Citigroup Inc. (C) asked a court to throw out William Salomon’s lawsuit accusing the bank of supplying the former Wall Street banker and son of the founder of Salomon Brothers with a personal secretary who was later convicted of stealing from him.
Salomon sued Citigroup in May after Karen Febles was convicted in federal court in Newark, New Jersey, of stealing $1.3 million from him to pay for cars, real estate, cruises and jewelry. Febles stole $3 million through her “systematic theft,” according to the lawsuit filed May 9 in state court in Manhattan.
Citigroup in its request today that the case be dismissed said the complaint is based on an “implied” provision in its agreement with Salomon that the company was obligated “to provide a secretary who would not steal his personal funds.”
“Salomon claims that Citi has a contractual obligation to hold him harmless from the dishonest acts committed by a secretary whom Citi hired but whom Salomon himself decided to entrust to manage his personal financial affairs,” Citigroup said in the filing.
In 1933 Salomon began work at Salomon Brothers, the investment firm founded by his father and uncles. He was a managing partner from 1963 to 1978. After retiring in 1981, he signed a consulting agreement that gave him an office, two secretaries and support services, according to the complaint. Citigroup, which bought the firm that became Salomon Smith Barney Holdings Inc., assumed the contract in 1998.
Febles began working in 1997 for Salomon, who soon decided he needed only one secretary, according to the complaint. Salomon said he “trusted Febles completely” to write personal checks, review his bank accounts and pay his household employees and other expenses.
In 2005, she began doctoring his checks to increase the amounts and pocket the difference, Salomon claimed. She also cashed checks by him, “just keeping the cash,” according to the complaint. U.S. prosecutors made similar claims at Febles’s trial in January, where Salomon testified.
Febles was convicted on Jan. 14 of wire fraud, money laundering and bank fraud. She also was convicted of failing to pay more than $250,000 in taxes. She is scheduled to be sentenced on July 23 in Newark. She faces as long as 30 years in prison on the bank fraud and wire fraud counts.
At the trial, prosecutors said she used the money she stole to buy a Range Rover and a Mercedes-Benz. She also spent $100,000 on cruises and paid more than $50,000 in rent one year. Citigroup paid her $90,000 to $95,000 a year, prosecutors said.
“The alleged criminal conduct is so gross a departure form the normal performance of a secretary that it cannot be considered to have been within the scope of Febles’ employment,” Citigroup said in its filing.
The case is Salomon v. Citigroup Inc., 651683/2013, New York state Supreme Court, County of New York (Manhattan). The criminal case is U.S. v. Febles, 12-cr-00406, U.S. District Court, District of New Jersey (Newark).
To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court at 8969 or firstname.lastname@example.org
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