Thomas Sung and daughters Vera (left) and Jill in Abacus’ vault containing more than 8,000 safe deposit boxes rented by the bank’s customers. (Photo by Sean Lyness, courtesy PBS Hawai‘i)
Thomas Sung and daughters Vera (left) and Jill in Abacus’ vault containing more than 8,000 safe deposit boxes rented by the bank’s customers. (Photo by Sean Lyness, courtesy PBS Hawai‘i)
“Abacus: Small Enough to Jail” filmmaker Steve James. (Photo by Rahoul Ghose/PBS)
“Abacus: Small Enough to Jail” filmmaker Steve James. (Photo by Rahoul Ghose/PBS)

The Story of the Only Bank Prosecuted Following the 2008 Economic Meltdown

Alan Suemori
Special to The Hawai‘i Herald

In 2008, America careened on the precipice of an economic meltdown that ultimately resulted in a $22 trillion loss to the American economy. The crisis had been fueled by a long era of cheap credit and free market deregulation that had ushered in a perfect storm of financial manipulation, outright fraud and predatory abuse that would have made the robber barons of the 19th century’s Gilded Age blush at its unabashed greed and brazenness. Virtually every major financial institution and big bank in the country was engaged in a feeding frenzy of issuing spurious home loans to unqualified borrowers and then selling those loans to unwary investors — but only after concealing their actual worth. In three years, over $4 trillion in fraudulent loans were issued, and when they defaulted — which they were guaranteed to do — the home foreclosure rate exploded by 555 percent by 2010.

The architects of this Hobbesian nightmare included Morgan Stanley, Citicorp, JP Morgan Chase and Goldman Sachs — institutions whose breadth and reach were so vast and pervasive that prosecuting them would have wrecked the global financial system and sent the world spiraling down into another Great Depression. In the parlance of the times, they were “too big to fail.” Instead, the Bush and Obama administrations fined the big banks a paltry $110 billion after they had made trillions off of their fraudulent deals. Inexplicably, the federal government also threw in a $700 billion bailout with no strings attached and no requirements for the banks to change their practices. To this day, no American bank has been prosecuted for the part it played in igniting the financial crisis of 2008. Except one.

The story of the one commercial bank that the government did prosecute is the focus of filmmaker Steve James’ Academy Award-nominated documentary, “Abacus: Small Enough to Jail,” which was produced for PBS’ “Frontline” series. James, who has given us remarkable moviemaking with such past offerings as “Hoop Dreams” and “The Interrupters,” has crafted a well-balanced and thoughtful examination of how the American justice system operates under the influence of money, power and politics.

Born in Shanghai, China, in 1935, Thomas Sung immigrated to New York City at the age of 16, eventually becoming a lawyer and real estate investor and a respected member of lower Manhattan’s Chinese community. In 1984, Sung opened Abacus Federal Credit Bank after he grew tired of watching bigger uptown banks exploit the naïveté of vulnerable Chinese immigrants whose deposits were always welcomed, but whose applications for credit were regularly denied.

Sung’s bank grew quickly, eventually boasting over 100 employees, originating over $100 million in loans and expanding to six branches servicing thousands of customers in Chinatown.

Trouble arrived in 2012 when Manhattan district attorney Cyrus Vance Jr. indicted Sung and Abacus for conspiracy, securities fraud and mortgage fraud. The prosecution initially charged Sung and Abacus with 110 counts of routinely falsifying mortgage documents, then selling the loans to Fannie Mae (Federal National Mortgage Association), knowing full well that the borrowers’ information was misleading and deceptive. Arrest warrants were issued for 19 low-level Abacus bank employees. In an unprecedented move, the DA’s office paraded the suspects in front of local television news cameras handcuffed together in a shuffling, stumbling conga line as they were hustled off through the glare of public humiliation.

For Vance, facing re-election and hungry for a bigger national stage, Abacus was low-hanging fruit and the Chinese community a non-factor in his political calculus to advance his career. The suspects were arrested at home in the early morning and hustled downtown where they were coerced to confess and finger other co-workers higher up the food chain. In quick order, Vance had 10 guilty pleas in his back pocket.

The government’s star witness was Ken Yu, a four-year employee of Abacus who had been running a wide-ranging money laundering scam at the bank and lining his pockets with additional installments from borrowers who thought they were paying down their loans. Abacus fired Yu as soon as it learned of his malfeasance; reported the case to its regulator, the Office of Thrift Management; and hired an outside investigator who was a former federal prosecutor to dig up the extent of Yu’s crimes. Abacus also voluntarily turned over 600,000 pages of internal bank documents to Vance’s office, assuming that the government had arrived to help the bank assess the damage that Yu had inflicted upon Abacus and its customers. Instead, it quickly became apparent that Abacus itself was being investigated as a co-conspirator in Yu’s schemes.

At the heart of Vance’s allegations was the bank’s floor seating chart, which stationed senior Abacus executives next to newbie loan officers like Yu: How could the bank’s leaders have remained oblivious to the scams and schemes that were swirling all around them with so many hands touching the documents that flowed through Abacus’ offices? Vance’s strategy was to depict Yu as the poster boy of a hopelessly corrupt institution. The district attorney’s case began to wobble from the start, however, as Yu perjured himself repeatedly, revealing the arbitrary fervor of the prosecution’s charges. Meanwhile, Abacus’ lawyers meticulously argued their case, pointing out that during the five-year period of the indictment, the bank had sold over 3,000 mortgages to Fannie Mae with only nine of the loans defaulting, representing one of the lowest failure rates in the country. Along the way, outside observers began questioning why Vance was continuing to ignore the big Wall Street institutions that had been accused of committing massive financial crimes and was instead marshaling his office’s limited resources to prosecute the 2,651st largest bank in the country.

At the end of the five-year grand jury investigation and four-month trial, Abacus was acquitted of the eventual 240 counts of fraud, grand larceny and conspiracy charges that Vance had leveled upon them. But it cost the bank $10 million to defend its name and clear its reputation.

Clearly, the film’s sympathy is with Abacus and the Sung family. James has created an emotional and evocative film that is populated with empathetic characters fighting against a monolithic bureaucracy: After all, Thomas Sung is a man who is easy to root for, and Abacus is a tiny community bank with most of its branches nesting in between the noodle shops, apothecaries, and mom-and-pop markets of Chinatown. Sung modeled himself after George Bailey, the small-town building and loan officer in the classic film, “It’s a Wonderful Life,” and he is surrounded by a loving wife and four caring daughters who embody the American Dream achieved. In comparison, Vance is a caricature of the ham-handed government hack who is stiffly formal and rigidly Puritan in his manner.

However, James’ documentary goes beyond an easy parable and tries to tell a much more difficult and interesting story of light and shadow, where there are more nuanced gradations of guilt and innocence coloring every street corner, back alley and lamp post from Chinatown to Wall Street. What makes James’ film so compelling is the equal time he gives to Sung’s critics, who point out in several instances where the bank’s alibi fails to satisfy. As a grass roots neighborhood bank dealing primarily with newly arrived immigrants, Abacus operated in a liminal world where trust was everything, personal relationships were lifelong, the cash economy was king and tax evasion was an everyday part of doing business. Operating in this world required a different sensibility than simply meeting the demands of, say a suburban community, where a paper trail of earned income and collateral assets was more easily available.

Writer Jiayang Fan, who covered the trial for the New Yorker Magazine, quickly recognized the cultural disconnect between the two sides. She cited an example in the film. “If I receive $50,000 from my mother, there isn’t a paper document that says I must return the sum. But if I end up caring for her in her old age, that’s a form of payment, and I remember sitting in the courtroom, hearing how perplexed they (prosecution) were when they were answering this question,” said Fan. “Repeatedly, they were badgered: ‘Is this a gift, or is this a loan? Can you clarify?’” Fan said the defendants tried to get the DA to understand: “‘Well, if I can pay it back, I will, but you know, if I can’t, we’re a family.’”

Ultimately indisputable was the fact that Abacus’ loans were performing: Fannie Mae made hundreds of millions of dollars off of the mortgages, and families got their homes.

As part of the final verdict, Ken Yu’s plea agreement with Vance’s office was rescinded and he was sent to jail for six months for fraud and grand larceny. The charges against the other bank employees were dropped, but Abacus was placed under closer federal regulatory controls and financial oversight. Thomas Sung’s victory in court was seen in Chinatown as vindication for the entire community and evidence that the American justice system still worked.

“We were vindicated and that’s great,” said eldest daughter Jill Sung, Abacus’ president and CEO. “But our goal was never to go through a criminal trial and be vindicated. Our goal was always to serve the community, so this is such a waste; it’s a tragedy.”

After spending five years and $10 million to defend themselves and Abacus, Thomas Sung had no regrets about the fight his family had waged: “We Chinese have to learn from the other minorities when it comes to the community’s interest — you must let those who are in power know that this shall never happen again.”

“Abacus: Small Enough to Jail” can be watched online at

Alan Suemori teaches Asian American history at ‘Iolani School. He is a former Hawai’i Herald staff writer.


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