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U.S. District Judge William J. Martini also sentenced Karen Febles to three years of supervised release and ordered forfeiture and restitution of $1,154,911. She was also ordered to surrender $38,000 in cash that she’d put toward her bail.
Febles, 48, was convicted in federal court this past January, nearly a year after FBI and IRS agents arrested her.
She was the personal secretary to William Salomon when she began altering checks he signed for legitimate expenses and then depositing the money into her bank account in 2007, the FBI said.
Salomon sued Citigroup over her actions in state court in Manhattan in early May, claiming that she stole $3 million through “systematic theft” under the company’s noses. He was brought into court in a wheelchair to testify in that case — and again today to witness Febles’s sentencing in U.S. District Court in Newark.
During that trial — in which Salomon also testified — federal prosecutors said Febles “routinely prepared checks” by hand, filled in the amounts and who they were to go to, and gave them to the victim among others to be signed.
She then added numbers and changed words – for instance, transforming one check from $900 to $9,900, they said.
The prosecutors also showed the jury evidence of her stealing and transferring hundreds of thousands of dollars into custodial bank accounts that she maintained for her minor son in order to conceal the bank and wire frauds.
Government records show Febles, who began working for Salamon in 2000, spent $52,720 in cash on the Range Rover, $34,650 on the Mercedes — also in cash — more than $100,000 on real estate deals and more than $20,000 for payments on other vehicles.
She also paid more than $45,000 in cash for six months’ rent on two apartments in Palisades Park.
Tens of thousands of dollars went for entertainment, meal, pleasure trips and clothing, the government said.
A simple review of her financial records raised several red flags: Febles “never made more than $93,000 in salary” in any given year and didn’t have any other sources of income, the FBI said. Yet she deposited more than $870,000 over a four-year period into her personal bank accounts, according a complaint on file in U.S. District Court.
Of that, $470,000 was in checks made out to “petty cash” or “cash” and signed by her boss, it says.
Febles, who was fired in September 2011, never earned more than $50,000 a year in take-home pay, the government said.
Federal jurors convicted her of bank fraud, wire fraud, money laundering and tax evasion after a one-week trial.
Salomon began work in 1933 at the investment firm founded by his father and uncles, and he was a managing partner from 1963 to 1978. After retiring in 1981, he signed a consulting pact that gave him an office, two secretaries and support services, according to his civil complaint.
Citigroup, which bought the firm that became Salomon Smith Barney Holdings Inc., assumed the contract in 1998.
U.S. Attorney Paul J. Fishman credited special agents of IRS-Criminal Investigation and the FBI with the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorneys Aaron Mendelsohn of the Economic Crimes Unit and Evan Weitz of the Asset Forfeiture and Money Laundering Unit.
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