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.
Now on April 23, after a story (and question) on Malawi, this on Sri Lanka: "During the 2022 IMF and World Bank Spring Meetings in Washington, D.C., IMF Managing Director Kristalina Georgieva and other senior members of IMF management met with a Sri Lankan delegation, led by Finance Minister Ali Sabry and Central Bank of Sri Lanka Governor Nandalal Weerasinghe, and discussed policy actions to address economic challenges. The IMF team for Sri Lanka held initial technical discussions on an IMF-supported program with the delegation. Masahiro Nozaki, mission chief for Sri Lanka, issued the following statement today: “During April 18–22, the Sri Lankan delegation and the IMF team had fruitful technical discussions on the authorities’ request for an IMF-supported program. The discussions covered recent economic and financial developments in Sri Lanka, the need for implementing a credible and coherent strategy to restore macroeconomic stability, and the importance of stronger social safety nets to mitigate the adverse impact of the current economic crisis on the poor and vulnerable. The IMF team welcomed the authorities’ plan to engage in a collaborative dialogue with their creditors. “Going forward, the IMF team will support Sri Lanka’s efforts to overcome the current economic crisis by working closely with the authorities on their economic program, and by engaging with all other stakeholders in support of a timely resolution of the crisis.”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
By
Matthew Russell Lee, Patreon Maxwell
Book
BBC-Guardian
UK - Honduras
- ESPN NY
Mag
SDNY
COURTHOUSE, April 5 – India's Bank of
Baroda has sued Harsh Imports on a $550,000
promissory note. Harsh replies that the Bank is
only trying to dump smaller accounts and
accelerate all their
payments.
On April 5, U.S. District Court for the Southern
District of New York Judge Gregory H. Woods held
a proceeding. Inner City Press covered it.
The
sides are agreed to a bench trial.
April
4, 2022
Citigroup Is Sued By Former Banamex Staffer But Says Must Arbitrate Now Wants 20K a Day
By
Matthew Russell Lee, Patreon
BBC
- Guardian
UK - Honduras
- ESPN
SDNY
COURTHOUSE, April 1 – Citigroup was sued in
Mexico by a former Bananex employee Luis
Sebastian Sayeg Seade. Citigroup responds, as it
does when sued nearly anywhere in the world,
that arbitration is
mandatory.
On December 17, U.S. District Court for the
Southern District of New York Judge John
P. Cronan held a proceeding. Inner City Press
covered it.
Citibank
wanted a TRO to force Seyag to drop litigation
in Mexico and arbitrate in AAA Case No
01-21-0017-7441.
Judge
Cronan listened than agreed to issue the TRO.
Sayeg was directed to show cause by December 22
why a preliminary injunction should not issue.
On
December 22 Judge Cronan held another call, and
Inner City Press again called in. Sageg did not
- at least, he did not identifying himself.
There was ex parte talk about a security guard
in Mexico having refused service. Judge Cronan
agreed to issue the Preliminary Injunction.
On
January 20 Judge Cronan ruled that pending the
completion of arbitration now underway, Seade
(or Sayeg) is enjoined for commencing or
prosecuting any other actions or proceeding
about Citigroup's Capital Accumulation Program
and Deferred Cash Award Plan, and to dismiss a
case in Mexico.
Jump
cut to April 1, when Citigroup through counsel
wrote to the assigned Magistrate Judge Robert W.
Lehrburger seeking additional contempt sanctions
- increasing $5000 a day every thirty days to
"hopefully induce Mr. Sayeg to comply with the
Court's Order."
March
28, 2022
After Fed Hears Citi & MUFG In Russia & Does Nothing, Congressman Proposes Disclosure Bill
By
Matthew Russell Lee, Patreon Maxwell
Book
BBC
- Guardian
UK - Honduras
-