The U.S. authorities today filed fraud charges against former Deutsche Bank head of subprime trading, alleging that he sold investors mortgage-backed investment that was secretly expected to lose value.

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In filing the civil suit, investigators target Paul Mangione who allegedly engaged in misleading investors about “characteristics of loans backing two residential mortgage-backed securities (RMBS),” although he knew they were doomed to fail.

Mr. Mangione faces potential fines and a possible ban from the financial industry. The exact punishment will be determined at a later hearing, the U.S. Justice Department said today.

The case strikes again at the main cause of the financial crisis but this times it goes beyond to raise the possibility that the bankers who devised these investments knew they were selling toxic financial products. While they were concerned only with the fees they would earn by doing so, the fraudulent scheme resulted in hundreds of millions of dollars in losses for investors who bet that the mortgage markets would continue to boom.

Earlier this year, Deutsche Bank AG settled over the same case and paid 7.2 billion after admitted to misleading investors about its handling of mortgage-backed securities before 2008. This was the first accord with a European bank since the mortgage investment misconducts were marketed.

This case involves a new type of target for the US authority, which this time is tracing the mortgage pipeline in an attempt to uncover wrongdoing. Specifically, the complaint further alleges that Mangione hide the mortgage company that primarily originated loans, namely DB Home Lending LLC, a wholly-owned subsidiary for the German biggest bank.

Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York said: “The government’s complaint alleges that 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.”

He continued: “As alleged in today’s filing, this individual knowingly took steps during the lead up to the financial crisis to sell defective mortgage loans while hiding the poor quality of the loans from investors,” said Deputy Inspector General for Investigations Rene Febles for the Federal Housing Finance Agency Office of the Inspector General. “This conduct was deliberately fraudulent and resulted in significant losses for the investors. We are committed to working with the U.S. Department of Justice and the U.S. Attorney’s Office for the Eastern District of New York to hold accountable those who engaged in fraud in the secondary market for mortgages.”