Arthur Brower/The New York TimesWilliam R. Salomon at Salomon Brothers in 1965, when he was a managing partner. Now 98, he still has an office at Citigroup.At 98, a venerable banker still goes to the office, even after the name of the storied investment firm he once ran has faded from Wall Street.
William R. Salomon uses space and a secretary paid for by Citigroup, which swallowed his firm, Salomon Brothers, in a merger. It is the least that the banking giant can do for the son of one of three brothers who started the firm a century ago.
But federal prosecutors say that Mr. Salomon’s longtime secretary did him no favors. Karen R. Febles, his former assistant at Citigroup for over a decade, has been charged with stealing nearly $2 million from him, according to a person with direct knowledge of the case.
Court papers filed by the government in February accused Ms. Febles of defrauding a retired bank executive but kept the name of the bank and the executive confidential. The victim is Mr. Salomon, according to this person, who spoke only on the condition of anonymity.
A Citigroup spokesman, Mark Costiglio, said the bank “informed law enforcement immediately upon discovery of suspicious account activity by this former employee, and we have cooperated fully to ensure that justice is done.”
Matthew Reilly, a spokesman for the United States attorney in New Jersey, whose office brought the case, declined to comment.
Ms. Febles, 47, of Palisades Park, N.J., has pleaded not guilty and is set to stand trial in Federal District Court in Newark on Nov. 13.
Her lawyer, Edward J. McQuat, said that she “was not responsible for the government’s allegations and we hope to convince a jury of that.”
Ms. Febles is hardly the first executive assistant accused of fleecing a corporate boss, a crime that investigations and securities firms say happens with some frequency. One of the more memorable incidents happened in 2002, when a secretary who worked for E. Scott Mead, a top banker at Goldman Sachs in London, was imprisoned after looting more than $5 million by wiring blocks of his money to bank accounts in Cyprus.
Experts say that these incidents arise for several reasons. Investment bankers and corporate lawyers are often on the road, working 60 to 80 hours a week, and they give secretaries a lot of discretion. They also say that class envy often factors into these crimes. And in cases like the one involving Mr. Salomon, elder abuse can play a role.
Bill Cunningham/The New York TimesWilliam Salomon, right, the founder of Salomon Brothers, the New York investment banking firm, with his wife, Virginia in 2005.“People put an excessive amount of trust in individuals who have fiduciary duty and signing power over their accounts,” said Daniel E. Karson, chairman of Kroll Advisory Solutions, a corporate investigations firm. “And part of what goes into the larcenous thinking is that this is a wealthy person who isn’t counting their nickels and dimes and will never miss the money.”
Prosecutors say that Ms. Febles worked for Mr. Salomon from 2000 until September 2011, answering his phones, scheduling his appointments and paying his bills. Mr. Salomon authorized Ms. Febles to prepare personal checks that he would sign. After he signed the checks, many of which were made out to “cash” or “petty cash,” Ms. Febles would alter the withdrawal amount and deposit excess funds in her own bank account, according to the government’s complaint.
In 2010, for example, Mr. Salomon’s expenses, paid in cash, totaled about $450,000, but checks in excess of $1.1 million were issued that year from his bank accounts, the complaint said. Prosecutors say that Ms. Febles was the only other person given access to his accounts.
The money, totaling $1.8 million, is said to have been stolen in small increments over a period of years. In one instance, prosecutors say, Ms. Febles made out a check for “nine hundred” dollars, but when the check was negotiated, the words “nine thousand” were added before the words “nine hundred.”
Ms. Febles lived more like a Wall Street banker than a secretary who earned no more than $93,000 a year, according to court filings. Last year she paid more than $50,000 cash for a Range Rover and about $35,000 for a Mercedes-Benz. Recent cruise vacations cost her $45,000. She paid for such extravagances, the government says, by skimming from Mr. Salomon’s fortune.
Born and raised in New York City, Mr. Salomon, who is known as Billy, skipped college and joined his father’s firm at 19. While serving as senior managing partner for 15 years during the 1960s and 1970s, Mr. Salomon orchestrated the firm’s transformation from a small bond-trading house to one of the country’s largest and most profitable investment banks.
“Pleasant, well-tailored and casual, it would be easy to think of him as another example of Wall Street nepotism,” wrote The New York Times of Mr. Salomon in a 1965 profile. “Colleagues and competitors dispel that notion.”
Among Mr. Salomon’s protégés was an ambitious young trader named Michael R. Bloomberg. Another was John H. Gutfreund, who succeeded him in 1978 as head of the firm. The newly minted chief executive of Citigroup, Michael L. Corbat, also began his career at Salomon.
Mr. Gutfreund presided over Salomon during a tumultuous period that ended in a scandal, drawing charges that the firm rigged the Treasury bond market. Salomon’s brash, risk-taking culture under Mr. Gutfreund was chronicled in “Liar’s Poker,” a tell-all memoir by Michael Lewis, who worked as a bond salesman at Salomon before he became a writer.
In a 1991 interview with The Associated Press, Mr. Salomon, embittered after a falling out with Mr. Gutfreund, lamented that the firm had lost its way.
“In my time, the customer was God and we would no more take advantage of him than we’d fly out the window,” Mr. Salomon said. “We wanted to maintain a high ethical standard.”
Salomon became swept up in the financial services mega-mergers of the late 1990s. The insurer Travelers acquired the firm in 1998 and later that year combined with Citicorp, which would become Citigroup.
Through it all, Citigroup provided Mr. Salomon with a Midtown Manhattan office and a secretary. A fixture of the Upper East Side old-money crowd, Mr. Salomon lives in a Park Avenue apartment and has an oceanfront home in Southampton on Long Island. He was widowed in 2008 when his wife of more than 70 years, Virginia Foster Salomon, died. It was around that time, the government says, that Ms. Febles started embezzling from him.
Mr. Salomon, who, despite his advanced age is said to have all of his mental faculties, did not return multiple calls seeking comment. Another assistant now answers his phone.