Welcome to Inner City Press’ Bank Beat.  We aim to scrutinize the industry, from high to low. Our other Reporters cover Community Reinvestment, the Federal Reserve, and other beats.   ICP has published a (double) book about the Bank Beat-relevant topic of predatory lending - click here for sample chapters, an interactive map, and ordering information. The Washington Post of March 15, 2004, calls Predatory Bender: America in the Aughts "the first novel about predatory lending;" the London Times of April 15, 2004, "A Novel Approach," said it "has a cast of colorful characters." See also, "City Lit: Roman a Klepto [Review of 'Predatory Bender']," by Matt Pacenza, City Limits, Sept.-Oct. 2004. The Pittsburgh City Paper says the 100-page afterword makes the "indispensable point that predatory lending is now being aggressively exported to the rest of the globe." Click here for that review; click here to Search This Site. Click here for Inner City Press' weekday news reports, from the United Nations and elsewhere, which include bank-related topics.

Click here for Inner City Press' weekday news reports, from the United Nations and elsewhere. Click here for a recent BBC piece on Inner City Press' reporting from the United Nations. New: Follow us on TWITTER   BloggingHeads.tv  Click for March 1, 2011 BloggingHeads.tv re Libya, Sri Lanka, UN Corruption by Inner City Press.  Until next time, for or with more information, contact us.

May 16, 2022

Elliot Smerling Gets 97 Months After Defrauding Citizens and Silicon Valley Bank

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - ESPN

SDNY COURTHOUSE, May 13–  Silicon Valley Bank sued Elliot Smerling for $95 million, asserting fraud and deceit.  Citizens Bank was also defrauded - or, negligent.

    On May 13, 2021 U.S. District Court for the Southern District of New York Judge Denise L. Cote held the sentencing of Smerling in his criminal case, in which he pleaded guilty. Inner City Press live tweeted it here:

Smerling is in yellow prison jumpsuit. Sentencing guidelines are 97 to 121 months.

US Attorney urges to go on the low end. There is no "sophisticated means" enhancement. Lawyer notes he was transfered from Florida to NY via Oklahoma jail where he got COVID

 Smerling has four lawyers at his table. More lawyers here in the gallery. He did proffers with prosecutors, but no 5K1 cooperator's letter.

As Smerling's lead counsel makes claims about receiver, receiver rises. Judge calls a break. Smerling back into holding cell.

 Judge is back. During the break, an additional $7 million has been committed to the receiver. Mention of a Cook Islands trust.

 Smerling's lawyer wants a variation further down from Probation's 72 months - to 33 or 41 months. Smerling himself: I am changed.

 Another of Smerling's lawyer pats his back as he reads his statement.

Judge Cote: Remain standing. This was brazen. I sentence you to 97 months.

The case is US v. Smerling, 21-cr-317 (Cote). More details on Patreon here.

In the civil case, Judge John P. Cronan held a proceeding. Inner City Press covered it.  

Smerling was arrested by the FBI on February 26, 2020 and charged with wire fraud.

  On February 9, 2022 Smerling pled guilty in the criminal case: "ELLIOT SMERLING pleaded guilty today to a bank fraud scheme that caused the issuance of approximately $140 million in collateralized loans on the basis of forged documents, including subscription agreements from purported limited partners, audit letters attesting to his private equity firm’s finances, and falsified bank account statements.... sentencing is scheduled for May 13, 2022 at 12:00 p.m. before Judge Denise L. Cote."

The criminal case is US v. Smerling, 21-cr-317 (Cote)

May  9, 2022

Noah Bank CEO Shin on Trial Grills Kim About Casino Visits in Queens and Atlantic City

By Matthew Russell Lee, Video, Alamy photos

SDNY COURTHOUSE, May 5 – Noah Bank's Edward Shin was on arrested for defrauding the U.S. Small Business Administration on May 29, 2019 and would, it was said, be presented later on May 29 before Magistrate Judge James L. Cott in the U.S. District Court for the Southern District of New York.

  Inner City Press after reporting the arrest went the SDNY Magistrate's Courtroom 5A and was told Shin would be presented at some undefined later hours. But with the door to 5A locked at 4:30 pm, Inner City Press was told Shin "has not been presented, there are no terms.  Tomorrow is more likely." And later, as Inner City Press waited in front of the locked door, staff emerged with a more specific prediction: 2 pm May 30.

  In fact it happened slightly before then. Here are the terms of Shin's release: "Surrender travel documents and no new applications; travel restricted to SD/EDNY, DNJ, EDPA. $1 Million bond secured by $25,000 cash and signed by two co-signors (condition to be met within a week)." And, interestingly, "Alcohol testing / treatment." Inner City Press has been contacted by those covering Shin well before this, who said that Shin "threatened to kill a borrower [and] was sued for reneging on a board control deal."

Then on February 12, 2021 leading up to a trial scheduled for August 16, Judge Woods rejected many of Shin's motions in limine - evidence will come in. (One motion was denied as moot, excluding six loans, which was a win for the defense).

  Jump cut to April 25, 2022. The case was re-assigned to Judge John P. Cronan, who has set trial for April 26. On the eve of it the US put in SBA documents about loans to produce companies, offering to redact some.

On April 27, there were opening statements. While numerous AUSAs in the gallery but apparently no media other than Inner City Press, Shin's lead counsel Paul Boyton Brickfield showed a half dozen PDF slides, emphasizing that the US's cooperating witness James Kim is a "Crooked Deli Owner." Juror 6 raised his hand to say that his screen was not working. Then the witnesses kicked off.

On April 28, former Noah Bank executive offer Marie Lee was questioned by Shin's lawyer about her Regulation O filing where she said there were no "covert transactions." Now she says there were. So was she lying then, or lying now? She demanded a year's salary as severance, then called it a consulting agreement for 14 months. The AUSA objected to hearsay. But Shin's text to her may come in if a foundation is laid.

On May 2, she was still on the stand, now trying to explain when a referral fee could or would be paid, and when not. She was show a Form 159 to the SBA that she had signed...

On May 3, the next witness was questioned with Korean interpreter about a broker fee email from James Kim to Ed Shin, $37,500 to SBA Eastern Realty in Koreatown, and Windsor LLC. The proof was accumulating and in the hall by the elevators at day's end, Shin looked worried.

On May 4, Kim was still on the stand, now testifying about an email from Shin about using Wells Fargo and Shinhan Bank for projects "Cafe 45" and 32 Madison with Chin Yi, who Shin described as fishy.

May 2, 2022

Noah Bank CEO Shin on Trial Shows Former Staffer Violated Reg O or Is Lying as Witness

By Matthew Russell Lee, Video, Alamy photos

SDNY COURTHOUSE, April 25 – Noah Bank's Edward Shin was on arrested for defrauding the U.S. Small Business Administration on May 29, 2019 and would, it was said, be presented later on May 29 before Magistrate Judge James L. Cott in the U.S. District Court for the Southern District of New York.

  Inner City Press after reporting the arrest went the SDNY Magistrate's Courtroom 5A and was told Shin would be presented at some undefined later hours. But with the door to 5A locked at 4:30 pm, Inner City Press was told Shin "has not been presented, there are no terms.  Tomorrow is more likely." And later, as Inner City Press waited in front of the locked door, staff emerged with a more specific prediction: 2 pm May 30.

  In fact it happened slightly before then. Here are the terms of Shin's release: "Surrender travel documents and no new applications; travel restricted to SD/EDNY, DNJ, EDPA. $1 Million bond secured by $25,000 cash and signed by two co-signors (condition to be met within a week)." And, interestingly, "Alcohol testing / treatment." Inner City Press has been contacted by those covering Shin well before this, who said that Shin "threatened to kill a borrower [and] was sued for reneging on a board control deal."

Then on February 12, 2021 leading up to a trial scheduled for August 16, Judge Woods rejected many of Shin's motions in limine - evidence will come in. (One motion was denied as moot, excluding six loans, which was a win for the defense).

  Jump cut to April 25, 2022. The case was re-assigned to Judge John P. Cronan, who has set trial for April 26. On the eve of it the US put in SBA documents about loans to produce companies, offering to redact some.

On April 27, there were opening statements. While numerous AUSAs in the gallery but apparently no media other than Inner City Press, Shin's lead counsel Paul Boyton Brickfield showed a half dozen PDF slides, emphasizing that the US's cooperating witness James Kim is a "Crooked Deli Owner." Juror 6 raised his hand to say that his screen was not working. Then the witnesses kicked off.

April 25, 2022

IMF Answered Inner City Press on Sri Lanka Now Statement Here and Malawi China Question

By Matthew Russell Lee, Patreon Video Podcast
BBC - Guardian UK - Honduras - ESPN

SDNY COURTHOUSE, April 23 – When the International Monetary Fund held its biweekly embargoed press briefing on March 31, Inner City Press asked about Sri Lanka and Haiti. On Sri Lanka it asked for "an update and what is the IMF's view of the Rajapaksa government imposing import restrictions on 367 items such as fruits, milk products and fish in a bid to tackle the foreign exchange shortage?"

  IMF Spokesperson Gerry Rice replied that the negotiations with Sri Lanka will take place in the coming days, including with the Finance Minister's anticipated presence at the April IMF-World Bank Spring Meetings in DC, which Inner City Press will also be covering. Rice referred to the IMF's February 25, 2022 statement.

April 18, 2022

US Bank Hearing Showed MUFG in Russia But Fed April 14 Questions Here Ignore It

By Matthew Russell Lee, Patreon Maxwell Book
BBC - Guardian UK - Honduras - ESPN

FEDERAL COURT, April 14 – Amid US Treasury Department and Federal Reserve partial reactions to the war on Ukraine, and near total inaction on fair lending and the closure of branches in low income US communities, the agencies scheduled a public meeting on the US Bank - Mitsubishi UFG Financial Group proposed merger on March 8. 

  As often happens in such meeting, a variety of bank grantees Zoomed in to support the merger. Other grassroots activists opposed it, or proposed Community Benefits Agreements increasing lending by thirty or fifty percent. 

 Fair Finance Watch, with Inner City Press as always on the FOIA, raised fair lending issues and something new - the war on Ukraine, and MUFG's continued business in Russia:

"U.S. Bank in 2020 in New York State made only 26 mortgage loans to African Americans, while denying more, fully 66 applications from African Americans. By contrast, it made 842 loans to whites while denying less, only 567 applications from whites. Fair Finance Watch has identified similar disparities in Florida, Michigan and elsewhere.   

  Mitsubishi UFJ Financial Group's bank in Oregon in 2020 made only ONE mortgage loan to and African Americans, while denying more, two applications from African Americans. By contrast, it made 196 loans to whites while denying fewer, only 55 applications from whites.  

  These disparities should not just result in a Fed footnote that the data cited by Fair Finance Watch is accurate but HMDA data is not probative. The incoming Governors should go on the record on this before the Board rules.    

There are branch closing issues that should be addressed. 

  There is another issue which Inner City Press hereby timely raises to the Federal Reserve Board: the continued business with and in Russia by Mitsubishi UFJ Financial Group, which we confirmed on the bank's website just before this testimony.    Mitsubishi UFJ Financial Group's website says, "MUFG's presence in Russia started in Moscow in 1992, through a Representative Office. Our presence expanded significantly through the establishment of a Russian subsidiary, ZAO Bank of Tokyo-Mitsubishi UFJ (Eurasia), by the sole shareholder, The Bank of Tokyo-Mitsubishi UFJ, Ltd., on 29 May 2006. On 14 October 2015, the name of ZAO Bank of Tokyo-Mitsubishi UFJ (Eurasia) was changed to AO Bank of Tokyo-Mitsubishi UFJ (Eurasia). The Bank of Tokyo-Mitsubishi UFJ Ltd. was renamed to MUFG Bank Ltd., effective April 01, 2018. In line with such change the name of AO Bank of Tokyo-Mitsubishi UFJ (Eurasia) was changed to AO MUFG Bank (Eurasia) on 03 April 2018.    AO MUFG Bank (Eurasia) has a presence in Moscow and Vladivostok."  

This is troubling, and must be addressed under the Bank Holding Company Act's managerial and financial if not moral factors. Other large banks under Federal Reserve supervision still bragging about their presence and business in Russia including Citigroup and HSBC.

 But what the Fed asked questions on April 14, the day after Janet Yellen inveighed against other countries' banks still in Russia, the Fed did not include the issue. Here are some:

"1. On November 3, 2021, and January 13, 2022, staff requested copies of the executed Transitional Services Agreement and the Reverse Transitional Services Agreement (“Agreements”), including schedules A and B to each of the Agreements, when available. Provide a copy of the final Agreements, including schedules A and B to each of the Agreements. Further, if final versions of these Agreements are unavailable, staff requests a detailed summary of each of the Agreements and the accompanying schedules, including a list of each service that would be provided pursuant to each of the Agreements. The January 26, 2022, Additional Information (“AI”) response stated that schedules A and B to the Agreements would be available by March 2022, and Confidential Exhibit A to the January 26, 2022, AI response lacked the level of detail necessary for staff to understand the Agreements and complete the record. Provide the final versions of these Agreements, including accompanying schedules, when available.

2. In the March 24, 2022, response to adverse comments, USB states that “USB has already planned for growth in its LIHTC investment activity and expects that the combined organization will make more (rather than fewer) LIHTC investments following the Proposed Transaction.” Provide quantitative information detailing how the transaction is expected to result in additional LIHTC investments relative to the banks operating independently, including the LIHTC investments of the banks over the past three years and the anticipated level of LIHTC investments for the three years following the transaction. Provide the information nationally and for California.

 3. In the November 18, 2021, AI response, USB stated that “decisions regarding the anticipated community development lending, investment, or service activities of the combined organization are subject to USB’s ongoing discovery efforts, integration assessment activities and continued due diligence of Union Bank’s community development program.” Provide an update on the status of the assessment of Union Bank’s community development program and indicate any community development activities of Union Bank that are expected to be discontinued after the transaction. Discuss any products or services that would be offered to customers of Union Bank that are not currently offered by Union Bank.

4. The November 18, 2021, AI response states that “[f]inal decisions regarding the retention of Union Bank product offerings remain subject to USB's ongoing discovery efforts.” To the extent decisions have been made, indicate any Union Bank products to be discontinued. Indicate the anticipated timing for final decisions to the extent the review is not complete.

5. Describe in more detail the branch closure mitigation strategies discussed in the March 24, 2022, response to comments. Indicate whether those or any other mitigation strategies would be applied to closures occurring as a result of the proposed transaction.

6. Indicate whether the “Digital Discovery Centers” discussed in the January 9, 2022, response to comments would be offered at Union Bank locations. To the extent applicable, discuss how they would be offered to customers of closing branches after the merger. Discuss generally how online, mobile, or ATM services would be offered to customers of closing branches.

7. Discuss whether the merger is expected to result in expanded credit availability to low- and moderate-income (“LMI”) borrowers, LMI communities, majority-minority borrowers, and majority-minority communities relative to each bank operating independently.

8. The March 24, 2022, response to comments states that “USB maintains credit policies specifically designed to allow access to financing for Native American borrowers on tribal lands.” Elaborate on these credit policies."

The Federal Reserve must act on this immediately -- Inner City Press is requesting this be raised to the new / nominated Governors at the earliest time, along with recent rubber stamping by Federal Reserve Banks, which brag of not being government agencies, of bank mergers including involving banks with Needs to Improve CRA ratings, like Berkshire Bank. So too should the record of Toronto Dominion, among others. But the MUFG - Russia / Ukraine issue is most pressing, on this application.   

This was not addressed (yet?) by MUFG's Kevin Cronin and Julius Robinson nor USB's CDEO Andrew Cecere nor Reba Dominski.

The regulators present included Ben Olson Fed Presiding Officer; Donna M. Murphy OCC Presiding Officer; Fed's Vaishali Sack, Susan Motyka, Dafina Stewart, Chris Wangen FRB of Minneapolis; OCC's Barry Wides, Andrew Moss, Ron Pasch and Jason Almonte.

April 11, 2022

Bank of Baroda of India New York Branch Is Accused For Closing Out Smaller Accounts