Citigroup Is Fined $500K For Failing To Supervise Former Broker Who Stole $800K From Clients
Tamara Lanz Moon, a 43 year old broker who worked for Citigroup Global Markets from 1996 until 2008, has been indicted by a federal grand jury in San Francisco for misappropriating over $800,000 of clients’ money, according to Investment News and others. The theft occurred during the eight (8) years between 2001 and 2008 in the Palo Alto, California office, according to the Financial Industry Regulatory Authority (FINRA). Ms Moon was a registered sales assistant for Citigroup and she held her Series 7 and 63 licenses. As such, she frequently would assist in making trades in customers’ accounts and complete all paperwork related to trades and client communications.
According to court documents, Moon focused upon customers that were old, sick or otherwise incapable of adequately monitoring their accounts. She preyed on an elderly widow, another older customer that had Parkinson’s disease, an American diplomat and even stole money from her father. During the eight (8) year spree, Moon altered account documents, forged signatures, used deceased customers’ social security numbers to open new accounts, changed customer addresses, created bogus letters of authorization (LOAs) for transfers to her own accounts and made unauthorized trades. This activity went undetected until 2008, when Citigroup confronted Moon and terminated her employment. FINRA permanently barred her from the industry in 2009 and Citigroup was slapped with a fine of $250,000 in 2009 by the New York Stock Exchange (NYSE) for failure to supervise.
Notwithstanding numerous occasions that ought to have been a signal of illegal activity to Citigroup regarding Moon’s activities, the firm’s supervisory system either failed miserably or was non-existent. Even when computer generated reports identified the differences in account documents and Citigroup was placed on notice that something was wrong, the firm accepted her weak and unrealistic explanation without questioning it, allowing the theft to continue. All the while, Tamara Moon was reaping the benefits of her crime by using the money to pay credit cards, monthly expenses, updating her residence and making outside investments in real estate.
Some examples of Moon’s fraud include the time she opened an account in the name of a customer that had died and then opened another bogus account for his widow. She then deposited $10,440 in widow’s account taken from the deceased customer’s account. Later, Moon has the money transferred to her own account. In another case, Moon set up a bogus account in her father’s name and transferred $150,000 from another customer into it. Later, she authorized transferring money from her father’s bogus account into hers.
The Financial Industry Regulatory Authority (FINRA) has fined Citigroup another $500,000 on August 9, 2011 for failing to supervise its former employee and failing to heed the litany of red flags alerting the firm of the fraud.