Constitutional Law

Atty. General Brown Forces Settlement with Citibank: Investigation Reveals Bank Was Stealing From Its Customers

California Attorney General Edmund G. Brown Jr. today announced that he has reached a settlement with Citibank after a three-year investigation into the company?s use of an illegal ?account sweeping? program. Nationally, the company took more than $14 million from its customers, including $1.6 million from California residents, through the use of a computer program that wrongfully swept positive account balances from credit-card customer accounts into Citibank?s general fund.

?The company knowingly stole from its customers, mostly poor people and the recently deceased, when it designed and implemented the sweeps,? Attorney General Brown said. ?When a whistle blower uncovered the scam and brought it to his superiors, they buried the information and continued the illegal practice.?

In July of 2001, a Citibank employee uncovered the practice and brought it to the attention of his superiors. The employee was later fired for discussing the credit sweeps with an internal audit team. In the words of a Citibank executive, "Stealing from our customers is a business decision, not a legal decision." The same executive later said that the sweep program could not be stopped because it would reduce the executive bonus pool.