicants to meet federal loan standards, a scheme that prosecutors say brought the bank tens of millions of dollars in ill-gotten fees and sent hundreds of millions of dollars in risky mortgages to the investment market. Marilyn K. Yee/The New York Times In 2003, a bank manager was charged with stealing money from customer accounts setting off a Depression-era bank run on Abacus. The indictment against the bank and its employees describes the sort of schemes that led to the financial crisis of 2008, when the risk of mortgages to borrowers was disguised and passed on to investors. As those mortgages went bad, banks considered too big to fail were brought to their knees and bailed out by taxpayers. From May 2005 through February 2010, hundreds of millions of dollars' worth of Abacus mortgages were guaranteed by the Federal National Mortgage Association, known as Fannie Mae, based upon false information, the indictment says. The Manhattan district attorney, Cyrus R. Vance Jr., said the indictment of the bank itself was the first time the office had indicted a bank since the 1991 indictment of Bank of Credit and Commercial International. In announcing the indictment on Thursday, Mr. Vance said that nearly all of the Abacus loans were still performing, meaning the borrowers were still making payments on the home mortgages that they received. But Mr. Vance said that the 2008 financial crisis showed the danger of waiting for illegitimate mortgages to go bad. "If we've learned anything from the recent mortgage crisis it's that at some point, these schemes will unravel and taxpayers could be left holding the bag," Mr. Vance said. Eleven former Abacus employees are expected to be arraigned Thursday afternoon; seven more have already pleaded guilty and are cooperating with the investigation. The bank, whose seven branches include several in Chinatown; Sunset Park, Brooklyn; and Flushing, Queens, has attracted the attention of investigators before. In 2003, a bank manager was charged with taking more than $1 million from customers' accounts; panicked depositors then staged a Depression-era run on the bank, withdrawing more than $2 million. Mr. Vance said his office had uncovered the scheme after a borrower reported a suspicion about the bank to the local police precinct. He said bank officials eventually cooperated but it was "too little, too late." Abacus released a statement saying it had reported the problem to regulators. "We are greatly disappointed to learn that the D.A.'s office has decided to indict Abacus Federal Savings Bank," said the statement, issued through an outside public relations firm. We never imagined our bank would be the target of this investigation, since it is indisputable that the bank itself discovered, investigated and reported the results of its investigation to law enforcement authorities, its regulator and Fannie Mae.