Top Bank Executive Sentenced to 8 Years in Prison for Fraud in TARP Bank Failure Case

Friday, September 04, 2015
(photo: Getty Images)

A senior executive at a U.S. bank is actually going to prison for his actions following the financial crisis.


Ebrahim Shabudin, the ex-chief credit officer for United Commercial Bank, was convicted of fraud for falsifying records to hide major loan losses from auditors and investors after the federal government stepped in to help the failing bank under its Troubled Asset Relief Program (TARP). He was sentenced to eight years.


“This massive criminal scheme defrauded investors, including Treasury who became an investor through TARP,” Christy Romero, the Special Inspector General for TARP, said, according to HousingWire. “He was essentially gambling with taxpayers’ bailout dollars, and it was taxpayers who ultimately lost more than $300 million when the bank failed one year after receiving TARP funds.”


United Commercial Bank, which once managed $11 billion in assets, teetered after its strategy of making risky loans made it a candidate for TARP, which gave $300 million to assist the San Francisco-based institution.


While receiving TARP’s help, Shabudin carried out what prosecutors said was a “delay-and-pray” scheme that could not prevent United Commercial Bank from becoming the first bailout-boosted bank to fail during the financial meltdown. It was the ninth largest since 2007 to collapse. “Its dramatic failure cost the federal fund that insures Americans’ deposits more than $675 million,” The Washington Post reported.


Shabudin was the bank’s third officer to be criminally convicted following Senior Vice President Thomas Yu and Chief Financial Officer Craig S. On pleading guilty to conspiracy charges late last year.

-Noel Brinkerhoff


To Learn More:

Bank Executive Sentenced to 8 Years behind Bars in Bailout’s Biggest Criminal Case (by Drew Harwell, Washington Post)

Exec at Center of First TARP Bank Failure Gets 8 Years in Prison (by Ben Lane, HousingWire)

Banks Say “Thanks for the Bailout,” Now We’ll Park our Profits in Overseas Tax Havens (by Steve Straehley, AllGov)

Top Executives at Bailed-Out Companies Keep Getting the Big Bucks, with a Wink from Treasury Dept. (by Noel Brinkerhoff, AllGov)


Kalyan 8 years ago
You might want to -- just for giggles -- use the Google mainche and take a look at wealth distribution in the U.S. of A. You might notice that the concentration of wealth is about as high as it's ever been. (And you might be fine with this, but I'm not.)On that note, this weekend's New York Times (of all sources) has an article highlighting the research of economists who note the correlation between periods of extreme income inequality and the economic collapses.It might not be such a coincidence that the great depression happened at the moment when the top 1% in the U.S. received 24% of the nation's income, and the top 10% received 50% of the income. Which is virtually identical to the numbers in 2007. But hey, the commenters above have convinced me that those numbers are false, and that the real problem is firefighters and nurses and police officers and teachers. How dare we do anything, like regulate financial markets, or support working people. Doesn't everyone realize yet that the super-rich got that way because they're morally superior?

Leave a comment