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April 18, 2011

FORMER BANK EMPLOYEE CONVICTED OF STEALING FUNDS HELD IN TRUST

(HOUSTON) - A former administrative assistant in the Trust Department of a Galveston branch of Frost Bank has been convicted of bank fraud, United States Attorney José Angel Moreno announced today.  

Michele Lauryn Osteen, 27, of Houston, pleaded guilty today to bank fraud before United States District Judge Lynn N. Hughes. Osteen was accused of defrauding Frost Bank, an FDIC-insured depository institution, by stealing approximately $95,000 in funds from trusts it administered between June 23, 2008, and June 16, 2010. 

The Trust Department of Frost Bank served as trustee for a number of different trusts, including trusts set up for the health, education, support and maintenance of minors and incapacitated adults, many of whom received large sums of money following severe injuries. As trustee, it managed significant assets for those beneficiaries, which included paying their daily living expenses and making other disbursements on their behalves.  

In the plea agreement signed by Osteen and submitted to the court as part of today’s rearraignment hearing, Osteen conceded the government could prove she fraudulently obtained funds from numerous trust accounts by requesting disbursements from the accounts in the form of Frost Bank checks, representing that the disbursements were legitimate expenditures typical for the trusts she helped manage, when in fact they were for her financial benefit. On some occasions, Osteen instructed Frost Bank to make the checks payable to companies, creditors and other entities to whom she owed money, which she then sent to pay personal bills, debt and fines. On other occasions, she instructed Frost Bank to make the checks payable to Frost Bank or to a trust beneficiary, which she then used to obtain money orders she spent or deposited into her accounts.  A few times she instructed Frost Bank to make the checks payable to a retailer, which she then used to shop at that retailer. Many times she instructed Frost Bank to make the checks payable to a healthcare provider, which she then altered by typing an instruction on the checks to reflect that they were for cashier’s checks for “MLO,” a fictitious entity. Osteen then used those altered checks to obtain cashier’s checks from Frost Bank, which she deposited into her accounts. 

To avoid detection, Osteen obtained the money orders and cashier’s checks at her Frost Bank branch, where she was known and therefore less scrutinized, but deposited them at a different Frost Bank branch in Galveston.        

Osteen faces a maximum penalty of up to 30 years imprisonment and a fine of up to $1 million, upon conviction. Judge Hughes set sentencing for July 18, 2011. Osteen has been permitted to remain on bond pending sentencing.

The FBI’s Texas City field office, with the assistance of Frost Bank, led the investigation leading to the charges. Assistant U.S. Attorney Stephen L. Corso is prosecuting the case.

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