Former Riggs Executive, Wife, Charged With Fraud and Conspiracy

Federal prosecutors charged a former Riggs Bank vice president and his wife with bank fraud and money laundering yesterday, and a federal magistrate kept them in custody without bail after the government alleged they planned to leave the country.

Simon P. Kareri was the manager of the African and Caribbean division of Riggs's international and embassy banking department until he was fired in January 2004. Prosecutors alleged that he had taken more than $1 million from his clients through kickback schemes, forged checks and wire transfers, and funneled the money into a shell company he and his wife, Nene Fall Kareri, had set up in the Bahamas.

Simon Kareri, 47, and Nene Fall Kareri, 40, were arrested at their Silver Spring home Thursday afternoon. They have three children, ages 6, 9 and 17, said her attorney, Cynthia Katkish, after the two were arraigned yesterday before U.S. Magistrate Judge Alan Kay. Simon Kareri's attorney, Tony Lenell Axam, declined to comment.

Kareri once was responsible for Riggs's biggest depositor, the government of Equatorial Guinea, and that oil-rich country's ruling family. He was one of the most successful embassy bankers at Riggs's Dupont Circle branch before Riggs shut down the division last year as a criminal investigation of its activities expanded.

Riggs was sold to PNC Financial Services Group Inc. this month. In January, Riggs pleaded guilty to failing to prevent possible money laundering by Equatorial Guinea officials and former Chilean dictator Augusto Pinochet. An investigation into the bank's activities continues.

At the hearing, Assistant U.S. Attorney Barry Weigand argued that Kareri and his wife posed a flight risk and should be held without bond pending a detention hearing next week. Weigand said the couple had recently sold a Maryland property that the government was preparing to seize, and, according to the criminal complaint filed yesterday, had tried to wire almost $1 million from the sale to an overseas account.

Simon Kareri told title company employees he needed the funds from the sale released right away because "he and his wife were leaving the country or moving out of the country and purchasing another house out of the country," according to an FBI affidavit filed as part of the complaint. Kareri instructed his bank, once in possession of the funds, to wire them to a bank in Luxembourg, according to the affidavit.

Nene Fall Kareri's lawyer asked Kay to reconsider because the couple's children required care and offered to relinquish her client's passport. Kay denied the request, saying it would be "the height of folly" to allow the Kareris to go free.

"The arrest of Mr. Kareri and his wife demonstrates that the United States government will not tolerate efforts of property owners to subvert our forfeiture actions by disposing of the property in question," said U.S. Attorney Kenneth L. Wainstein in a written statement. "It also reflects our continuing commitment to investigate and bring to justice any individuals who have betrayed the trust of Riggs's customers, employees, and shareholders."

Kareri and his wife were charged in two criminal complaints, one for bank fraud, money laundering, wire fraud and conspiracy in connection with his alleged embezzlement of customer funds, and the other for selling the property. If convicted on all the charges, the couple could be sentenced to up to 75 years in prison and have to pay more than $2.75 million in fines.

The bank fraud charges relate to the years 2000 to 2004, during which he oversaw dozens of accounts for African embassies as well as the main country account for Equatorial Guinea. Kareri also maintained broad authority over the accounts of Equatorial Guinea's ruling family, the Obiangs. Total balances were more than $800 million at their peak.

In charging documents filed yesterday, the government alleged that Simon Kareri wired more than $1 million from an Equatorial Guinea government account to the Kareris' Bahamas company. The government also alleged that Kareri induced the son of Equatorial Guinea's president to write a check to an acquaintance of Kareri. Of the $140,000 drawn on the check, $139,000 was eventually deposited into the Kareris' Bahamas company.

In addition, the government charged Kareri in connection with a scheme to overbill the African country of Benin for construction work being done on its embassy. Benin was one of Kareri's banking clients. He was charged with persuading the contractor doing the work to increase the bill from $186,000 to $410,000, and to pay him the $224,000 difference.