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Friday, October 8, 2010

Former Bank Employee Indicted for Stealing Funds Held in Trust in Texas

A former administrative assistant in the Trust Department of a Galveston branch of Frost Bank has been indicted by a federal grand jury for bank fraud and aggravated identity theft, United States Attorney José Angel Moreno announced today. Michele Lauryn Osteen, 27, of Houston, charged in a 16-count indictment returned by a federal grand jury in Houston on Sept. 27, 2010, surrendered to federal authorities today and is expected to appear before United States Magistrate Judge John R. Froeschner in Galveston at 2:00 p.m. today where the issue of bond is expected to be raised.The 16-count indictment accuses Osteen of 15 counts of bank fraud and one count of aggravated identity theft. The indictment alleges that between June 23, 2008, and June 16, 2010, Osteen defrauded Frost Bank, an FDIC-insured depository institution, by stealing approximately $95,000 in funds from trusts it administered.The Trust Department of Frost Bank served as trustee for a number of different trusts including trusts set up for the health, education, support and maintenance of minors and incapacitated adults, many of whom received large sums of money following severe injuries. As trustee for such trusts, the bank managed significant assets for those beneficiaries, which included paying their daily living expenses and making other disbursements on their behalves.The indictment alleges Osteen fraudulently obtained funds from numerous trust accounts by requesting disbursements from the accounts in the form of Frost Bank checks, representing that the disbursements were legitimate expenditures typical for the trusts she helped manage, when in fact they were for her financial benefit.
According to the indictment, once Frost Bank issued the checks, Osteen allegedly requested checks be sent to her branch in Galveston, where she took possession of the checks and used them in various ways for her personal benefit. On some occasions, Osteen allegedly instructed Frost Bank to make the checks payable to companies, creditors and other entities to which she owed money and paid personal bills, debt and fines. On other occasions, the indictment alleges Osteen instructed Frost Bank to make the checks payable to Frost Bank or to a trust beneficiary, which she then used to obtain money orders she spent or deposited into her accounts. A few times, Osteen instructed Frost Bank to make the checks payable to a retailer, then, according to the indictment, used the funds for shopping at that retailer. Many times, she allegedly instructed Frost Bank to make the checks payable to a healthcare provider, which she then altered by typing an instruction on the checks to reflect that they were for cashier’s checks for “MLO,” a fictitious entity. Osteen then used those altered checks to obtain cashier’s checks from Frost Bank, which she deposited into her accounts. To avoid detection, according to the indictment, Osteen obtained the money orders and cashier’s checks at her Frost Bank branch, where she was known and therefore less scrutinized, but deposited them at a different Frost Bank branch in Galveston. The indictment accuses Osteen of obtaining approximately $95,000 in this fraudulent manner, which she allegedly used to fund a high-consumption lifestyle. Each of the 15 counts of bank fraud carries a maximum penalty of up to 30 years' imprisonment and a fine of up to $1 million, upon conviction. A conviction for aggravated identity theft carries a mandatory two-year term of imprisonment which must be served consecutive to any term of imprisonment imposed for any bank fraud convictions. The FBI’s Texas City Resident Agency, with the assistance of Frost Bank, led the investigation leading to the charges. Assistant U.S. Attorney Stephen L. Corso is prosecuting the case.An indictment is a formal accusation of criminal conduct, not evidence.

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