Former Citigroup Executive Foster Said to Plan Guilty Plea in Fraud Scheme
By Thom Weidlich – Sep 6, 2011 10:46 AM ET
Gary Foster, a former Citigroup Inc. (C) vice president accused of embezzling more than $19 million from the bank, will plead guilty, his lawyer said.
Foster will plead guilty today to one count of bank fraud in federal court in Brooklyn, New York, Isabelle A. Kirshner, one of Foster’s lawyers, said in a phone interview. The count brings a maximum sentence of 30 years.
Foster, 35, of Englewood Cliffs, New Jersey, was arrested in June at New York’s John F. Kennedy International Airport after returning from Bangkok and charged with bank fraud. Foster, who worked in the bank’s treasury finance department, is accused of transferring money from various Citigroup accounts and ultimately to his own account at JPMorgan Chase & Co. (JPM)
“The defendant allegedly used his knowledge of bank operations to commit the ultimate inside job,” U.S. Attorney Loretta Lynch in Brooklyn said in a June statement.
Foster was released June 27 on an $800,000 bond secured by his parents’ house in Teaneck, New Jersey. His mother works as a teller for Bank of America Corp. (BAC), Kirshner told U.S. Magistrate Judge Ramon E. Reyes Jr. during the court appearance.
Foster was vacationing in Bangkok and returned when he learned the government was investigating him, Kirshner said after the June hearing.
From last July to December, 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. During the alleged fraud, which spanned from May 2009 to the end of 2010, Foster wired out of Citigroup a total of $19.2 million, according to the criminal complaint.
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 complaint charged.
Citigroup’s treasury finance department funds loans and other business transactions within the bank and Foster supervised the department’s derivatives unit, according to the criminal complaint.
Foster joined Citigroup in 1999 and left voluntarily in January, according to a person familiar with his employment.
An internal audit of the department turned up the wire transfers to Foster’s personal account, prosecutors alleged.
“We are outraged by the actions of this former employee,” Shannon Bell, a spokeswoman for New York-based Citigroup, said in a June e-mail. “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.”
The case is U.S. v. Foster, 11-cr-601, U.S. District Court, Eastern District of New York (Brooklyn).
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