US Files Complaint Against Ex Deutsche Bank Head of Subprime Trading

US Files Complaint Against Ex Deutsche Bank Head of Subprime Trading
AP Photo/ Michael ProbstBusiness06:41 12.09.2017Get short URL

The US Department of Justice reports that it has brought a complaint in a federal court against the former chief of Deutsche Bank’s subprime trading for participating in a in a fraudulent scheme.

WASHINGTON (Sputnik) — The US Department of Justice said in a press release on Monday it has filed a civil complaint against the former head of Deutsche Bank’s subprime trading for having engaged in a fraud scheme that misled investors to invest in defective loans.

“In its complaint, the United States alleges that [Paul] Mangione engaged in a fraudulent scheme to misrepresent the characteristics of loans backing two residential mortgage-backed securities (RMBS) that Deutsche Bank sold to investors that resulted in hundreds of millions of dollars in losses,” the release stated.

In 2007, Mangione participated in the fraudulent scheme to sell a $1 billion security and a $400 million security by misleading investors about the quality of the loans backing the securitizations, the release said.

During the lead up to the financial crisis, Mangione knowingly sold defective mortgage loans while hiding the poor quality of the loans from investors, a senior official with the Office of the Inspector General said in the release.

The Justice Department noted it filed the complaint in a federal court in New York City.

In January, the Justice Department settled a related RMBS matter with Deutsche Bank, the release added. However, this suit is brought pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and seeks an appropriate civil penalty, according to the release.