Citigroup Pays $1.5 Million for Supervisory
Failures Related to Elaborate Scheme to
Misappropriate Millions in Trust Funds Belonging
to Cemeteries Located in Michigan and Tennessee
May 26, 2010 12:39 PM Eastern Daylight Time
WASHINGTON--(EON: Enhanced Online News)--The Financial Industry Regulatory Authority (FINRA)
announced today that it has imposed a monetary sanction of $1.5 million against Citigroup Global Markets Inc. for
supervisory violations relating to its handling of trust funds belonging to cemeteries in Michigan and Tennessee. The
sanction represents a $750,000 fine and disgorgement of $750,000 in commissions, which is being returned to the
cemetery trusts as partial restitution.
“Firms have a duty to protect customer funds by taking prompt and meaningful action when they encounter
indications of possible fraud or misappropriation,” said James S. Shorris, FINRA Executive Vice President and
Executive Director of Enforcement. “That duty is particularly critical when firms handle trust funds where the
beneficiaries may be unsophisticated investors who are unaware of how the funds are being handled.”
Citigroup consented to findings that, from September 2004 through October 2006, Citigroup broker Mark Singer
and two of his customers were involved in a scheme to misappropriate an amount alleged in various legal actions to
be over $60 million in cemetery trust funds. One of Singer’s customers, Clayton Smart, is currently facing criminal
charges arising from the scheme in Tennessee and in Michigan. Singer’s criminal trial in Tennessee recently ended in
a mistrial. He still faces criminal charges in Indiana. Smart and the second customer, Craig Bush, have been named in
civil litigation arising from the scheme.
Singer’s two customers, Smart and Bush, were successive owners of a group of Michigan cemeteries from which
funds were believed to be stolen. In August 2004, Smart purchased the cemeteries from Bush using trust funds that
had been improperly transferred from the Michigan