MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
|
|
MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Friday, August 22, 2003 Fund Executive Arrested for Embezzling Assets The controller of two fund groups at Citigroup is alleged to have embezzled assets from the funds. A grand jury indicted Irving Paul David, 42, on sixteen counts relating to the embezzlement of nearly $73,000 from the funds. David is a resident of Staten Island, New York. Separately, the SEC filed a civil complaint against David. Citigroup fired David as controller and chief financial officer the Consulting Group Fund and controller of the Smith Barney World Funds in January of 2003 after it learned of the issues, according to a report published by Dow Jones Newswires. The bank then informed the authorities of its suspicions. David was arrested on Thursday and is expected to be arraigned in Manhattan federal court. Based on the charges in the indictment, David could receive as many as 30 years in prison and a $1 million fine on each of 15 counts of mail fraud, and up to five years in prison and a $10,000 fine on one count of embezzlement. The Manhattan U.S. Attorney's office claims that David misdirected $72,870 in checks payable to the Consulting Group Capital Markets Funds and Smith Barney World Funds. He allegedly deposited $47,528 those checks into his personal bank accounts. The actions took place between November 2000 and January 2003, according to news reports. The federal officials added the checks made out to shareholders of the Consulting Group were for class action and other settlement payouts. Checks to the World Fund were made to a special account for rectifying valuation errors. Meanwhile, The SEC claims that David both embezzled from the funds and violated the Sarbanes-Oxley law by filing a false certification of the funds finances with he audit committee and external auditors on October. 28, 2002. At that time, the SEC charges that he had stolen $10,703 from the funds. The SEC acknowledged that David has repaid the bulk of the monies to the funds, but claims he continues to owe $14,529. The SEC is seeking a permanent injunction and disgorgement of ill-gotten gains. Shareholders in the funds did not suffer any financial losses because of David's actions, said a Citigroup spokesperson. Printed from: MFWire.com/story.asp?s=5696 Copyright 2003, InvestmentWires, Inc. All Rights Reserved |