The Financial Industry Regulatory Authority has hit Citigroup Inc. with $1.5 million of sanctions for allegedly failing to supervise millions of dollars in trust funds belonging to cemeteries in Michigan and Tennessee.

The agency accused the company of mishandling funds as a broker then with Citi, Mark Singer, and two of his customers were involved in a scheme to misappropriate more than $60 million in cemetery trust funds in 2004 through 2006.

Citi, which neither admitted nor denied the allegations but consented to the entry of Finra’s finding, will pay a $750,000 fine and $750,000 in commissions repayment. Spokesman Alex Samuelson said: "Having cooperated with authorities since 2007, we’re pleased to have this matter resolved. This was a situation related to one former financial adviser at a single Smith Barney office."

Smart purchased a group of Michigan cemeteries in 2004 from trust funds that Finra alleges were improperly transferred from the cemeteries to a company of one his customers, Clayton Smart. He then used other trust funds to buy cemeteries and funeral homes in Tennessee, Finra said.

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