Anyone know anyone unfortunate enough to work at Abacus? Sounds like they've had a nightmare of a week!

Abacus story

I couldn't believe it when I heard the story last night on NPR, when was the last major run on a bank, the 30s? There were some minor runs in TX and New England during the 80s, but this sounds like it was worse.

I saw this yesterday afternoon. Apparently, word spread from NY customers to Philadelphia customers, creating a run there as well.

This is a good test for me to see who does -- and does not-- subscribe to our Banker Briefing. Those who do got a special briefing mid-afternoon on the 23rd pointing them to a special article we had just done on this very subject.

I consider it required reading.

Here's the article:

Damage Control

You listen to NPR at night? I'm thinking that you are the only one.

It is amazing how a badly worded announcement can wreck utter havoc. How many Compliance folks have "discussed" with Senior Management how to word both internal and external communications so that the proper context is conveyed? Have you ever received the "The message is fine. We don't think it's confusing." response?

I read with interest the links supplied when the "run" was happening; however, does anyone know the "rest of the story"? What happened after the big day?

MaryBeth,
That was a great article, I shared it with my CEO and he thought it was
great, too.

I've got a couple of questions about this. I've read conflicting news reports - some saying that the notice about the branch manager was posted on the doors at the branch, and some saying it was just reported in the Chinese language newspaper. Which is it? Or is it both?

Second (and I know hindsight is 20/20) - surely this bank is aware that a large % of their customers speak and read Chinese more fluently than English! Did they post the notice in English in compliance with some regulator or law enforcement requirement, or was it the bank's idea?

We are definitely considering this story and Mary Beth's article in updating our disaster recovery plan.

From The New York Times (4/25/03 - Metro Briefing)

MANHATTAN: BANK RUN ABATES The F.B.I. continued its search yesterday for the fugitive branch manager of a Chinatown bank where panicked depositors withdrew more than $2 million in a three-day bank run. Depositors of the bank, Abacus Federal Savings, continued to show up yesterday to demand their money, but lines were shorter. Bank officials and federal regulators said the bank had enough cash to meet demand. The branch manager, Carol Lim, was dismissed April 13 after working at the bank for 15 years. She has not been charged with a crime but is wanted for questioning in connection with what bank officials say is the embezzlement of $1 million.

From the People's Daily "Investigators say the rumor began when the bank posted a sign saying the branch manager was fired last week for financial irregularities. The sign generated concern among customers but the run in the bank was fueled by rumors racing through the Chinese community that the bank had run out of money, said some customers."
Full story at: http://english.peopledaily.com.cn/200304/24/eng20030424_115702.shtml

New York Daily News (4/23/03) "Notices posted by bank officials outside the branches said Abacus is covered by insurance that protects businesses from theft or other financial dishonesty and that it "expects to fully restore these accounts affected."

New York State Banking Department - Press Release:

Statement from Acting Superintendent Kent on the Safety of New York Banks:

Chinese: http://www.banking.state.ny.us/pr03042a.htm

English: http://www.banking.state.ny.us/pr030423.htm

Fri, Apr 25, 2003
Business - AP

Ex-Bank Manager Charged With Embezzlement

NEW YORK - A fired bank official was charged Friday with embezzling $1 million, three days after hundreds of people rushed to the Chinatown branch to get their money after rumors of wrongdoing.

Carol John Mee Lim, a former branch manager and officer of Abacus Federal Savings Bank, was charged in a criminal complaint unsealed in U.S. District Court. She was not in custody.

"We're looking to arrest her," said Jim Margolin, an FBI spokesman.

Crowds of customers began gathering outside the bank Tuesday after a Chinese language newspaper and radio station reported Lim had embezzled as much as $1 million. She had already been fired.

The bank, with other branches in Brooklyn, Queens, Philadelphia and Edison, N.J., caters to Chinese, including many recent immigrants.

Efforts by the bank to reassure customers that their accounts were insured and safe appeared to be working. There were no lines outside the bank's Chinatown branch Friday afternoon.

Federal regulators have said the bank's accounts are safe. The Federal Deposit Insurance Corp. insures bank deposits of up to $100,000 per account.

Anyone know what actions the bank took after the run to calm, and bring customers back to the bank? A direct mail letter? Media? Incident Protocol ideas of others could be a helpful post.

The news story below reports that "as much as $30 million was withdrawn from the bank last week" and that "community leaders, other banks and friends of Thomas Sung came out in support of Abacus. Some 20 community leaders deposited a substantial amount of money, Sung said."

From WNBC New York:
Chinatown Banking Scandal Reflects Community Fears

POSTED: 8:57 a.m. EDT April 28, 2003

NEW YORK -- When Cathy Wu heard "something bad" happened at Abacus Federal Savings Bank, she rushed to Chinatown to withdraw her family's savings. She was among thousands of ethnic Chinese depositors who, despite repeated bank and government reassurances, withdrew as much as $30 million from the bank last week.

The tempest -- which most observers considered an extraordinary overreaction to news of a bank employee's alleged embezzlement -- reflected a general sense of precariousness still felt by ethnic Chinese following the Sept. 11, 2001, terrorist attacks, the economic downturn and the SARS scare, experts said.

If embezzlement were reported at a large mainstream bank, customers would say, "'Oh, another case of financial impropriety,"' said Cynthia Lee, an expert on the politics of Chinatown and deputy director of programs at the Museum of Chinese in the Americas.


"But the community is still reeling from the effects of 9/11 and then there's SARS and so many businesses have not been able to recover," Lee said. "People said it looked like a scene from the Depression era -- and that's what we're experiencing in Chinatown."

Just blocks from the World Trade Center site, Chinatown has yet to recover the 8,000 jobs lost when streets were closed in the aftermath of the terrorist attacks. The prolonged economic woes increased financial strains on the many people who care for their extended families in the United States and mainland China.

Anxieties about the SARS virus have exacerbated the economic difficulties, reducing the number of visitors to Chinatown's restaurants and shops.

Then, last week, a Chinese-language newspaper and radio station reported that a former Abacus branch manager allegedly embezzled at least $1 million, triggering a run on the bank. Carol John Mee Lim was charged Friday with embezzlement, but was still being sought for arrest.

Abacus is FDIC-insured and regulators said it was in sound financial shape.

But as word of the alleged embezzlement spread throughout the tight-knit community, news mutated into rumor, creating a heightened sense of panic about the bank's solvency. By Wednesday, jittery patrons at the bank's Philadelphia branch had withdrawn at least $700,000 by noon, temporarily emptying the branch's vaults. Abacus' other branches, in Queens, Brooklyn and Edison, N.J., appeared to be operating as usual.

Many people waiting between police barricades to get into the bank in downtown New York said they were concerned about passports, papers and personal items they had stored in safety deposit boxes -- even though nothing like that had been reported missing.

"I just wanted to look and check and make sure everything is OK," said Rita Lin, 24, who arrived at the bank's Bowery branch at 6:45 a.m. Thursday and stood on line for five hours.

By the end of the week, the commotion died down as community leaders, other banks and friends of bank founder Thomas Sung came out in support of Abacus. Some 20 community leaders deposited a substantial amount of money, Sung said.

Yet, the run left observers bemused. Andrew Schotter, an economics professor at New York University, said bank runs generally occur when people learn of a bank's fundamental problems -- or when a group of people simultaneously decides, rightly or wrongly, that something is awry at a financial institution.

While the latter theory would explain how the Abacus run unfolded, Schotter said he was surprised "that there seemed to be a level of anxiety out there that (customers) interpreted that piece of information in that way."

The establishment of the Federal Deposit Insurance Corp. in 1933, he noted, had nearly eliminated bank runs in the United States. Officials at the FDIC and the American Bankers Association said bank runs are so rare they keep no statistics on the phenomenon.

Don Lee, an executive director at the Chinese Consolidated Benevolent Association, said many ethnic Chinese, particularly recent immigrants, were likely unaware that the FDIC backs deposits of up to $100,000 per account.

"To many of these people government is one thing and an agency that insures is something else," he said. "They don't associate the government with protection."

This is the best story I have heard about a bank surviving a run during the Great Depression:

On the day the run happened, the bank president told the tellers to pay out as slowly and methodically as they could. At closing time, they shut down the teller lines and did not service any waiting customer. They told those remaining in line to come back the next morning at 9 a.m.

The following morning, the president instructed his employees to open the doors an hour early pay out money as fast as they could. Soon they had paid all of those who had gotten there early and the bank had an appearance of normalcy.

As the day went on and more customers showed up to take their money out, they saw that there was no line of panicked customers. Seeing everything was under control, they went home with their money safely in the bank.

I think this was brilliant!!

On Tuesday, we got a call from a member of our compliance association located in Chinatown telling us of the pandemonium at Abacus. This was about 4:30PM. Naturally, everyone out there that knows me knows that I immediately ran down the block to the branch located here to get the scoop. There were police barricades, cops and hysterical people everywhere. The branch had to close at 2:00 due to the crowds and two 1/2 hours later they were still there. There were signs in all the windows telling what happened but, unfortunately for us, they were in Chinese. The Police were very nice to us, trying to tell us what was happening. Our source at the other Chinese bank said that when Abacus made the "everybody stay calm" speech they made it in the wrong dialect for most of the people. The next day, we went back first thing in (our) morning, about 9:15. The crowds were around the block. Very orderly, Cops everywhere. Everyone had a zeroxed copy of a withdrawal slip. But most people seemed to be very concerned about getting to their safe deposit box.

When I was young, I worked for a large bank that was involved in some kind of big scandalous loss. When news broke, there was a run. It was wild. News broke in May, the bank failed in October. So I could appreciate how those poor tellers were feeling.

From zwire.com

Chinatown bank founder finds tragedy brings a wonderful life

May 01, 2003

"It's a Wonderful Life" wasn't set in Chinatown, but a local banker found himself starring in a big-city version of the classic movie when there was a three-day run on his bank.

Recalling the 1946 Frank Capra holiday film, bank customers rushed into Abacus Federal Savings Bank branches in Philadelphia and New York last week. In an extraordinary over-reaction to news that a bank manager had been accused of embezzlement, Abacus customers withdrew a total of $30 million.

But as the bank was losing a significant portion of its $280 million in total deposits, community leaders, other banks and old friends of 68-year-old bank founder Thomas Sung stepped up to offer money and support.

"It makes our heart warm and makes us feel once this is over we will dedicate ourselves even more to community service and projects," Sung said.

Only this week did the amount of deposits to the bank begin to exceed the value of withdrawals, Sung said. "It's certainly stabilized and we're very heartened by the turn of events," he said.

On April 22, crowds of customers began gathering outside the bank after a Chinese-language newspaper and radio station reported a former branch manager had embezzled at least $1 million. Analysts noted many of the bank's primarly ethnic Chinese customers are recent immigrants with little understanding of U.S. bank protections.

Three days later, authorities announced they were searching for the former manager, Carol John Mee Lim, who faces a federal charge of embezzlement.

Meanwhile, friends of the bank opened up $100,000 accounts, told crowds of people making withdrawals that their money was safe, and spoke to local newspapers serving the bank's largely Chinese population. Government regulators reinforced the message that the bank was sound.

Once reassured their money was safe, many customers reopened their accounts, and others simply returned the bank checks they were handed when they made their withdrawals.

The bank run, a rare phenomenon in recent decades, stunned Sung. For a time, he said, he had trouble believing what was happening to the bank he founded in 1984 to serve the Chinese community in Manhattan.

"We're not here to make a lot of money for ourselves. We're here because we wanted to serve an under-served community," he said.

Sung said he repeatedly has turned down lucrative offers by large banks that wanted to purchase his bank, which stays open seven days a week in Chinatown.

"But that would change the character of the bank and would lose the purpose for which this bank was formed," he said.

Sung said the bank lost money for the first three months of its operation but has turned a profit ever since, earning roughly $11 million last year.

This year got off to a bad start when a gunman entered the bank's Brooklyn branch one day and stole $12,000, part of a spree of New York City bank robberies that police have begun to target.

Other heartwarming shows of support flooded in as the government immediately spread the word that The Federal Deposit Insurance Corp. would insure bank deposits of up to $100,000 per account.

Then, some 20 some community leaders, went to the bank and each deposited a substantial amount of money, he said. The Chinese Bankers Association, for example, opened an account with $95,000.

The support, he said, has made him want to give more back to the community. He vowed to open a Chinese school in Brooklyn.

"I just felt very, very heartened by the community's outpouring of support," he said. "Perhaps with this unfortunate experience, we will become a stronger institution."

Thanks for keeping us up to date with action/reaction.

An update: The embezzlement is now up to $10 million and Carol John Mee Lim has apparently left the country.

From the New York Post:

'INSIDER' BANK JOB TAKE AT $10 MIL

Sun May 18, 5:05 AM ET

By PHILIP RECCHIA

A Chinatown bank employee accused by federal investigators of stealing $1 million from customer accounts may have embezzled 10 times that amount, The Post has learned.

The woman is on the run and has left the country, according to a relative, leaving angry account holders threatening to sue the bank and its manager to get their money.

Investigators are hunting Carol John Mee Lim, 41, a Singapore native who lived in the Midwood section of Brooklyn. She disappeared last month after admitting she never deposited investments she took from customers at the Canal Street branch of the Abacus Federal Savings Bank.

One theory investigators are pursuing is that Lim may have stolen the money to fuel a gambling habit. The federal criminal complaint filed against Lim in U.S. District Court in Manhattan alleges she stole $1 million in a complicated scheme in which she allegedly opened bogus accounts and falsified bank records over a period of seven years.

But according to a state Supreme Court order issued May 8, Abacus Federal Savings successfully gained an injunction that froze $6.5 million of customers' money as part of a civil action the bank has launched to identify and recover missing deposits.

And at a meeting last Monday between bank officials and irate customers at Abacus' Bowery Street headquarters, bank chairman Thomas Sung Sung said Abacus had lost at least $10 million as a result of Lim's pilfering, according to Alfred Lui, an attorney representing 40 customers threatening legal action.

"He told us that insurance [in the form of an employee fidelity bond] would cover $5 million of the losses, and that he'd put up another $5 million out of his own pocket," Lui said.

Sung and the bank's counsel, Andrew Hahn of Seyfarth Shaw, did not return calls for comment.

The irate Abacus depositors say their accounts are missing $4 million, and are threatening a class action against Abacus and Sung.

The depositors, many of whom are retired Chinese immigrants who don't speak English, say bank officials have refused their attempts to withdraw their money or confirm what they believe is the extent of their investments.

Dennis Liang, of Queens, said his 62-year-old father had $250,000 on deposit with Abacus - $200,000 of which the bank has now told him no longer exists.

"That's his life savings. He put it in the bank because he thought that would be the safest place. I can't believe this would happen in America," Liang said.

A retired Chinatown restaurant owner, who asked to be identified only as Mr. Wong, 61, of Manhattan, said he had two accounts valued at about $200,000 with Abacus. But when he tried to close them out, the bank told him the accounts didn't exist, he said.

Another Abacus depositor, a 47-year-old man who owns a trading company in Chinatown, said a check he made out for $9,000 cash six months ago came back canceled from Abacus with a "2" written in front of the "9." He later noted an unexplained $20,000 debt in his commercial account, he said. Last month, when news of the embezzlement was first published in a Chinese-language newspaper, hundreds of customers stormed Abacus branches and reportedly withdrew $30 million in savings.

Cops say the investigation into the matter is ongoing.

From Newsday.com

Customers jam bank after break-in

BY BRYAN VIRASAMI AND TANIA PADGETT
STAFF WRITERS

March 23, 2004

A Chinatown bank, the victim of a major run last year, had its depositors jumpy again yesterday after burglars broke into the bank's vault over the weekend and stole more than $200,000 in valuables from customers' safety deposit boxes.

Customers, some crying, flocked to Abacus Federal Savings Bank's Bowery branch in Manhattan, jamming the bank's doors and creating lines of 150 people.

Over the weekend, burglars broke through three doors and used a blowtorch to get into the bank's vault, making off with an undisclosed number of items, said Thomas Sung, president of Abacus, which has $283 million in assets.

The bank, with branches in Brooklyn, Queens, Philadelphia and Edison, N.J., caters to Chinese-Americans, particularly many recent immigrants from the Fujian province.

Sung said 24 safety deposit boxes out of 8,500 had been invaded.

Many immigrants tend to put jewelry and important documents like passports in their safety deposit boxes, Sung said. Sometimes they put cash, which the bank warns against.

"I would say it's overreacting but I'm totally sympathetic to their feelings," said Sung about the crowd.

Banks are required by law to have private insurance for robberies, according to industry experts. Sung said he will figure out how to deal with his customers' claims once the insurance company determines if the bank was at fault.

That was little solace to Raymond Chu, 45, of Massapequa. Chu was at the Manhattan branch yesterday consoling relatives whose box contained their "entire life savings."

"They said they have state-of-the-art security and I was told they broke through three doors," Chu angrily said. "What kind of security is that?"

Chu estimated that his relatives lost $50,000 to $60,000.

Kevin Petrasik, spokesman for the government's savings and loan regulator, the Office of Thrift Supervision, said his agency has "had several conversations with the bank and believe it has the situation under control."

The scene at Abacus yesterday comes almost a year after a $10-million embezzlement scam brought thousands of customers to the bank's doors demanding their deposits.

Depositors took out $30 million from three of the bank's branches, raising concerns about its financial health.

Peter Kwong, a professor of Asian-American studies at Hunter College in Manhattan, said he expects this latest episode to damage the bank further.

"This will definitely hurt the bank's credibility," he said.