DOJ Alleges Former Deutsche Bank Executive Fraudulently Sold $1.4 Billion Worth Of Residential Mortgage-Backed Securities
The Department of Justice has filed a civil complaint against Paul Mangione. Mangione is the former Head of subprime trading at Deutsche Bank.
The DOJ alleges Mangione engaged in fraud by misrepresenting the characteristics of loans in two residential mortgage-backed securities. As a result, investors incurred hundreds of millions of dollars in losses.
This suit is brought pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. The DOJ is seeking an appropriate civil penalty.
Mangione allegedly engaged in a fraudulent scheme to sell ACE 2007-HE4 and ACE 2007-HE5. The trusts had an alleged value of $1.4 Billion dollars in securities.
In addition, investors were allegedly misled to have misled by Mangione about the quality of the loans backing the securitizations. The complaint also alleges that Mangione misled investors about the origination practices of a Deutsche Bank’s wholly-owned subsidiary.
In addition, Mangione approved offerings for HE4 and HE5. Furthermore, he also did so knowing they misrepresented key characteristics of the loans.
Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York stated:
The defendant fraudulently induced investors to invest nearly a billion and a half dollars in HE4 and HE5. This caused them to suffer extraordinary losses as a result.
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