DEVELOPING: Citibank settles with Calif. AG for $18 million

Chris Rizo Aug. 26, 2008, 12:12pm

Jerry Brown (D)

SACRAMENTO, Calif. (Legal Newsline)-Attorney General Jerry Brown on Tuesday announced a settlement with Citibank, ending a three-year investigation into the company's credit sweeping program.

Between 1992 and 2003, Brown said the company took more than $14 million from its customers, including $1.6 million from California residents, through a computer program that swept positive account balances from credit-card customer accounts into Citibank's general fund.

Under the settlement filed Monday in Sacramento County Superior Court, the New York-based company agreed to return the seized money, pay $3.5 million in damages and penalties to the state and pay 10 percent interest to affected customers.

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

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