Preet Bharara, the United States Attorney for the Southern District of New York, Philip R. Bartlett, Inspector in Charge, United States Postal Inspection Service (“USPIS”), and Shantelle P. Kitchen, Acting Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigations Division (“IRS-CI”), announced today the arrest of KAREN ALAMEDDINE, a/k/a “Karen Dean,” the former controller of a New York-based non-profit organization whose core mission is to cure genetic illnesses by supporting biomedical research (the “Non-Profit”), for allegedly embezzling more than $1.8 million from the Non-Profit. ALAMEDDINE also was charged with tax evasion for deliberately failing to report to the IRS as income the money she embezzled from the Non-Profit. ALAMEDDINE was arrested yesterday in Boston, Massachusetts, and was presented today before United States Magistrate Judge Judith Gail Dein in Boston federal court.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Karen Alameddine not only embezzled almost $2 million and evaded taxes, she did so by ripping off the non-profit organization she worked for – an organization dedicated to finding cures for serious diseases – and she did so when she was supposed to be responsible for its finances. I would like to thank our partners on this investigation, USPIS and IRS-CI, for their work.”
USPIS Inspector in Charge Philip R. Bartlett said: “While Ms. Alameddine allegedly went to great lengths to hide her theft from her employer and those hoping to find the cure for serious illnesses, she could not hide from the watchful eye of law enforcement who put an end to her illegal activities.”
IRS Acting Special Agent in Charge Shantelle P. Kitchen said: “It is clear how embezzlement can hurt a business’s owners or stockholders, but stealing from a non-profit organization deprives those who will benefit from the organization’s mission. As a financial investigative agency, IRS-CI is dedicated to working with federal prosecutors and our partner federal law enforcement agencies, like the U.S. Postal Inspection Service, to investigate those who take advantage of their positions for personal criminal gain, at the expense of others.”
According to the Complaint unsealed in Manhattan federal court:
From approximately late 2008 through early 2014, while working as the controller for the Non-Profit, ALAMEDDINE diverted over $1.8 million of the Non-Profit’s funds to her own bank accounts and for her own personal use. ALAMEDDINE executed the scheme principally by disguising QuickBooks entries to make transfers to her personal bank account appear as if they were transfers made to pay grant recipients of the Non-Profit. ALAMEDDINE further sought to disguise the fraud by inventing a fictitious accounting firm named “Davis & Greene,” purportedly based in Washington, D.C., which was, according to ALAMEDDINE, retained to prepare certain tax returns for the Non-Profit for the 2012 and 2013 tax years.
After ALAMEDDINE fraudulently transferred the funds from an account belonging to the Non-Profit to a personal bank account, she further transferred the funds to other accounts she controlled, and thereafter used those funds for various personal expenses, including to pay personal bills. Among the personal bills ALAMEDDINE paid with the fraudulently diverted funds were utility bills, car payments, and personal mortgages.
In addition, for each of the calendar years 2009 through 2013, ALAMEDDINE filed tax returns with the IRS in which she deliberately omitted the reporting of the income she received from the fraud. Those deliberate omissions resulted in ALAMEDDINE’s evasion of substantial amounts of income for each of the years between 2009 and 2013.
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ALAMEDDINE, 57, of Perris, CA, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, and five counts of tax evasion, each of which carries a maximum sentence of 5 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the outstanding investigative work of the IRS and the USPIS.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorney Stanley J. Okula is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.