If there’s one film from this year’s Oscars nominations that you should watch, it’s the documentary film Abacus: Small Enough to Jail. It is high in suspense, surprisingly funny, and has a certain charm to it despite the outrageous legal case that it depicts.
The film centers on how the Sungs, a Chinese-American immigrant family who runs a storied community bank in New York’s Chinatown (Abacus Federal Savings Bank), became the target of an overzealous prosecution by the Manhattan District Attorney’s Office. As the film’s title indicates, unlike the high-powered big banks of Wall Street, this community bank appears to be “small enough to jail” for its purported role in the 2008 financial crisis. Yet this tight-knit, courageous family fights back to set the record straight for themselves and the Chinese-American community.
The documentary has incredible access to the family in real time as the trial takes place. The film does a great job showing what it’s like to be under the great weight of the State when it makes false allegations against you. Some of the best scenes from the film are around the dinner table when the father, Thomas Sung, who started the bank, talks trial strategy with his wife Hwei Lin Sung, and their three daughters Jill, Vera, and Chanterelle Sung, all of whom work for the bank in some capacity. There are also extended interviews with the attorneys on both sides, including Manhattan District Attorney Cyrus Vance, Jr. that are very revealing.
For me as a white-collar defense attorney, the film illuminates several things I see all the time in prosecutions of businesses and individuals accused of business crimes.
The Politics Involved in a White-Collar Case
Though politics is not supposed to play a role in our justice system, we know that it does. Abacus reveals this in so many ways. For example, instead of simply filing the requisite charging documents with the court, District Attorney Vance announced the indictment of Abacus and several of its top executives in a large press conference for the media. In front of the cameras with the microphones on, the prosecutors did not simply state the charges that they were alleging, but instead used their platform to make sweeping pronouncements about the excesses of the financial system.
Nevermind that even the allegations, let alone the actual truth of what happened at Abacus, did not have anything to do with the mortgage lending crisis from 2008.
In white collar cases, the repetitional damage from even the mere allegation of a criminal act by a business or its executives can be devastating to professional futures. Prosecutors know this and often use it as leverage in their case to score a quick victory with a big-fine settlement. What was unusual about this case was that the Sungs actually chose the risky and expensive, yet principled path to fight back.
District Attorney Vance also admits in the film that he considers much of what the big banks did leading up the financial crisis as “less than ethical,” but he did not seek any indictments against them. Essentially, he says that it would have been too hard to prove charges against the big banks. The former U.S. Attorney for South District of New York, Preet Bharara, has essentially said the same thing on numerous occasions.
The only bank to be charged was Abacus, the 2,651st largest bank in the country. Did I mention that district attorneys like Vance (chief state prosecutors for their parish) are elected officials that have to campaign in elections every couple of years and that U.S. Attorneys (chief federal prosecutors) must undergo political confirmation after being nominated by the U.S. President?
Yes, politics play a role in our justice system in more ways than one.
The Perp Walk
The scene in Abacus that will truly get your blood boiling is the infamous “perp-walk” — several of the accused employees, all of Chinese heritage, are handcuffed together and paraded in front of the media into the courtroom for their arraignment. The shame is palpable as they all try to hide their heads from the cameras in the back of the person chained in front of them. The person in the very front held up a notepad over his face. Nevermind that these people are innocent unless they are proven guilty beyond a reasonable doubt at a trial.
The media that were there to film the accused were not there by chance. They were told by the police and/or the prosecutors where to be and when just like they always are. And the goal, as is the case with every perp walk, was obvious — to make the accused look guilty before the trial has even started.
The perp walk is, in my view, unconstitutional and should stop. But Abacus does a powerful job of making you appreciate what it truly feels like to experience this shaming spectacle.
The Self-Reporting Trap
The other part of the Abacus story that will spark your sense of injustice is how the District Attorney’s office came to accuse the bank and its executives of wrongdoing in the first place — because Abacus self-reported to its regulator about the wrongdoing of one mid-level employee, whom the bank promptly fired. Abacus conducted its own internal investigation, fired a total of three employees that were implicated, and handed over thousands of pages of documents to the government. These were not the actions of a corrupt organization – they were the actions of a company trying to do the right thing.
Yet no good deed goes unpunished. The District Attorney thought it saw an opening, and they took it. This is actually a common theme in white collar and corporate compliance cases. Part of the government’s white collar strategy is to encourage self-reporting of wrongdoing in exchange for supposed lenient treatment. The other part of that strategy is to harshly punish and make an example out of the handful of businessmen and companies they prosecute who don’t comply. Similar to the IRS’ strategy on tax returns, the government knows it doesn’t have the resources to prosecute every white-collar infraction, but if it can create a climate of compliance through fear and self-policing, the government can still be effective.
Yet, as the Abacus case demonstrates, when the government is not true to its word about rewarding self-reporting and instead punishes self-reporting, then the “Mommy Rule” applies – only self-report if you know you’re going to get caught. That’s not the way it’s supposed to work. Abacus was clearly acting in good faith, and it should not have so been widely and zealously prosecuted for the self-acknowledged bad actions of a few former employees.
Even if you’re not a legal junkie like me, you’ll enjoy this film. It’s very much a story about the triumph of an immigrant community and how the reality of the American dream still needs to catch up to the ideal. Happy Oscars watching y’all…
Got questions about white collar defense? The Law Office of Sam Winston provides federal white collar defense representation. If you’ve been accused of a crime, contact Sam Winston for your free consultation today.