Former Citi Executive Charged in $19 Million Theft
Category: Frauds & Scandals
June 27, 2011 by CHAD BRAY And MICHAEL ROTHFELD
A former Citigroup Inc. executive has been arrested and charged with allegedly embezzling more than $19 million from the bank, federal prosecutors said Monday.
According to a criminal complaint, Gary Foster, 35 years old, allegedly wired about $19.2 million in a series of transactions from Citigroup corporate accounts to his personal account at a unit of J.P. Morgan Chase & Co. between May 2009 and December 2010.
"The defendant allegedly used his knowledge of bank operations to commit the ultimate inside job," said Loretta Lynch, the U.S. attorney for the Eastern District of New York in Brooklyn. "We are committed to ensuring the integrity of the banking system and to prosecuting those who would undermine it for their personal gain."
Mr. Foster, a former vice president in Citigroup's internal treasury finance department, was arrested at John F. Kennedy International Airport on Sunday when he returned to the U.S. on a flight from Bangkok.
He has been charged with bank fraud and faces up to 30 years in prison if convicted. He is expected to appear in federal court in Brooklyn later Monday.
"Obviously these are serious charges that require our serious attention and we will undertake to investigate them fully," said Isabelle A. Kirshner, Mr. Foster's lawyer.
Mr. Foster, who supervised a derivatives unit, was based in the bank's office tower in Long Island City. He worked in the internal treasury finance department, which funds loans and other business transactions inside Citigroup.
In a series of eight transfers, between July and December 2010, about $900,000 of the money he allegedly took came from the bank's interest expense account, while an additional $14.3 million came from its debt adjustment account, the complaint said. The transactions went unnoticed until a recent audit, a Citigroup investigator told the Federal Bureau of Investigation, the complaint says.
In one transfer cited by the authorities, he allegedly wired himself $3.9 million on Nov. 8, 2010.
Mr. Foster allegedly put phony contract or deal numbers in the reference lines for his wire transfers to make them look like they were for legitimate contracts.
"We are outraged by the actions of this former employee. Citi informed law enforcement immediately upon discovery of the suspicious transactions and we are cooperating fully to ensure Mr. Foster is prosecuted to the full extent of the law," said Shannon Bell, a Citi spokeswoman. "In light of the ongoing investigation, we cannot comment any further at this time."