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Former citibank employee convicted for stealing and hiding more than $1.3 million from wall street titan william salomon



FOR IMMEDIATE RELEASE
January 14, 2013


 

Also Convicted of Failing to Pay More Than $250,000 in Taxes

NEWARK, N.J. – A former Citibank employee was convicted today of 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 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 in Newark federal court.

“Karen Febles took advantage of her position as an executive assistant to loot her employer’s bank accounts of nearly $2 million,” U.S. Attorney Fishman said. “By betraying her employer’s trust, Febles financed a luxurious lifestyle she could not otherwise have afforded. Today’s jury verdict ensures she will soon find out the true cost of her choices.”

Acting Special Agent in Charge of IRS-Criminal Investigation, Newark Field Office, Shantelle P. Kitchen said, “This case shows that the appearance of success can be a mask for a tangled web of financial lies. Today, justice is served as Karen Febles is being held responsible and will now have to face judgment for her criminal conduct.”

Acting Special Agent David Velazquez said: “The FBI remains committed to vigorously investigating individuals who violate positions of trust. Karen Febles took advantage of her unique relationship with her employer in order to fulfill her selfish need for luxurious items and trips. Today’s verdict sends a message to others, in similar positions of trust, that these activities will be fully investigated by the FBI.”

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.

The bank fraud count carries a maximum potential penalty of 30 years in prison and a maximum fine of $1 million. Each of the four counts of wire fraud carry a maximum potential penalty of 30 years in prison and a maximum fine of $1 million. Each of the three counts of money laundering carry a maximum potential penalty of 20 years in prison. Each of the two counts of tax evasion carry a maximum potential penalty of five years in prison and a maximum fine of $250,000. Sentencing is scheduled for June 5, 2013.

U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Kitchen in Newark, and special agents of the FBI, under the direction of Acting Special Agent in Charge Velazquez in Newark, with the investigation leading to today’s conviction.

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. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

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Defense counsel: Edward J. McQuat and Richard Langweber, New York

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