Posted by & filed under Accounting Information Systems, Accounting Principles, All Articles, Auditing, Cost Accounting, Financial Accounting, Fraud Accounting, Intermediate Accounting, Managerial Accounting.

Despite the fact that bank officials uncovered a fraud, fired its mastermind, investigated and reported it to regulators, and then provided New York State prosecutors with over 900,000 pages of documents, a tiny Chinatown bank, Abacus Federal Savings Bank, was under put under indictment by a grand jury in New York State Supreme Court and endured a five and a half year saga leading to a recent court case.

1. What were the charges against the bank and its employees?
2. Although the bank was exonerated, what were the costs to the tiny bank?
3. What was the bank’s track record with mortgages during the sub-prime crisis? Did Fannie Mae lose money?
4. The Abacus indictment was the Manhattan District Attorney office’s first against a bank since what famed 1991 prosecution? Summarize briefly what this previous case was about.

Morgenson, G. (2015). A Tiny Bank’s Surreal Trip Through a Fraud Prosecution. The New York Times, July 17 (Retrievable online at