Bloomberg News

Ex-Citigroup Secretary Convicted of Stealing From Salomon

January 15, 2013

A former Citigroup Inc. (C:US) secretary was found guilty by a federal jury of stealing $1.3 million from William Salomon, the 98-year-old former Wall Street banker who was the son of the founder of Salomon Brothers.

Karen Febles, 48, was convicted yesterday by jurors in Newark, New Jersey, of four counts of wire fraud, three counts of money laundering, two counts of tax evasion and one count of bank fraud. Febles who testified in her defense on Jan. 11, denied wrongdoing.

Febles, who controlled Salomon’s checkbook, used the money she stole to pay for cars, real estate, cruises and jewelry, prosecutors told jurors. Jurors deliberated less than three hours yesterday before announcing a verdict after 4 p.m.

“Karen Febles took advantage of her position as executive assistant to loot her employer’s bank accounts,” U.S. Attorney Paul Fishman said in a statement. “By betraying her employer’s trust, Febles financed a luxurious lifestyle she could not otherwise have afforded.”

Febles also was convicted of failing to pay more than $250,000 in taxes.

“We respect the jury’s verdict, and we’ll go ahead and prepare for sentencing,” Febles attorney Edward McQuat said in a telephone interview. “I’m sure she’ll appeal.”

Salomon Brothers

Salomon told jurors on Jan. 9 that he worked from 1933 until 1978 at Salomon Brothers, the investment firm founded by his father and uncles. Citigroup, which bought the firm that became Salomon Smith Barney Holdings Inc., agreed to supply him with an office, a driver, a secretary and a personal assistant, he told jurors.

“Were you not careful in overseeing Ms. Febles’s check writing?” Assistant U.S. Attorney Evan Weitz asked Salomon.

“There’s no reason to have a personal secretary if you can’t trust her,” Salomon said.

Weitz asked if Salomon trusted Febles, who worked for him from 2000 until New York-based Citigroup fired her in September 2011.

“I certainly did,” said Salomon said.

Weitz told jurors that Febles used the money she stole to buy a Range Rover and a Mercedes-Benz, spent $100,000 on cruises, and paid more than $50,000 in rent one year. Citigroup paid her $90,000 to $95,000 a year, the prosecutor said.

Febles, he said, altered some checks to make them larger than the ones signed by Salomon.

The case is U.S. v. Febles, 12-cr-406, U.S. District Court, District of New Jersey (Newark).

To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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