You would think that if your mother's money was handled by a financial advisor at a world-famous major bank, you would at least be safe from outright fraud, right?
Think again.
The most surprising thing about the former Citibank SE case,
Vice President Helen Caldwell, who has just pleaded guilty to fraud, is that while working at the bank she was able to defraud her elderly customers under Citi's watch for at least nine years.
The case came to light after one of Caldwell's clients developed dementia and ended up in a nursing home, and the public guardian in Cook County, Illinois, stepped in to oversee her affairs.
From 2014 until last year, Caldwell tricked three elderly clients into spending $1.5 million on obscure film projects, including horror and vampire films, and a documentary about Cuba. (Wait what?)
During that period, Citi's compliance department apparently didn't notice anything.
City declined to comment.
But perhaps we shouldn't be surprised.
In modern leading US companies, “compliance” and “oversight” are mostly based on simplistic procedures and self-reporting – things that make compliance departments feel good, but do no real good.
This includes maintaining impressive industry credentials. Caldwell was a “Registered Financial Advisor” and held Series 7, 63 and 65 financial licenses. These ensure a basic level of competence. They do little or nothing to ensure honesty.
This included filling out and signing a report to her bosses every year confirming that she, certainly, was not involved in any fraud, no Sir Bob.
As the U.S. Attorney's Office in Chicago said in court documents, Caldwell was able to hide her fraud from the bank “by, among other things, filing annual reports with the bank.” [Citi] Falsely certifies that its foreign business activities do not involve soliciting investments from [Citi] clients or participate in joint investments with them [Citi] “Customers.”
How many scammers do these types of formats catch?
It makes you wonder why we deal with the police or the Department of Justice: Uncle Sam can send every citizen a form once a year, asking them to self-certify that they are not breaking the law. What could go wrong?
During the nine years that Caldwell, 58, was dutifully filling out and signing these ridiculous documents, she was meanwhile taking her clients' savings and spending them on construction work on her home, renovating a classic car, paying property taxes, and buying food and food. Liquor, pay her cell phone bills, pay off loans, buy things for her pets, buy furniture and clothes, pay parking tickets, pay for physical therapy.
She also took some money through cash withdrawal.
One of Caldwell's clients was in her 70s and the other was in his late 80s. Their money is gone now.
Caldwell's attorney did not respond to a request for comment.
If this can go on for nine years without being detected, what is going on at the big big banks that we don't know about yet?
The upside is that when this happens at a big bank, there's someone with deep pockets you can sue. Citi's market value is more than $100 billion.
It's a timely reminder to make sure your elderly relatives — or you — aren't taken advantage of. Ask questions, double-check the documents, and don't assume that everything is fine. Elder fraud is an epidemic, and it's sure to get worse as America's elderly population grows: Complaints filed with the FBI reached more than 88,000 in 2022, with losses totaling $3.1 billion — an 84% increase from the previous year.
And these are just the things we know about.
