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Tuesday, January 18, 2011

Former Chase Bank Official Convicted of Bank Bribery

In Riverside, California, a former official with Chase Bank has been found guilty of disclosing the existence of a suspicious activity report (SAR) filed with federal officials, and then soliciting thousands of dollars in bribes to help the borrower deal with a possible criminal investigation related to the illegally disclosed SAR.

Frank E. Mendoza, of Victorville, was convicted of three counts of bank bribery and one count of unlawfully disclosing a SAR. The federal jury took only 30 minutes to deliver their verdict, which included a not guilty finding on a charge of attempted economic extortion. At trial in United States District Court, the jury determined that he demanded a $25,000 bribe, and accepted $10,000 in bribes from the customer, and disclosed the existence of a SAR. The Financial Crimes Enforcement Network (FinCEN), a bureau that receives SARs from financial institutions around the country, believes he is the first bank official in the nation to be convicted of criminal charges for revealing the filing of a SAR.

The evidence presented showed that Mendoza, who was employed as a loss mitigation specialist for Chase Bank, conducted an investigation of a delinquent borrower on mortgage loans made in relation to seven properties in Palmdale, California. He reported that he suspected fraud in relation to the mortgages, which led the bank to file a SAR with FinCEN. Months later, Mendoza suggested that the borrower pay $25,000 in exchange for his assistance with Chase and a possible federal criminal investigation. During this conservation, he disclosed the filing of the SAR and said that a federal criminal investigation of the borrower was imminent.

Mendoza’s bribery solicitation caused the borrower to contact the FBI. After the borrower delayed paying any bribe money, he agreed to accept $10,000 in cash. During two meetings in the borrower’s car, the borrower made two $5,000 payments to Mendoza. Following the second payment, special agents with the FBI arrested him, recovered the second cash payment, and recovered from his wallet two $100 bills that were part of the first bribe payment. Mendoza is scheduled to be sentenced by a United States District Judge as a result of the guilty verdicts. He faces a statutory maximum penalty of 95 years in federal prison.

The Financial Crimes Enforcement Network is a bureau within the Treasury Department responsible to protect the United States financial system from criminal abuse. FinCEN administers the Bank Secrecy Act, which is the federal anti-money laundering and counter-terrorism financing statute. The Bank Secrecy Act and FinCEN regulations require all banks to have Anti-Money Laundering programs in place and to report suspicious transactions and large currency transactions. The case against Mendoza was investigated by the Federal Bureau of Investigation, which received assistance from FinCEN.

Federal law and California law both make bribery a criminal offense. The purpose of bribery statutes is to prevent people from seeking preferential treatment from public officials from using their office for personal gain. If a government official is offered or seeks anything of value for himself in exchange for performing an official act, a fraudulent action, or any action in violation of their official duty, the elements of bribery may be met.

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