Banker Convicted of TARP Fraud
A federal jury in Los Angeles this week convicted the former chief operating officer of United Commercial Bank (UCB) of criminal fraud and conspiracy charges. After just a few hours of deliberation, the jury convicted Ebrahim Shabudin of all charges. The indictment related to a TARP fraud that ultimately caused the bank to fail. Taxpayers were once again left holding the bag.
Short for the Troubled Asset Relief Program, TARP was the government’s response to the banking crisis in 2008. The federal government spent hundreds of billions of dollars bailing out banks in an effort to keep the economy afloat. Most of that money was repaid but not in this case. UCB had borrowed $299 million before failing.
Prosecutors claimed that Shabudin and former UCB senior vice president Thomas Yu conspired to hide loan losses from the public, the FDIC and even its own auditors. The bank borrowed hundreds of millions of taxpayer dollars while hiding its true financial picture.
The conviction represented one of the first actions against a bank official for TARP fraud. In February, feds indicted the former CEO of Georgia based Tifton Banking Company for using the bank’s assets as his own personal piggybank.
Overall, there have been very few TARP fraud actions brought since the massive taxpayer bailout of banks in 2008. Under both the federal False Claims Act and FIRREA statute (Financial Institutions Reform Recovery and Enforcement Act), whistleblowers with information about TARP fraud may qualify for large cash awards.
The False Claims Act generally pays whistleblower s 15% to 20% of whatever the government collects from the wrongdoers. Larger awards are possible. To qualify for a False Claims Act whistleblower award, there must be a loss to a government program such as TARP or the FDIC. There is no cap on the total amount that can be awarded.
FIRREA awards are also based on a percentage of the government’s recovery but are capped at $1.6 million. Prosecutors love FIRREA cases because of the long 10-year statute of limitations.
Even with a long statute of limitations, the time to qualify for a whistleblower award for TARP fraud is quickly winding down. If you think you have inside, “original source” knowledge of a fraud involving government bailout monies, act quickly.
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For more information contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). We help our clients combat fraud and qualify for the largest awards possible. All inquiries are kept strictly confidential and protected by the attorney – client privilege.
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