Citigroup (NYSE:C) agreed to pay $1.5 million to settle the case where
they were accused of not properly supervising employees who were under suspicion over mishandling trust fund of cemeteries located in Tennessee and Michigan, by the Financial Industry Regulatory Authority, which oversees brokerages.
According to the Financial Industry Regulatory Authority, Citigroup “failed to reasonably supervise the handling of these accounts by inadequately responding to a succession of ‘red flags’–failures that permitted the scheme to continue undetected until October 2006,”
The fine or sanctions were $750,000, while the other $750,000 which made up the overall $1.5 million, came from the return of the commissions generated from the activities.
Mark Singer was the broker involved with the scheme, which he evidently worked out with two customers he had, where over $60 million in funds were misappropriated from 2004 through 2006.
A mistrial was recently declared in Singer’s court appearance, although there are other charges he will have to defend against. One of the customers involved in the scheme, Clayton Smart, is facing criminal charges in Michigan and Tennessee.
Smart evidently acquired cemeteries in Michigan in 2004 from trust funds which were then wrongly transferred to a company owned by Smart.
From there Smart other trust funds to acquire funeral homes and cemeteries located in Tennessee.