Citibank employees killed customer over disputed credit card debt

Citi employees killed a Jakarta customer when he questioned his credit card bill at a Citi office. Another Citi employee embezzled millions from customers. Indonesia banned Citi from acquiring new customers for two years and they are not allowed to open new branches for a year.

Why didn’t they just kick Citi out as Japan did?

Despite the government sanctions, Citibank Indonesia representative Otto Hasibuan claims it’s too soon for a lawsuit by the widow because the employees have not yet been convicted in court.

In the Citibank Case, a Long Wait for Answers
Ulma Haryanto | September 27, 2011

It’s been six months since the secretary general of a little-known political party was declared dead at one of Citibank’s offices in Jakarta, and now there might finally be legal closure.

It has been a long wait for Esi Ronaldi, the 47-year-old widow of Irzen Octa, who is still struggling to pick up the pieces of her life, doing the work of two parents for her two teenage daughters, Grace and Citra.

“[Irzen] used to drop off and pick up the girls from school. Now I have to do it,” Esi told the Jakarta Globe on Monday. “The girls miss their father so much.”

Irzen’s death was a personal tragedy for the family, but it also sent shock waves through the banking industry as questions were asked about how he died in the Citibank office while meeting with representatives about his unpaid credit card bills.

For Citibank, the death came as it was still reeling from news that one of its wealth managers, Inong Malinda Dee, had allegedly stolen money from clients. Inong is now awaiting trial on charges that she embezzled at least Rp 29 billion ($3.2 million).

The South Jakarta Prosecutor’s Office has said it will soon present an indictment in Irzen’s case.

“It’s going to be submitted to the court this week. It took us quite a while since there was a lot of attention from the public, and we wanted to make sure we didn’t make any careless mistakes,” said Masyhudi, a prosecutor.

That might bring some comfort to Esi, who doesn’t work outside the home and has had to rely on handouts from relatives to support herself and her daughters. “The kids wanted to get jobs, but I told them they had to finish school first,” she said. “I want to start something, but it’s hard to focus.”

Esi said Citibank had at one point offered her compensation, but then she never heard from the bank again. Compensation is the subject of an ongoing lawsuit filed by Irzen’s family against Citibank Indonesia at the Central Jakarta District Court.

Slamet Yuwono, the family’s legal representative, said they were seeking Rp 3 trillion in damages for Irzen’s death, based on future living costs for Irzen’s two daughters.

“The parties have reached a deadlock in their negotiations,” Slamet said. “Citibank tried to settle for less, Rp 60 billion, which we refused.”

Otto Hasibuan, representing Citibank Indonesia, said the lawsuit was premature because there was no court ruling finding Citibank responsible for the death.

“They say that Citibank should be responsible for its employees. But which employees?” he said.

Slamet says a court ruling is not necessary for the lawsuit to go forward and the family to seek compensation for their loss.

“Our lawmakers have deemed [Citibank] to be responsible, and it has also been sanctioned by Bank Indonesia,” he said.

After Irzen’s death and Malinda’s embezzlement case, in May the central bank suspended Citibank from acquiring new credit card customers for two years and priority banking clients for one year. It was also suspended from opening new branches for a year.

Citibank’s chief country officer, Shariq Mukhtar, was replaced in the fallout of the scandals.

Regulatory loopholes and a lack of monitoring from the central bank have been blamed for Irzen’s death.

Under “certain circumstances” outsourced debt collectors can be used, according to a 2009 decree from Bank Indonesia. Earlier this month, Comr. Gen. Sutarman, the National Police’s chief of detectives, announced that police officers could become involved in enforcing court rulings in civil cases, including debt collection.

Legal practitioner and consumer rights activist David Tobing is concerned about debt collectors, and the police decision.

“When a debtor, for whatever reason, fails to pay up, then this should be taken to court, not dealt with by employing thugs with no legal understanding,” he said. “On top of that, it is not the police’s domain to interfere in, because debts are civil cases, not criminal.”

And it seems that little seems to have changed in the way some banks and finance companies collect debts.

Last week, the Jakarta Police arrested eight debt collectors and two soldiers apparently moonlighting as collectors. They allegedly seized a car belonging to Elvirawati. The 25-year-old intern at a law firm in Tebet, South Jakarta, said a man claiming to be a debt collector came to her office on Sept. 19 accompanied by two men in military uniforms.

“They said the installments on a car, a Toyota Fortuner, hadn’t been paid for four months. But it was my father’s and I told them to call him instead,” she said.

The men left but returned an hour later with five other men, and insisted on taking her car. “I told them to settle it at the Tebet Police station, and they agreed to go with me to the police,” she said.

Elvirawati said two of the men rode with her in the car. “The other men were following me in two separate cars, and when we got to Tebet Dalam, one of the other cars stopped mine and they ordered me to step out while the men in my car grabbed my keys,” she said.

She immediately went to the police, who tracked her car down the next day.

“We found it at a lender’s office in Jatiwaringin, Bekasi. Its license plate had been changed,” said the Jakarta Police’s chief of detectives, Comr. Herry Heryawan.

HSBC recently sold its American credit card portfolio to Capital One at least in part due to “regulation” and apparently they’ll focus on international business where it’s apparently easier to collect.

Citi cooking the books?

Do you really have to be an analyst to know that they’re cooking the books?

Analyst: Citigroup Is Cooking the Books

By Charlie Gasparino
Published August 25, 2010

An all-out war has broken out between Citigroup CEO Vikram Pandit and a prominent securities analyst who is saying that the big bank may be cooking the books by inflating its earnings through an accounting gimmick, FOX Business Network has learned.

The analyst, Mike Mayo, of the securities firm CLSA, has been telling investors that Citigroup (C: 3.75 ,0.00 ,0.00%) should take a writedown, or a loss on some $50 billion of “deferred-tax assets,” or DTAs. That is a tax credit the firm has on its financial statement that Mayo says is inflating profits at the big bank by as much as $10 billion.

For that critique, Mayo has been denied one-on-one meetings with top players of the firm, including CEO Vikram Pandit, Chief Financial Officer

John Gerspach, and any other member of management, while other analysts enjoy full access to the bank’s top executives, FBN has learned.

In fact, Mayo hasn’t had a meeting with Pandit or anyone in Citigroup management since around the time of the financial crisis, in the fall of 2008, when Citigroup was on the verge of extinction and needed an unprecedented series of government bailouts to survive.

Since then Citigroup has been profitable, albeit marginally. Though it posted a loss for the full year of 2009, after it repaid a government bailout loan during the fourth quarter and began to unwind Uncle Sam’s ownership stake. One reason Citigroup may be unwilling to write off its DTAs: to do so may sink the troubled bank back into unprofitability.

Now, Mayo’s continued criticism of the firm’s accounting has turned a testy relationship between Pandit and Mayo into one of the most-bitter analyst-CEO confrontations seen on Wall Street for some time. When asked about the matter, a spokeswoman for Citigroup would only say “I have no comment on Mike Mayo.”

Of course. What else COULD they say?  He’s right?

Federal judge REFUSES the corrupt SEC settlement with Citigroup

More documentation of the extraordinary corruption of our regulators. When they’re not watching porn, the thugs at the SEC work on designing settlements favorable for the criminals.

It RARELY happens that a JUDGE refuses to accept a settlement and this just goes to show how horrible this settlement really is.

Judge balks at SEC’s settlement with Citigroup

By Zachary A. Goldfarb
Tuesday, August 17, 2010

A federal judge refused on Monday to accept a $75 million settlement between the Securities and Exchange Commission and Citigroup, marking the second time this year that a judge has questioned whether the agency had exacted the proper sanction from a major bank.

During a hearing on the settlement, Judge Ellen S. Huvelle of the U.S. District Court for the District of Columbia raised questions about the SEC’s investigation into Citigroup, and how it decided on the size of the penalty and on the individual executives who also face sanctions, according to lawyers who were present. She asked why company shareholders must ultimately bear the price of the sanction, and why the agency charged only two executives with wrongdoing when more senior executives were involved.

Huvelle demanded additional information from the SEC and Citigroup, ordering the parties to file briefs and scheduling a hearing for late September. Through spokesmen, the SEC and Citigroup said they would provide the judge with all the requested information.

The judge’s action is the latest setback for the agency as it tries to show it can hold major Wall Street firms and their executives accountable for actions that might have fueled the financial crisis.

Last year, a federal judge in New York pilloried the SEC over its settlement with Bank of America of charges that the bank did not disclose mounting losses and plans to pay billions of dollars in bonuses to employees.

In rejecting the SEC’s initial $33 million Bank of America settlement, U.S. District Judge Jed S. Rakoff of the Southern District of New York was incredulous about the agreement. He said it suggested “a rather cynical relationship between the parties” in which the SEC would get to say it was penalizing a big bank and Bank of America could avoid a protracted fight with one of its regulators.

Ultimately, after the SEC quintupled the fine and added new charges, Rakoff offered his half-hearted approval to the settlement.

Last month, the SEC charged Citigroup with misleading investors about nearly $40 billion of subprime mortgage investments in its portfolio in 2007. Those investments blew a gaping hole in the bank’s balance sheet and led the federal government to provide tens of billions of dollars in financial aid to keep the bank afloat.

The SEC also charged former Citigroup chief financial officer Gary L. Crittenden and former investor relations head Arthur Tildesley for their alleged roles in the wrongdoing.

Crittenden agreed to pay $100,000 and Tildesley agreed to pay $80,000 to settle the charges. Under the settlement, Citigroup and the former executives neither admitted nor denied wrongdoing.

An SEC lawyer told the judge on Monday that the agency did an expansive investigation into Citigroup and could only find evidence of wrongdoing by those two executives. The lawyer told the judge that the agency did an economic analysis of the bank’s alleged wrongdoing, trying to determine what gain the company enjoyed as a result of the faulty disclosures, and came up with what it considered a reasonable penalty.

Matthew Miller, a lawyer at Cuneo, Gilbert and Laduca who is representing a shareholder who has sued Citigroup executives over losses incurred by the firm, praised the judge’s action.

“There’s very little explanation as to why these two individuals who are named in a related administrative complaint are the only two people responsible for the conduct at issue, and why there are no more senior executives involved in this proceeding,” he said.

If YOU owe Citi any unsecured debt and you are (near) judgment-proof, vote with your money.

Don’t pay these criminals.

If you feel bad about not keeping your word to pay them back, consider the MILLIONS whose lives have been ruined and give some of the money you would have given to Citi to people who DESERVE it.

Play Robin Hood and create a little JUSTICE.

California judgment against Citibank for STEALING customer funds

Between 1992 and 2003 Citi stole funds from credit card account holders.   California investigated and the Citi executives ADMITTED that stealing from their customers is a business decision.

While 53,000 customers were defrauded, the victims were mostly “poor or deceased” and the accounts were in “recovery status.”  Obviously, most people would demand their money back when their accidental double payment or a refund for returned merchandise would “disappear.”

During my personal experiences with Citi (their various entities, such as Citi Financial Auto , Citi Financial, etc.) I determined that they routinely defrauded customers with financial problems.

In fact, I have never reviewed accounting for a mortgage in foreclosure that did NOT have payments or credits missing and/or contain fraudulent charges.

According to the California AG press release, a Citibank executive stated:

“Stealing from our customers is a business decision, not a legal decision.”

Since you might find it hard to believe, here is the 8/26/2008 press release by California Attorney General Edmund (Gerry) Brown:

Atty. General Brown Forces Settlement with Citibank: Investigation Reveals Bank Was Stealing From Its Customers

SAN FRANCISCO- California Attorney General Edmund G. Brown Jr. today announced that he has reached a settlement with Citibank after a three-year investigation into the company’s use of an illegal “account sweeping” program. Nationally, the company took more than $14 million from its customers, including $1.6 million from California residents, through the use of a computer program that wrongfully swept positive account balances from credit-card customer accounts into Citibank’s general fund.”The company knowingly stole from its customers, mostly poor people and the recently deceased, when it designed and implemented the sweeps,” Attorney General Brown said. “When a whistleblower uncovered the scam and brought it to his superiors, they buried the information and continued the illegal practice.”

Between 1992 and 2003, Citibank employed a computerized “credit sweep” process to automatically remove positive or credit balances from credit-card customer accounts. An account could show a credit balance if a customer double-paid a bill or returned a purchase for credit. The credit sweeps were done without notifying the customer and without regard for whether the customer had any unpaid balances or other charges owed to Citibank.

The credit sweeps targeted more than 53,000 customers nationwide. All of the affected accounts were in a recovery status, which includes accounts of customers who have died, sought bankruptcy protection, or been the target of litigation or other collection efforts by Citibank.

In July of 2001, a Citibank employee uncovered the practice and brought it to the attention of his superiors. The employee was later fired for discussing the credit sweeps with an internal audit team. In the words of a Citibank executive, “Stealing from our customers is a business decision, not a legal decision.” The same executive later said that the sweep program could not be stopped because it would reduce the executive bonus pool.

The Attorney General launched its investigation of Citibank in 2005 to determine whether the company violated the California False Claims Act by filing false holder reports with the California State Controller that omitted any reference to the swept funds. The 3-year investigation led to today’s settlement.

The settlement includes:
– Permanent injunction – Citibank will be permanently prevented from re-initiating the credit sweeps.
– Refunds to victims – Citibank will refund all improperly swept funds to customers who were victimized by the sweeps. Citibank will also pay California customers 10% interest on the amount taken.
– Penalties – Citibank will pay $3.5 million in damages and civil penalties to the State of California.
– Compliance audit – After Citibank’s refund process is complete, an independent auditor will review Citibank’s work to ensure that it has lived up to its obligations.

Citibank has affirmed that it can identify most of the victims of the credit sweeps and has begun the process of reviewing archived account data and refunding the improperly swept funds going back to 1992. [emphasis added]

So Citi refunds the money and the state of California gets $3.5 million.

The Citibank Judgment


If anyone else stole money, they’d go to PRISON!

The criminal bankers freely ADMIT that they steal their customers’ money to pay their BONUSES and they don’t go to jail.  That they CONSPIRED at the highest level to commit this fraud does NOT result in prison time.

Of course it didn’t take long until Citi was bailed out and those $3.5 million to California were essentially paid for by the tax payer.

The state of California FAILED to take appropriate actions.

It’s like the Republicans v. Democrats circus .

They put on this show, PRETENDING to be adversaries.

NOTHING whatsover was done to punish the corporations and the responsible executives.

Most likely, California only investigated Citi because they HAD to after the whistle blower Citi employee went public.

In contrast, many FDRS fraud victims filed complaints with the California AG and they did NOTHING to stop the FDRS fraud and they did NOTHING to recover the loot.  They claimed not to have the funds to investigate.  Of course that’s baloney because they get awarded the cost of the investigation (and maybe MORE) when they prevail in court or they SETTLE with a payment to the state — essentially the state agrees to accept a bribe in exchange for no criminal prosecution.

I’m currently working on my OPEN letter to AG Brown to demand the investigation of FDRS — enough is enough!