former citibank employee who bilked former salomon brothers former partner out of $1.3 million gets 54 months in prison
FOR IMMEDIATE RELEASE
July 30, 2013
Former Assistant Also Failed to Pay More Than $250,000 in Taxes
NEWARK, N.J. – A former Citibank employee was sentenced today to 54 months in prison for stealing more than $1.3 million from William Salomon, a 98-year-old former managing partner of Salomon Brothers, which was later acquired by Citibank, U.S. Attorney Paul J. Fishman announced.
Karen Febles, 48, of Wallington, N.J., who worked as an executive assistant for Citibank, helping Salomon with his personal and professional finances, was previously convicted by a jury of bank fraud, four counts of wire fraud, three counts of money laundering, and two counts of tax evasion, after a one-week trial before U.S. District Judge William J. Martini. Judge Martini imposed the sentence today in Newark federal court.
According to documents filed in this case and the evidence at trial:
From at least 2000 through September 2011, Febles worked as an executive assistant for Citibank in New York City. Her duties included assisting Salomon with his finances. As part of her employment, Febles had exclusive control over Mr. Salomon’s bank accounts and routinely prepared and negotiated checks on his behalf. Febles was terminated by Citibank in September 2011.
Between 2007 and September 2011, at least $1.3 million of Mr. Salomon’s funds went from his bank accounts directly into Febles’ 21 bank accounts, including two accounts that she maintained for her minor son. A review of hundreds of checks written by Febles revealed that the checks had been altered by Febles – after they had been signed by Mr. Salomon – to add additional sums of money. Once issued, Febles negotiated many of these checks, in cash, for the altered amount.
At the same time that more than $900,000 in checks and almost $400,000 cash went from Mr. Salomon’s bank accounts into Febles’ accounts, Febles spent hundreds of thousands of dollars on luxury purchases. These included, in just a five-month period in 2011, $52,720 in cash for a 2011 Range Rover; $34,650 in cash for a Mercedes-Benz; $43,200 in cash for one year’s rent of a three-bedroom home in Clifton, N.J.; and more than $45,000 in cash for six months’ rent on two apartments in Palisades Park, N.J. Febles’ purchases also included more than $115,000 on vacation and travel expenses; $56,000 rent on a four-bedroom home in Mahwah, N.J.; more than $20,000 on other automobile payments; and more than $20,000 on personal expenses, including entertainment, meals, travel, and clothing. During this time, Febles never earned more than $50,000 per year in take-home pay from Citibank.
In addition to the evidence of Mr. Salomon’s money going into Febles’ bank accounts and the evidence of Febles’ expenditures, the evidence at trial also established that Febles transferred hundreds of thousands of dollars that she stole from Mr. Salomon from her accounts into custodial bank accounts that she maintained for her minor son. The jury found that Febles transferred these funds to her son in order to conceal her bank and wire frauds.
In the tax years 2009 and 2010, Febles failed to disclose to the IRS any of the money that she stole from Mr. Salomon. In those two years, she claimed tax refunds of $14,839 and $9,293, respectively. Had Febles disclosed the money that she stole from Mr. Salomon on her tax returns in 2009 and 2010, she would have owed almost $70,000 to the United States in 2009 and more than $200,000 to the United States in 2010.
In addition to the prison term, Judge Martini sentenced Febles to three years of supervised release and ordered forfeiture and restitution of $1,154,911. She was also ordered to surrender $38,000 in cash she had put toward her bail.
U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen in Newark, and special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorneys Aaron Mendelsohn of the Economic Crimes Unit and Evan Weitz of the Asset Forfeiture and Money Laundering Unit of the U.S. Attorney’s Office in Newark.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
Defense counsel: Edward J. McQuat and Richard Langweber, New York