Former Citigroup Inc. (C:US) 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:US) He concealed his activities by making false accounting entries, according to the government.
He used the money to buy real estate and luxury sports cars, including a Ferrari and a Maserati, prosecutors said. The government has seized or restrained property from Foster valued at a total of $14 million.
“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.
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.
During the sentencing today, Foster “expressed enormous contrition and remorse and was very clear about taking full responsibility for what happened,” his lawyer, Isabelle A. Kirshner, said in a phone interview.
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.
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.
Originally from Jamaica, Foster started at Citigroup as a temporary employee and worked his way up to a vice president position, his lawyer Kirshner said.
“In many ways, this was tragic,” she said. “He had achieved a lot.”
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).
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