Former Controller Of Non-Profit Organization That Funds Medical Research Sentenced In Manhattan Federal Court To Four Years In Prison For Embezzling Over $2 Million And Tax Evasion
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that KAREN ALAMEDDINE, a/k/a “Karen Dean,” the former controller of a New York-based non-profit organization whose core mission is to cure genetic illnesses by supporting biomedical research (the “Non-Profit”), was sentenced in Manhattan federal court to four years in prison for embezzling more than $2 million from the Non-Profit, and to tax evasion for deliberately failing to report to the Internal Revenue Service (“IRS”) as income the money she embezzled. ALAMEDDINE was sentenced today by United States District Judge Gregory H. Woods.
Manhattan U.S. Attorney Preet Bharara said: “Karen Alameddine’s brazen theft of over $2 million was not just a breach of her duties of loyalty and honesty to her employer, it was a federal crime that diverted much-needed funds from biomedical research that could help to cure genetic illnesses. Thanks to the work of the IRS and the Postal Inspection Service, Alameddine will now pay the price for her faithless conduct.”
According to the Complaint, the Indictment, guilty plea, and proceedings in Manhattan federal court:
From approximately late 2008 through early 2014, while working as the controller for the Non-Profit, ALAMEDDINE diverted over $2 million of the Non-Profit’s funds to her own bank accounts and for her own personal use. ALAMEDDINE executed the scheme principally by disguising QuickBooks entries to make transfers to her personal bank account appear as if they were transfers made to pay grant recipients of the Non-Profit. ALAMEDDINE further sought to disguise the fraud by inventing a fictitious accounting firm named “Davis & Greene,” purportedly based in Washington, D.C., which was, according to ALAMEDDINE, retained to prepare certain tax returns for the Non-Profit for the 2012 and 2013 tax years.
After ALAMEDDINE fraudulently transferred the funds from an account belonging to the Non-Profit to a personal bank account, she further transferred the funds to other accounts she controlled, and thereafter used those funds for various personal expenses, including to pay personal bills. Among the personal items ALAMEDDINE paid for with the embezzled money were utility bills, car payments, jewelry, the purchase of a recreational vehicle, her personal mortgages, and leisure travel. In addition to the fraudulent diversions, ALAMEDDINE carried out her embezzlement scheme by secretly procuring a credit card in the Non-Profit’s name and using it to pay for personal expenses; by submitting fraudulent requests for reimbursement for expenses she falsely claimed to have incurred; and by making illicit transfers from the Non-Profit’s bank account purportedly to pay for expenses related to hiring of temporary help to assist with certain accounting and payroll functions but which, in truth, were never actually incurred.
In addition, for each of the calendar years 2009 through 2013, ALAMEDDINE filed tax returns with the IRS in which she deliberately omitted reporting the income she received from the fraud. Those deliberate omissions resulted in ALAMEDDINE’s evasion of a total of over $640,000 in income tax for the years 2009 through 2013.
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ALAMEDDINE, 58, of Perris, California, who has been in custody since her arrest in November 2014, pled guilty to one count of wire fraud and one count of tax evasion. In addition to her prison term, ALAMEDDINE was ordered to pay $2,674,983 in restitution, including $1,934,000 to the Non-Profit and $640,000 to the IRS. ALAMEDDINE was also ordered to forfeit $1,828,000 in proceeds she obtained from the embezzlement offense.
Mr. Bharara praised the outstanding investigative work of the IRS and the U.S. Postal Inspection Service.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorney Stanley J. Okula is in charge of the prosecution.