WASHINGTON (Legal Newsline) — The U.S. Department of Justice announced Sept. 11 that it has filed a lawsuit against Paul Mangione, former Deutsche Bank head of subprime trading.
The department alleges Mangione conducted a fraudulent scheme to misrepresent the characteristics of residential mortgage-backed securities (RMBS).
“The defendant fraudulently induced investors, including pension plans, religious organizations, financial institutions and government-sponsored entities, to name only a few, to invest nearly a billion and a half dollars in HE4 and HE5 RMBS, and caused them to suffer extraordinary losses as a result,” stated acting U.S. attorney Bridget M. Rohde for the Eastern District of New York. “We will hold accountable those who seek to deceive the investing public through fraud and misrepresentation.”
The department is suing Mangione under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) and seeks an appropriate civil penalty.
“The government’s complaint alleges Mr. Mangione knew that certain of Deutsche Bank’s RMBS contained unsound mortgages that did not meet the credit or appraisal standards that the bank represented,” said acting assistant attorney general Chad A. Readler of the Justice Department’s Civil Division.
“By allegedly misleading investors about the riskiness of these securities, Mr. Mangione prioritized his and his employer’s bottom line over principles of honesty and fair dealing. The Department of Justice will continue to pursue those who engage in fraud as a way to conduct business.”