Patricia E. Collantes, the former operations manager at the Palo Alto, Calif., office of Citigroup Global Markets Inc., has been fined and suspended by the Financial Industry Regulatory Authority, or FINRA, for her failure to supervise a sales assistant who misappropriated almost $750,000 from customers.
Collantes agreed last month to an $8,000 fine and a suspension from associating with any FINRA member in a principal capacity for four months. Collantes signed a Letter of Acceptance Waiver and Consent, or AWC, in which she neither admitted nor denied any charges but agreed to an entry of the findings. FINRA accepted the AWC on November 30.
Collantes Failed to Supervise Tamara Lanz Moon
According to the AWC, from January 2001 to March 2008, Collantes was the operations manager at Citigroup Global’s Palo Alto branch office and was among those responsible for direct supervision of the operations staff, including Tamara Lanz Moon, a registered sales assistant.
Over an eight-year period, Moon misappropriated almost $750,000 from 22 customers while under the supervision of Collantes and others at Citigroup Global. Moon also falsified account records and engaged in unauthorized trades.
Moon was able to perpetrate the fraud because of supervisory lapses at the branch, the AWC said. Collantes failed to respond to suspicious activity in the accounts Moon targeted, which allowed her to continue her fraud for years. As such, Collantes violated National Association of Securities Dealer Rule 3010 on supervision and Rule 2110 on standards of commercial honor and principles of trade.
Moon deliberately targeted Citigroup Global’s most vulnerable customers. Per an AWC filed in April 2009, Moon was barred from associating in any capacity with any FINRA member firm. This October she pleaded guilty to one count of mail fraud in federal court as a result of her fraud on Citigroup Global customers.
Moon admitted to falsifying account records and engaging in unauthorized trades in her AWC. She transferred and disbursed customer funds in order to convert them for personal use, including home remodeling and speculative real estate investments.
According to her AWC, Moon targeted customers she believed were not monitoring their accounts. These included the elderly, the ill and the deceased, and customers whose account statements had been returned because of wrong addresses. She also used accounts Citigroup had designated as abandoned property. Moon forged signatures on letters requesting address changes, trades, transfers and disbursements to her personal bank accounts.
In one instance, Moon misappropriated about $80,000 belonging to an elderly widow who has since passed away. At the time the widow was 82 years old and held multiple Citigroup accounts, including a primary account, an IRA account, and a Citicorp Trust account, Moon’s AWC said.
Starting in June 2003 through October 2004, Moon transferred about $80,000 from the widow’s primary and IRA accounts into the Citicorp Trust account without authorization. Moon then used a “money in, money out” pattern to distribute funds from the Citicorp Trust account to herself, in some cases forging the widow’s signature on letters of authorization, according to Moon’s AWC.
In June 2004, Moon forged the widow’s signature on another letter of authorization that changed the address of the widow’s Citibank Trust account to Moon’s home address.
Collantes Failed to Respond to Red Flags
While the above fraud and more than 20 like it were was taking place, Collantes failed to respond to a series of red flags concerning irregularities in customer accounts that were revealed by exception reports and account records, according to Collantes’ AWC.
For example, she and other supervisors at the branch were responsible for reviewing Experian reports designed to highlight mismatches between new account information and information kept in a third-party database, the AWC said.
One Experian report from October 2005 identified two mismatches involving the address and phone number for a client that Moon was supposed to resolve. On the hard copy of the report, Moon wrote “client moved to Arizona,” which did not explain either of the mismatches. Collantes just accepted Moon’s assertion without further inquiry.
Collantes was also responsible for reviewing letters of authorization for transfers of funds, disbursements and changes to account information, including address changes.
According to the AWC, the branch office limited its review to a check of the “four corners” of the letters for completeness, without comparing the letters to account statements or earlier letters.
In one example, according to Collantes’ AWC, Moon used a series of letters of authorization to channel money from customer accounts to herself beginning in January 2007. Moon changed the account addresses to her own address after she created a fraudulent account in her father’s name under the same address.
Two transfers totaling $32,364.78 were made from customers’ trust accounts to the fraudulent account. In addition, check writing was added to the fraudulent account and the checkbook was sent to Moon’s address. She used the checks to misappropriate funds.
By limiting the review of the letters of authorization, Collantes failed to adequately responds to the suspicious activity in customer accounts, the AWC said.
Collantes first registered with FINRA in January 1996. From January 1996 until December 2010, she worked for Citigroup Global in Palo Alto. In May 2006, Collantes (under her maiden name of Fanella) consented to a three month suspension in all capacities for causing Citigroup Global to maintain inaccurate books and records.
For a complete disciplinary and employment history of Collantes, see her FINRA BrokerCheck report here. For Moon’s employment and disciplinary history, see her BrokerCheck report here. Both Collantes and Moon are no longer registered with FINRA.
Guiliano Law Group
The practice of Nicholas J. Guiliano, Esq., and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost to unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.