Federal lawyers are seeking to seize nearly $1 million and property owned by Simon P. Kareri, a onetime senior vice president at Riggs Bank who managed the accounts of African and Caribbean embassy clients, arguing that the assets are tied to money laundering.
In a court filing Dec. 7, the government alleged Kareri, without authorization, wired $700,000 from a Riggs account belonging to the government of Equatorial Guinea into an account controlled by a company he created. The U.S. government is seeking to seize those and other funds in Kareri's accounts, totaling nearly $1 million.
Separately, in court papers filed in September, the U.S. attorney's office in the District alleged that Kareri obtained money from one of his embassy clients through a kickback scheme with a local construction company in 2000 and used some of that money to buy 2.6 acres in Montgomery County in 2001. In a court filing, Kareri denied those allegations.
The forfeiture proceedings are not a criminal action, and Kareri has not been charged with a crime. His lawyers, Jonathan Shapiro and Christopher Hoge, did not return calls seeking comment. Kareri did not respond to a message left at his home yesterday.
U.S. attorneys involved in the case also could not be reached yesterday. The proceedings were reported in Monday's Legal Times.
In the September filing, the U.S. attorney alleged that Kareri gained the trust of several embassy officials and had oversight of their accounts at Riggs, including the accounts of the African countries of Benin, Togo, Mozambique and Equatorial Guinea. Equatorial Guinea was Riggs's largest deposit customer before Riggs closed the account early this year as federal regulators were raising questions about the bank's failure to comply with laws designed to prevent money laundering.
Both court filings cite an internal Riggs investigation of Kareri and his management of Equatorial Guinea's accounts. The December papers said the Riggs investigation found that Kareri "had made unauthorized interbank transfers of large sums of monies that he oversaw to corporate accounts that were controlled by his wife," Nene Fall Kareri. Her lawyer, Nina Ginsberg, was traveling yesterday and could not be reached for comment.
The government seeks to seize nearly $1 million in three accounts in which it claims funds from the Equatorial Guinea account and the kickback scheme were commingled. All three accounts have been frozen since August.
"As Riggs has previously disclosed, at the beginning of 2004, Riggs terminated Mr. Kareri and referred the matter to appropriate authorities," said Mark Hendrix, a Riggs spokesman. "It would be inappropriate for Riggs to comment further about his activities given investigations by various authorities underway."
Kenneth L. Wainstein, the U.S. attorney for the District of Columbia, alleged in the September court filing that Kareri developed a relationship with the owner of two construction companies. The U.S. attorney's filing alleges that Kareri would "arrange" for the companies to perform maintenance or construction projects at embassy properties or diplomatic residences in the Washington area. The papers allege that the two men agreed that the contractor would inflate the prices for the work, and then pay Kareri the difference between the normal cost and the price charged to the embassy.
The companies' owner, Hardutt Singh, could not be located for comment. No actions have been filed against him.
In one instance, the U.S. attorney's filing alleged, Singh performed a renovation project at Benin's embassy on Kalorama Road in the District. According to the filing, Singh prepared a written estimate of $186,000 for the work. Kareri then told Singh to submit an estimate for $410,000 to the embassy and pay Kareri the $224,000 difference. Singh was paid the $410,000 in a check drawn on Benin's Riggs Bank account overseen by Kareri, the filing alleges.
Eventually, the government claims, Kareri used some of the funds generated by the scheme to buy the Potomac property the government is attempting to seize.
The government asserted that it can seize the property because funds used in the transaction were involved in money laundering, which gives the government broad powers to confiscate ill-gotten gains if it can prove the allegations to a federal judge.
Kareri, who joined Riggs in 1994, managed more than a dozen embassy relationships. Equatorial Guinea's accounts at Riggs were fueled by hundreds of millions of dollars in payments from oil companies producing the country's vast reserves. At one point, Equatorial Guinea and its officials had more than $700 million in various deposit accounts at Riggs. A federal grand jury and the Securities and Exchange Commission are looking at whether bribes were paid by U.S. oil companies to the ruling family of Equatorial Guinea through the Riggs accounts.
According to a Senate subcommittee report in July, Kareri oversaw multiple suspicious transactions involving Equatorial Guinea accounts. The report cited such "lax oversight" by Riggs officials of Kareri that he was able to wire more than $1 million from the country's main oil account into an offshore company he controlled. That company, Jadini Holdings, was incorporated by Kareri's wife.