 |
Gary
Foster, a former Citigroup Inc. vice president, was arrested June 26
at New
York’s John F. Kennedy International Airport after returning from\
Bangkok and
charged with bank fraud. Photographer: Ed Wray/Bloomberg
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Former
Citigroup (C) (C) Inc. Vice President Gary Foster was sentenced to 97 months in
prison for embezzling almost $23 million from the bank, according to federal
prosecutors in Brooklyn, New York.
Foster
pleaded guilty to bank fraud in September, admitting that he transferred money
from various Citigroup accounts to his own at JPMorgan Chase & Co. (JPM)
(JPM) He concealed his activities by making false accounting entries, according
to the government.
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| Former VP at Citigroup Gary Foster |
“I executed
a scheme to defraud Citigroup,” Foster told U.S. District Judge Eric Vitaliano
at his plea hearing last year in Brooklyn. “I directed funds to be wired into
my personal account at JPMorgan.”
Foster, of
Englewood Cliffs, New Jersey, was arrested last June at New York’s John F.
Kennedy International Airport after returning from Bangkok. Foster, who worked
in the bank’s treasury finance department, transferred money from various
Citigroup accounts.
Under
nonbinding sentencing guidelines, Foster faced a maximum of about 10 years in
prison. John Diat, a spokesman for New York-based Citigroup, declined to
comment.
Part of
Deal
As part of
his plea deal, Foster agreed to forfeit about $16 million in properties,
including residences in Manhattan, Brooklyn and New Jersey, as well as the
Ferrari and Maserati.
“The
defendant violated his employer’s trust and stole a stunning amount of money
over an extended period of time to finance his personal lifestyle,” U.S.
Attorney Loretta Lynch in Brooklyn said last year.
Foster, who
worked for Citigroup in the Long Island City section of Queens, New York, caused
about $900,000 to be moved from its interest-expense account and about $14.4
million from its debt-adjustment account to the bank’s cash account, according
to prosecutors.
Then, in
eight transfers, his actions led to the money being wired from the cash account
into his personal account, prosecutors said. He conducted the fraud from
September 2003 to June 2011, according to the government.
Wire
Transfers
Foster
caused a fraudulent contract or deal number to be put in the reference line of
the wire-transfer instructions to make it appear the transfers supported an
existing contract, the prosecutors charged.
“I made
entries in Citigroup’s records to conceal the fact that I took the funds,” he
said at his plea hearing.
Citigroup’s
treasury finance department funds loans and other business transactions within
the bank and Foster supervised the department’s derivatives unit, according to
his criminal complaint. The unit processed payments related to trades of
derivatives, including swaps, according to court papers.
Foster
joined Citigroup, which is ranked third by assets among U.S. banks, in 1999 and
left voluntarily in January 2011, according to a person familiar with his
employment.
An internal
audit of the department detected the wire transfers to Foster’s personal
account, prosecutors said.
“We are
outraged by the actions of this former employee,” Shannon Bell, a spokeswoman
for Citigroup, said in a June 2011 e-mail.
The case is
U.S. v. Foster, 11-cr-00601, U.S. District Court, Eastern District of New York
(Brooklyn).
To contact
the reporter on this story: Christie Smythe federal court in Brooklyn, New
York, at tweidlich@bloomberg.net.
To contact
the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.
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