Former Riggs Bank Executive Is Arrested
Friday, May 27, 2005
Federal officials arrested former Riggs Bank vice president Simon P. Kareri and his wife yesterday afternoon, according to sources familiar with the case.
The Kareris are to be arraigned this afternoon in U.S. District Court in Washington, the sources said.
The Kareris are the only people to be arrested in connection with an 18-month investigation into Riggs's international private-client and embassy banking business. Kareri, who was fired by Riggs in January 2004, was the account manager for Riggs's onetime biggest customer, the government of Equatorial Guinea and its autocratic ruling family. Riggs pleaded guilty in January, agreeing to pay $16 million in fines, for not reporting suspicious transactions by Equatorial Guinea and former Chilean dictator Augusto Pinochet.
Kareri and his wife, Nene Fall Kareri, are being investigated not for those transactions, a government source said, but rather for money he is said to have embezzled from Equatorial Guinea's Riggs account and possibly from other Riggs clients. In a federal civil action, which was suspended several months ago pending possible criminal charges against the Kareris, the Department of Justice was trying to seize money and property the Kareris had assembled with the proceeds of Simon Kareri's alleged embezzlement scheme.
A spokesman for the U.S. Attorney's Office in the District could not be reached last night for comment. Riggs was recently acquired by Pittsburgh-based PNC Financial Services Group Inc., but the federal investigation of the company and its former officials is continuing.
The civil complaint alleged that Kareri transferred funds from accounts of his Riggs clients and into corporate accounts controlled by his wife. The suit also alleged that Kareri orchestrated kickback schemes from contractors who did work for his embassy clients. Kareri was vice president for the West African and Caribbean regions in Riggs's international division.
"We intend to defend the charges vigorously," said Jonathan Shapiro, Simon Kareri's lawyer. Nene Fall Kareri's lawyer could not be reached last night for comment.
FBI agents arrested the Kareris at their Maryland home. The government decided to arrest and detain the couple based on new information that investigators think pointed to a potential flight by the family, including the wiring of a large sum of money overseas, said the government source, who spoke yesterday on the condition of anonymity because formal charging documents hadn't been filed.
The Kareri matter began with a routine review of his clients' accounts by Riggs's own internal security department in late 2003. Riggs officials soon uncovered a host of suspicious accounts and transactions by Equatorial Guinea, an oil-rich West African country. Hundreds of millions of dollars a year were being funneled into the country's Riggs accounts by oil companies exploiting the country's off-shore oil reserves. At its peak, the Equatorial Guinea accounts at Riggs topped $800 million.
Riggs closed the accounts in March 2004, but not before uncovering a personal check written by the son of Equatorial Guinea's president to Kareri. Riggs officials said they thought Kareri had added a numeral 1 in front of the $40,000 check, making it $140,000. That sum and at least $700,000 more Kareri allegedly embezzled from his Equatorial Guinea clients made it into Jadini Holdings Ltd., a shell company the Kareris had created in the British Virgin Islands, federal officials alleged in court documents filed in conjunction with the earlier civil suit.