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Federal prosecutors are attempting to seize property and nearly $1 million in cash from a former Riggs Bank executive accused of embezzling money from foreign embassy accounts he oversaw. The move, revealed in filings with the U.S. District Court for the District of Columbia, is the first court case by the government growing out of the scandal surrounding the D.C. bank’s handling of its international accounts. According to the court documents, the executive, Simon Kareri, former senior vice president of the Riggs’ International Banking Group, was fired by the bank in January 2004 after an internal investigation alleged that he stole hundreds of thousands of dollars from an embassy account. The Senate has also scrutinized Riggs for its possible ties to former Chilean dictator Augusto Pinochet. Kareri has not been charged with a crime and, in court papers, denies the allegations. In September, the U.S. Attorney’s Office in the District filed a civil forfeiture action in federal court, claiming that Kareri purchased undeveloped land in Rockville, Md., using funds from an alleged kickback scheme. On Dec. 7, prosecutors filed a second forfeiture action aimed at confiscating $1 million being held in three bank accounts controlled by Kareri and his wife. Veteran criminal defense lawyers say the decision by the government to target Kareri’s assets is a classic prosecutorial move — one that is often designed to pressure a target into a plea deal and cooperation with an investigation. “All of us know, a defendant’s ability to afford an adequate defense in the real world is a component of a defendant’s decision making — whether to fight or plead out,” says Barry Coburn of D.C.’s Coburn & Schertler. “Even aside of the economic aspect, the defendant feels the weight of the government’s foot on his neck.” Kareri’s lawyer, Alexandria, Va., solo practitioner Jonathan Shapiro, says he does not know what the government has planned for his client, but that “they are lurking in the shadows.” Shapiro declines further comment. In court papers filed in the Rockville property case, Shapiro denies the allegations. Shapiro says Kareri will also contest the seizure of the money. Alexandria lawyer Nina Ginsberg, who represents Kareri’s wife, Nene, says seizing assets through a civil action is a sign that the government is struggling to put together a criminal case against the Kareris. “In my view, they don’t have sufficient evidence to indict them,” says Ginsberg, of DiMuro, Ginsberg & Mook. “If they did, they would have done so already.” Ginsberg says her client denies any wrongdoing and will also file a claim to some of the money. Channing Phillips, principal assistant U.S. attorney, declines comment. The government investigation is reportedly targeting some of the best-known figures at Riggs. The Washington Post reported in August that Interim U.S. Attorney Kenneth Wainstein is examining the role of current and former Riggs executives and directors as part of a criminal probe into money laundering allegations at the D.C.-based bank. In a letter sent to federal bank regulators, Wainstein named Riggs former chairman and top shareholder Joe Albritton, his wife, Barbara, and his son Robert, who is chairman of Riggs, as some of the officials under scrutiny, according to the Post report. Federal bank regulators also levied a $25 million civil penalty against Riggs for failing to abide by regulations aimed at preventing money laundering. According to Phillips, Assistant U.S. Attorneys Steven Durham, Robert Chapman, and Gerald “Jay” Balacek are running the criminal investigation, along with Cynthia Stone, a trial attorney in the Justice Department’s Asset Forfeiture and Money Laundering Section. Assistant U.S. Attorney Michael Humphreys is handling the civil forfeiture actions. Kareri, who was a top manager at Riggs for nearly a decade and oversaw more than 60 accounts now under scrutiny, would appear to be a key figure for information in any criminal probe. At this point, Kareri’s relationship with the Albrittons remains unclear. In July, Kareri refused to answer questions from a Senate panel, invoking his Fifth Amendment right against self-incrimination. FOREIGN RELATIONS Kareri had been a senior manager of Riggs’ Embassy Banking Division since January 1994 and was responsible for managing various embassy accounts as well as the personal accounts of foreign government officials and their families. Those accounts included the African nations of Equatorial Guinea, Benin, Mozambique, and Togo. Kareri later became a senior vice president of the international banking group. Under Kareri’s management, Equatorial Guinea became Riggs’ largest client, according to a July report by the minority staff of the Senate Governmental Affairs Permanent Subcommittee on Investigations. More than 60 accounts were opened — half of those belonging to government officials and their families. By 2003, these accounts contained nearly $700 million in balances and outstanding loans, according to the subcommittee’s report. The State Department has been highly critical of Equatorial Guinea’s government, accusing it of torture and corruption. The country, meanwhile, has had a surge in economic activity over the past five years stemming from its oil resources. The Senate report states internal Riggs documents show that bank officials were “fully aware of the corruption risks associated with the [Equatorial Guinea] accounts,” but made no efforts to ensure the money was legal. “Despite this knowledge, Riggs failed to designate the [Equatorial Guinea] accounts as high risk until October 2003,” the report states, “and failed to exercise enhanced scrutiny of the account activity, even for transactions involving large cash deposits or international wire transfers.” According to the Senate report, Kareri allowed Equatorial Guinea to deposit millions of dollars into Riggs accounts without asking questions as to the source of the funds. On two occasions, according to the report, Kareri personally carried $3 million in cash into Riggs’ Dupont Circle branch to deposit the money into a corporate account tied to Equatorial Guinea President Teodoro Obiang. Kareri also helped Obiang and other government officials purchase property in the D.C. area, according to Senate documents. While Kareri’s relationship with Obiang’s administration is what grabbed the attention of Senate investigators, it was Riggs’ own internal probe that made Kareri — and the bank — the focus of federal prosecutors. In the fall of 2003, Riggs officials contacted the Secret Service to report that Kareri had allegedly stolen money from the accounts he managed, according to papers filed in the forfeiture cases. Kareri was fired by the bank in January 2004. As the basis of their forfeiture actions, prosecutors claim Kareri initiated two separate schemes to embezzle money from the accounts he managed. One involved Jadini Holdings, which was incorporated in the British Virgin Islands in May 2001. Its only named shareholder and director was Nene Kareri, according to court papers. Kareri and his wife are U.S. citizens who emigrated from countries in Africa. Shapiro says they are not from Equatorial Guinea. In July 2001, Nene Kareri opened up a bank account for Jadini Holdings at SunTrust Bank. Shortly thereafter, Kareri transferred $700,000 from a Riggs account owned by Equatorial Guinea to the Jadini Holdings account. According to prosecutors, Melchor Esono Edjo, secretary of the country’s treasury, stated that Kareri had no authorization to make the wire transfer. That money was commingled with other funds deposited by Nene Kareri that prosecutors claim should also be forfeited. One SunTrust bank account in the name of Jadini Holdings containing $819,000 was frozen by prosecutors in July. A second account with $99,000 was frozen in August. Prosecutors also allege in court documents that Kareri used his relationship with various embassies to operate a “kickback scheme.” According to the court papers, Kareri would recommend building contractor Hardutt Singh for construction projects on embassy properties. Singh, president of Vienna, Va.’s Harry Singh Associates and vice president of the Potomac Construction Co. in Hyattsville, Md., would inflate the price of the projects on invoices and then pay Kareri a share of the proceeds, the court papers allege. Singh did not return messages left at his Hyattsville office. Kareri and Singh, according to court papers, hatched a complicated scheme to siphon money from a renovation project at the Benin Embassy in Northwest D.C. In spring 2000, Kareri recommended Singh to Benin officials. Singh then gave Kareri a written estimate of $186,000 for the job. Kareri asked Singh to add another $224,000 and resubmit the estimate. The Benin Embassy paid $410,000 for the work. Singh, according to prosecutors, then funneled the additional money back to Kareri. Prosecutors claim a portion of the money was used by Kareri to purchase a certificate of deposit at SunTrust Bank. The CD was combined with additional funds and transferred to a money market account owned by Kareri. In July 2001, Kareri wrote a check for $563,000 from the money market account to buy land in Rockville. In August 2004, prosecutors froze a SunTrust bank account owned by Kareri that contained $76,800, claiming that it included additional proceeds from the kickback scheme. U.S. District Judge Ricardo Urbina issued a scheduling order in November setting discovery rules and deadlines in the Rockville property case. A hearing has not been set. Kareri and his wife have until mid-January to file a claim to the $1 million. Nene Kareri’s lawyer, Ginsberg, says she expects the forfeiture cases to be stayed pending the outcome of the criminal probe.

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