A Jacksonville woman whose family lost and then got back nearly $6 million embezzled from their account at a Jacksonville bank remains bitter nearly a year after the crime was discovered.
“Hell, yes,” said the woman, 66, about her feelings of anger. “My husband has worked six days a week for his whole life since he was 14 and here he’s taking care of our family and finally decided he could retire and this guy steals all of his money.”
The guy, prosecutors said, is ex-Fifth Third Bank vice president and private banker Christopher David Boston, who is set to appear in federal court in Jacksonville Wednesday afternoon to enter a plea of guilty to bank fraud in the theft of $10.5 million from the bank’s north Mandarin branch.
Court records show Boston, 40, has already signed a plea agreement and faces up to 30 years in prison and a $1 million fine. He has not been arrested, but Wednesday’s hearing is scheduled to serve as an initial appearance where bail could be set.
Boston is accused of operating a bank fraud scheme that included stealing $10.5 million from at least one corporate account and transferring money from at least two individual accounts to cover the original thefts. The embezzlement occurred over 3 1/2 years ending in April 2013.
Court records show that Boston used $210,000 to make $2,000 monthly mortgage payments on his family’s Mandarin home, install a backyard pool and for other expenses.
Prosecutors said Boston used the rest of the money to help his customers, and ultimately his own standing in the bank, with favors such as paying off troubled loans and making “off-book” loans to those whose applications had been denied.
The bank replenished the embezzled accounts and had arranged new loans with Boston’s customers, recovering all but about $2 million, which is federally insured, court records show.
Boston could not be reached to comment and his defense attorney, former State Attorney Harry Shorstein, has declined to comment, as have prosecutors.
The woman is the first victim of the scheme to speak publicly about the theft, which she said involved money her husband made by selling his family manufacturing business early last year. The victim and her husband are well-known in the community for their philanthropy. She asked that she not be identified for her protection because of the amount of money taken and returned.
The woman said she and her husband first learned about the trouble when they went to the bank near closing time one day last April to have a statement notarized for a real estate deal. A bank official — not Boston, who worked closely with the husband — said he noticed some unusual activity in their account from the previous night.
The couple saw on a computer screen that all but $120,000 of their $6 million had been transferred out of the account.
“My husband kind of turned white,” the woman said. “I figured they made a mistake and put it somewhere and they would put it back.”
She said the bank official didn’t have an immediate explanation but assured the couple not to worry. She said the man and others at the bank scrambled for answers while the couple waited. She said Boston called, apparently in response to a call from the bank to him, and he talked by speaker to the official who broke the news.
“He [the official] let him know we were in there,” the woman said. “He [Boston] said, ‘Well, I’m out sick.’ ”
She said the conversation ended abruptly and bank officials told the couple they would try to get answers the next day. She said an executive with the bank’s corporate office in Cincinnati made arrangements to meet with her husband. She said the executive told her husband about the embezzlement and that multiple individual accounts were affected.
The bank put the money back in their account within a few days and officials pleaded with them to keep it there. But the couple was concerned that the scheme had gone on for so long and her husband decided to move most of the money elsewhere after having banked there for 15 years.
“It was a stake through our heart,” the woman said. “How could you trust somebody that did that to you?”
The woman said she still doesn’t understand how most of the stolen money was used to help other customers, as prosecutors have said.
“This was not Robin Hood taking from the rich and giving to the poor,” she said. “He was about to make us suicidal.”
Saturday, July 12, 2014
Wednesday, July 9, 2014
Judge in bank embezzlement case recuses himself
A judge has recused himself from the case of a local banker charged with embezzling millions of dollars.
The judge said he had a conflict.
Federal prosecutors accused Christopher Boston, a former vice president at the Fifth Third Bank in Mandarin, Florida of embezzling more than $10.5 million from accounts and using the cash to fund loans for bank customers previously denied loans.
Boston faced up to 30 years in prison and a $1 million fine.
In March, Boston signed off on a plea deal with the state. If approved by the new judge, Boston would pay $2.2 million in fines and forfeit his assets, but see no jail time for pleading guilty to bank fraud.
The judge said he had a conflict.
Federal prosecutors accused Christopher Boston, a former vice president at the Fifth Third Bank in Mandarin, Florida of embezzling more than $10.5 million from accounts and using the cash to fund loans for bank customers previously denied loans.
Boston faced up to 30 years in prison and a $1 million fine.
In March, Boston signed off on a plea deal with the state. If approved by the new judge, Boston would pay $2.2 million in fines and forfeit his assets, but see no jail time for pleading guilty to bank fraud.
Saturday, March 1, 2014
Former credit union employees plead guilty to embezzlement
Two former employees of Milledgeville Community Credit Union have pleaded guilty to embezzling money in separate cases.
As part of a plea agreement, Kim Kent, 53, the credit union’s former manager, pleaded guilty Monday in federal court in Rockford to embezzling $219,600 from October 2005 to February 2012.
And former credit union teller Kelsey Selman, 37, admitted that she embezzled $100,975 from the credit union, according to a news release from Zachary T. Fardon, U.S. Attorney for the Northern District of Illinois and Robert J. Holley, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.
Each woman faces a maximum penalty of up to 30 years in prison, followed by five years of supervised release, and a fine of up to $1 million.
Kent’s sentencing is set for June 2; Selman’s will be May 7.
To conceal her embezzlement, Kent created fictitious loans using names of family members and fictitious certificates of deposit, according to the news release.
In 2009, she was elected supervisor of the Milledgeville-based Wysox Township. She used money from the township’s credit union account to cover her embezzlement, the release said.
Selman, 37, used the credit union’s computer system to apply credits to her personal account that did not have a corresponding deposit, the release said. As a result, the credit union’s records falsely reflected that Selman’s cash drawer increased by an amount to offset the deposit into her account.
Wysox Clerk Laurie Byvick said Monday that she wasn’t aware that the women had pleaded guilty.
“I knew it would happen eventually, but didn’t know when,” Byvick said in an interview.
Todd Ewers, chairman of the credit union’s board, said the two women “totally” repaid the institution.
“This was well thought-out. This wasn’t simply taking money,” he said, adding that the women’s crimes were not connected.
Ewers, who was the supervisory committee chairman when the women committed the crimes, said the credit union was glad “that justice is finally being served.”
In March 2012, the Wysox board voted unanimously to accept Kent’s immediate resignation. The board then voided all checks issued by Kent.
In a December 2012 interview, Milledgeville Police Chief Jim Haag said he started looking into the problems in the township and credit union in March of that year. He said he identified misuse of funds at both places.
In August 2012, he said, he got a call from an FBI agent who was investigating. At the time, the FBI wouldn’t confirm the investigation with Sauk Valley Media.
The credit union, chartered in 1957, had $3.8 million in assets as of late 2012, according to the state. It has about 900 members.
Lenox National Bank is awaiting an FBI update on its embezzlement probe
Three months after the discovery of up to $400,000 in reserve funds missing from the Lenox National Bank, bank officials are still in the dark on the progress of an extensive FBI investigation.
Two long-serving employees who were terminated last November remain potential suspects in the federal case of embezzlement and fraud, but have not yet been charged or arrested.
The joint investigation is being handled by the FBI's Springfield office and Lenox Police.
Police Chief Stephen O'Brien said on Monday that he has been in contact with the bureau, but the status of the case remains unchanged since November. "This is still a very active investigation," he stated.
Bank President Paul Merlino, an executive at Lenox National since 1975, told The Eagle that, following what he has called "a shocking betrayal by two trusted employees," tighter internal security procedures have been deployed.
"We've done everything we can," he asserted. "We're doing more than we did before, we thought we had adequate procedures. They say it's a very difficult situation when there's collusion" involving two employees.
"I'm told the FBI is very, very thorough but works very slowly," said Merlino. He has had no further contact with FBI agents since the investigation began.
"I wish we knew; we're anxious to have it resolved," he added. "It's frustrating, not knowing. I'd like to have their names out there, but it's not my position. It seems unfair to us."
The bank has submitted claims to its insurer to recover the funds stolen from the cash vault, which Merlino described as ranging from $300,000 to $400,000. The missing funds will be replaced through an insurance bond arranged via the Toole Agency, based in Lee and Lenox.
No depositors' funds were affected by the embezzlement, which involved the bank's working capital, Merlino emphasized.
FBI officials did not immediately return a call for comment.
At the time the probe was launched, Mark Karangikis, supervisor of the FBI's Springfield office, said that when completed, the findings will be relayed to the U.S. Attorney's office in Massachusetts.
In terms of the bank's reputation and customer confidence, Merlino commented that "the public has been extremely supportive." On his desk was a pile of cards and letters from customers and well-wishers, including one from state Rep. William "Smitty" Pignatelli, D-Lenox, augmenting personal visits from residents.
The bank president described "a very touching call" he received at home from Josephine Pignatelli, 101, an aunt of the state lawmaker who lives at the Cameron House assisted-living facility and is the town's oldest native resident, according to Town Hall records. Ms. Pignatelli, a former banker, was a Merlino colleague when he broke into the industry in Pittsfield during the early 1970s.
"Some customers were upset at the individuals who were involved," Merlino acknowledged, "but they were not upset at the bank."
"Our big concern right from the beginning was the reputation of the bank," he noted. "It's been built up over years. We've gotten over what's called the ‘reputation risk.' Apparently, we've overcome that. We were trying to be transparent about the situation, we didn't attempt in any way to cover it up."
Maintaining a small-scale bank is challenging, according to Merlino, because of current industry rules and regulations, which he described as "onerous."
"It's not like it was 25 or 30 years ago," he recalled, "when you could make ‘character loans' to somebody you knew. They signed their name and they paid you back." Now, extensive documentation and procedures are required to obtain a loan or open an account.
"The easy thing is to sell out and merge," he added.
Two long-serving employees who were terminated last November remain potential suspects in the federal case of embezzlement and fraud, but have not yet been charged or arrested.
The joint investigation is being handled by the FBI's Springfield office and Lenox Police.
Police Chief Stephen O'Brien said on Monday that he has been in contact with the bureau, but the status of the case remains unchanged since November. "This is still a very active investigation," he stated.
Bank President Paul Merlino, an executive at Lenox National since 1975, told The Eagle that, following what he has called "a shocking betrayal by two trusted employees," tighter internal security procedures have been deployed.
"We've done everything we can," he asserted. "We're doing more than we did before, we thought we had adequate procedures. They say it's a very difficult situation when there's collusion" involving two employees.
"I'm told the FBI is very, very thorough but works very slowly," said Merlino. He has had no further contact with FBI agents since the investigation began.
"I wish we knew; we're anxious to have it resolved," he added. "It's frustrating, not knowing. I'd like to have their names out there, but it's not my position. It seems unfair to us."
The bank has submitted claims to its insurer to recover the funds stolen from the cash vault, which Merlino described as ranging from $300,000 to $400,000. The missing funds will be replaced through an insurance bond arranged via the Toole Agency, based in Lee and Lenox.
No depositors' funds were affected by the embezzlement, which involved the bank's working capital, Merlino emphasized.
FBI officials did not immediately return a call for comment.
At the time the probe was launched, Mark Karangikis, supervisor of the FBI's Springfield office, said that when completed, the findings will be relayed to the U.S. Attorney's office in Massachusetts.
In terms of the bank's reputation and customer confidence, Merlino commented that "the public has been extremely supportive." On his desk was a pile of cards and letters from customers and well-wishers, including one from state Rep. William "Smitty" Pignatelli, D-Lenox, augmenting personal visits from residents.
The bank president described "a very touching call" he received at home from Josephine Pignatelli, 101, an aunt of the state lawmaker who lives at the Cameron House assisted-living facility and is the town's oldest native resident, according to Town Hall records. Ms. Pignatelli, a former banker, was a Merlino colleague when he broke into the industry in Pittsfield during the early 1970s.
"Some customers were upset at the individuals who were involved," Merlino acknowledged, "but they were not upset at the bank."
"Our big concern right from the beginning was the reputation of the bank," he noted. "It's been built up over years. We've gotten over what's called the ‘reputation risk.' Apparently, we've overcome that. We were trying to be transparent about the situation, we didn't attempt in any way to cover it up."
Maintaining a small-scale bank is challenging, according to Merlino, because of current industry rules and regulations, which he described as "onerous."
"It's not like it was 25 or 30 years ago," he recalled, "when you could make ‘character loans' to somebody you knew. They signed their name and they paid you back." Now, extensive documentation and procedures are required to obtain a loan or open an account.
"The easy thing is to sell out and merge," he added.
Fifth Third Bank VP admits to embezzling $10 million largely and oddly to help Jacksonville customers
Federal authorities have charged a former Jacksonville bank vice president with embezzling $10.5 million for himself and customers, oddly using the money to help them with loans and other banking favors, court records show.
Christopher David Boston, 40, entered into a plea agreement with prosecutors last week in which he admitted to the thefts from Fifth Third Bank over a 3½-year period, records show. The thefts occurred while Boston was working as a vice president and a private banker at the bank’s Mandarin branch at 9716 San Jose Blvd. just south of Old St. Augustine Road. A private banker handles high dollar accounts, of which Boston had dozens.
Boston has not been arrested and is set to be in court next week to formally enter the plea to bank fraud, which carries a sentence of up to 30 years in prison and a $1 million fine. Boston could not be reached to comment and his defense attorney, former State Attorney Harry Shorstein, declined to comment, as did prosecutors.
A one-count information, which is a charging document prepared by federal prosecutors in lieu of an indictment, and the plea agreement initialed by Boston were filed in the federal clerk’s office in Jacksonville Feb. 19.
Boston, a bank employee since about 2007, admitted embezzling the money from one large commercial corporate account and two individual customer accounts, falsifying bank records and illegally laundered funds between November 2009 and April 2013.
About $8.3 million was taken from the individual accounts, while about $2.2 million came from the corporate account. The account holders were not identified in court records.
Boston electronically transferred the $8.3 million to the corporate account to help conceal a theft from that account, according to the records. It’s unclear if the individual account holders noticed the money was missing. The records do not say what triggered the investigation.
Boston used about $210,000 of the stolen money to pay down mortgage payments of about $2,000 for a Mandarin home on Emily’s Crossing Court just off Losco Road. That money also went toward installing a backyard swimming pool, court records show.
The home was given to his wife after she was granted a divorce in September, several months after her husband lost his job during the investigation, the couple's divorce file said. Records show about $250,000 was owed on the two-story home at the time of the divorce.
Court records said Boston used the bulk of the stolen money to:
■ Pay off the troubled loans in his customer portfolio.
■ Make “off-book” loans to customers whose loan applications had previously been denied and then making off-book interest payments on those loans. The records said many of those customers unknowingly received the benefit, though a further explanation was not provided.
■ Deposit the money into other customer accounts to fraudulently bolster their creditworthiness.
■ Provide customers “enhanced” interest returns on deposit accounts.
It’s unclear how Boston benefited, if at all, by helping the other customers. None of those customers are named in the information or plea agreement.
After discovering the theft, the bank “took corrective action in order to make their victimized clients whole and then to attempt to recover bank funds embezzled by the defendant,” the plea agreement said.
The records said the bank replenished the three accounts, then attempted to issue legitimate loans to customers who received about $8.4 million in “off-the-book and non-conforming” loans from Boston.
“Fortunately, the majority of the individuals that had unknowingly received the benefit ... voluntarily agreed to sign new bank-approved and legitimate loan documents,” the plea agreement said.
About $6.4 million in new loans were made, leaving about $2 million likely never to be recovered by the bank. The money is insured by the Federal Deposit Insurance Corp. About $2.2 million in restitution is being sought from Boston, the records said.
Fifth Third Bancorp, headquartered in Cincinnati, has about 10 branches in the Jacksonville area and 1,320 full-service banking centers in 12 states, according to the company’s website. Bank branch officials declined to comment on the case, instead referring all inquiries to the bank’s corporate office. An email from that office said that all affected customers have been contacted and that none would suffer a loss.
Boston and his ex-wife have one child, records show. At the time of the divorce, the wife worked at another branch of Fifth Third Bank. Records do not connect her to the case in any way and she has not been charged.
Christopher David Boston, 40, entered into a plea agreement with prosecutors last week in which he admitted to the thefts from Fifth Third Bank over a 3½-year period, records show. The thefts occurred while Boston was working as a vice president and a private banker at the bank’s Mandarin branch at 9716 San Jose Blvd. just south of Old St. Augustine Road. A private banker handles high dollar accounts, of which Boston had dozens.
Boston has not been arrested and is set to be in court next week to formally enter the plea to bank fraud, which carries a sentence of up to 30 years in prison and a $1 million fine. Boston could not be reached to comment and his defense attorney, former State Attorney Harry Shorstein, declined to comment, as did prosecutors.
A one-count information, which is a charging document prepared by federal prosecutors in lieu of an indictment, and the plea agreement initialed by Boston were filed in the federal clerk’s office in Jacksonville Feb. 19.
Boston, a bank employee since about 2007, admitted embezzling the money from one large commercial corporate account and two individual customer accounts, falsifying bank records and illegally laundered funds between November 2009 and April 2013.
About $8.3 million was taken from the individual accounts, while about $2.2 million came from the corporate account. The account holders were not identified in court records.
Boston electronically transferred the $8.3 million to the corporate account to help conceal a theft from that account, according to the records. It’s unclear if the individual account holders noticed the money was missing. The records do not say what triggered the investigation.
Boston used about $210,000 of the stolen money to pay down mortgage payments of about $2,000 for a Mandarin home on Emily’s Crossing Court just off Losco Road. That money also went toward installing a backyard swimming pool, court records show.
The home was given to his wife after she was granted a divorce in September, several months after her husband lost his job during the investigation, the couple's divorce file said. Records show about $250,000 was owed on the two-story home at the time of the divorce.
Court records said Boston used the bulk of the stolen money to:
■ Pay off the troubled loans in his customer portfolio.
■ Make “off-book” loans to customers whose loan applications had previously been denied and then making off-book interest payments on those loans. The records said many of those customers unknowingly received the benefit, though a further explanation was not provided.
■ Deposit the money into other customer accounts to fraudulently bolster their creditworthiness.
■ Provide customers “enhanced” interest returns on deposit accounts.
It’s unclear how Boston benefited, if at all, by helping the other customers. None of those customers are named in the information or plea agreement.
After discovering the theft, the bank “took corrective action in order to make their victimized clients whole and then to attempt to recover bank funds embezzled by the defendant,” the plea agreement said.
The records said the bank replenished the three accounts, then attempted to issue legitimate loans to customers who received about $8.4 million in “off-the-book and non-conforming” loans from Boston.
“Fortunately, the majority of the individuals that had unknowingly received the benefit ... voluntarily agreed to sign new bank-approved and legitimate loan documents,” the plea agreement said.
About $6.4 million in new loans were made, leaving about $2 million likely never to be recovered by the bank. The money is insured by the Federal Deposit Insurance Corp. About $2.2 million in restitution is being sought from Boston, the records said.
Fifth Third Bancorp, headquartered in Cincinnati, has about 10 branches in the Jacksonville area and 1,320 full-service banking centers in 12 states, according to the company’s website. Bank branch officials declined to comment on the case, instead referring all inquiries to the bank’s corporate office. An email from that office said that all affected customers have been contacted and that none would suffer a loss.
Boston and his ex-wife have one child, records show. At the time of the divorce, the wife worked at another branch of Fifth Third Bank. Records do not connect her to the case in any way and she has not been charged.
Former bank teller sentenced to 5 year diversion in fraud case
A former Capital Bank head teller was sentenced to a five-year judicial diversion for stealing more than $60,000 from a local bank.
Kristy Hodges, 31, of Cunningham, Tenn., was charged with theft and 43 counts of false bookkeeping.
In September of 2012, the 19th Judicial District Attorney General requested TBI investigate allegations of embezzlement by Hodges, who was head teller at Capital Bank located at 25 Jefferson St. Hodges allegedly stole approximately $64,000 between 2008 and 2012, according to a previous report.
On Jan. 3, Hodges entered an open guilty plea to theft over $10,000 in Judge John H. Gasaway’s court. The 43 charges of false bookkeeping were dismissed in settlement.
Thursday, she was sentenced to a five-year judicial diversion to be served on state probation. She must also pay restitution to the bank in a civil agreement, according to court records.
She must also disclose her conviction if she seeks employment at any type of financial institution.
Kristy Hodges, 31, of Cunningham, Tenn., was charged with theft and 43 counts of false bookkeeping.
In September of 2012, the 19th Judicial District Attorney General requested TBI investigate allegations of embezzlement by Hodges, who was head teller at Capital Bank located at 25 Jefferson St. Hodges allegedly stole approximately $64,000 between 2008 and 2012, according to a previous report.
On Jan. 3, Hodges entered an open guilty plea to theft over $10,000 in Judge John H. Gasaway’s court. The 43 charges of false bookkeeping were dismissed in settlement.
Thursday, she was sentenced to a five-year judicial diversion to be served on state probation. She must also pay restitution to the bank in a civil agreement, according to court records.
She must also disclose her conviction if she seeks employment at any type of financial institution.
Ex-UMB Employee Pleads Guilty to Embezzlement
A former employee of UMB Financial (UMBF) in Kansas City, Mo., has pleaded guilty to embezzling more than $650,000 from the company.
Lisa Taylor used her position as a closing account specialist at UMB Bank to create 377 fraudulent checks between May 2006 and October 2010, according to a press release Thursday from the U.S. Attorney's Office in the Western District of Missouri. She admitted to her role in the bank fraud conspiracy in a Kansas City federal court, the release said.
Taylor's job at UMB required her to request refund checks for customers with closed accounts. When a deposit earmarked for a closed account arrived, the money would be deposited into a general account at UMB. Taylor would then request that a refund check be issued from the UMB account and sent to the customer's last known address.
Taylor took advantage of her position by making fraudulent refund requests for checks payable to friends and family members, with whom she split the proceeds, according to the release. She also requested checks payable to names she made up, forged the signatures and deposited the money in her own account, according to the release.
Eleven of Taylor's friends and family members have also pleaded guilty to their roles in the scheme, according to the release.
Taylor is required to pay the United States government $650,659 as part of her plea agreement. She faces up to 30 years in federal prison without parole, a fine of up to $1 million and an order of restitution, according to the release. Her sentencing date has not yet been scheduled.
Lisa Taylor used her position as a closing account specialist at UMB Bank to create 377 fraudulent checks between May 2006 and October 2010, according to a press release Thursday from the U.S. Attorney's Office in the Western District of Missouri. She admitted to her role in the bank fraud conspiracy in a Kansas City federal court, the release said.
Taylor's job at UMB required her to request refund checks for customers with closed accounts. When a deposit earmarked for a closed account arrived, the money would be deposited into a general account at UMB. Taylor would then request that a refund check be issued from the UMB account and sent to the customer's last known address.
Taylor took advantage of her position by making fraudulent refund requests for checks payable to friends and family members, with whom she split the proceeds, according to the release. She also requested checks payable to names she made up, forged the signatures and deposited the money in her own account, according to the release.
Eleven of Taylor's friends and family members have also pleaded guilty to their roles in the scheme, according to the release.
Taylor is required to pay the United States government $650,659 as part of her plea agreement. She faces up to 30 years in federal prison without parole, a fine of up to $1 million and an order of restitution, according to the release. Her sentencing date has not yet been scheduled.
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