Irving David, 41, of Staten Island, New York, was named in an indictment announced by the US Attorney’s Office in Manhattan, which charged the former the controller, treasurer and chief financial officer of the Consulting Group Capital Markets Funds and controller of the Smith Barney World Funds, with taking $72,870 in checks intended to be deposited into the funds and putting nearly $48,000 into his bank account, Dow Jones reported.
David is charged with stealing the checks between November 2000 and January 2003. Some of the checks had been issued to fund shareholders to settle class-action lawsuits, prosecutors said. David was fired from the Citigroup Inc. unit in January.
Mary Athridge, a spokeswoman for Citigroup Asset Management, told Dow Jones that the company immediately notified authorities when it discovered the misconduct and continues to cooperate with law enforcement. In addition, “any affected mutual fund has been reimbursed in full,” she said.
David faces up to 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, prosecutors said.
In addition to the criminal charges, David has also been slapped with related civil charges by the US Securities and Exchange Commission (SEC). The agency also claims at the time he was embezzling from the funds, David signed a certification under the Sarbanes-Oxley Act in which he falsely stated that he disclosed to the fund’s auditors and audit committee any fraud, when in fact he had made no disclosure.
The SEC is seeking an order requiring David to give up all illegal gains plus interest and penalties.