The Great Pretenders

updated 11/12/1990 AT 01:00 AM EST

originally published 11/12/1990 AT 01:00 AM EST

Toms River. N.J., is a middle-class community where people drive Hondas and in matters of home repair do it themselves. So when neighbors saw the way Becky and Peter Schafer were spending, of course they would talk. In 1988, after only a year and a half in the seaside town, the young, fresh-faced couple from the Midwest by way of Manhattan began to renovate their modest property with a vengeance. They added a heated pool and built a Jacuzzi inside a gazebo. They had their yard professionally landscaped. Antiques, chinaware and crystal began arriving by the truckload—literally. Granted the Schafers were a two-career couple—Becky a Citibank trust service manager on Wall Street and Peter a paralegal at a Manhattan law firm—but this, by Toms River standards, was conspicuous consumption.

Linda Jones, a neighbor who baby-sat for the Schafers' infant daughter, Meghan, and signed for their UPS deliveries, recalls a day when 23 boxes piled up in her living room. Kathi Inman, a neighbor Becky hired to decorate her house, awoke one morning to find a check for $35,000 casually taped to her back door. Another time, she saw Becky spend $11,000 for four clocks in an hour. At one antiques shop Becky said yes to so many things that Inman lost count. She recalls Becky's uninhibited shopping rationale: "I love it, I want it, I gotta have it."

Two days after her antiques-hunting spree, Becky and Peter arrived home with a U-Haul truck full of purchases.

"My God," Kathi recalls saying, "what did you do, rob a bank?"

Last month, in a federal courthouse in Manhattan, Becky Schafer, 29, admitted she had. She pleaded guilty to embezzling $3.3 million over a 2½-year period from the nation's largest bank, whose onetime slogan, conceived without irony, was, The Citi never sleeps. Peter Schafer, 29, though not charged with a criminal offense, has been named as a co-defendant in two civil suits brought by Citibank.

What the neighbors saw in Jersey—where Becky Schafer had taken to keeping a Rolodex of her purchases, while her sporadically employed husband played with a fleet of remote-control boats in the pool—was just the beginning of an orgy of yuppie spending. By the time federal agents caught up with the Schafers, their 2½-year shopping spree had netted them a $150,000 lakeside vacation home in Missouri, a 38-foot Webbcraft cruiser, a MasterCraft ProStar 190 ski boat, a red Honda Hurricane motorcycle, two BMWs and a $1 million home in Kansas City, Kans., that was so opulent neighbors took to calling it Tara.

Back in the Schafers' home state of Nebraska, friends and family were incredulous. "Three million dollars." said Peter's father, Harold, an electrical supplies salesman, speaking to a reporter through the screen door of his house in an Omaha suburb. "That's more than I'll ever have." As for his son, he said. "I'm sure he knew nothing about it. We come from homesteaders out here. We like to work hard and go to church. I hate to even borrow money, you know."

Becky and Peter apparently had no such qualms. One of the last fraudulent checks Becky wrote was for $160,968.38, precisely the balance owed on her American Express credit card account.

Becky Jensen Schafer was born in the small farming community of Cozad (pop. 4,453) in south-central Nebraska, a half mile from Interstate 80. Becky's father, George Jensen, a quiet, conservative man, is a retired mail carrier. Her mother, Darlene, used to work in the hospital laundry. Today they still live in the small brown ranch house where Becky was reared with her sister and two brothers, all older than she. They still play bridge and attend the Lutheran church in town.

By all accounts, Darlene doted on her offspring. "She thought her children deserved the best and pushed them to get it," one neighbor says. But Becky hardly needed the pushing. Says a former English teacher at Cozad High School, "If she wanted something, she would leave no stone unturned. By sheer work and determination she was always at the top of the heap." Five-feet-ten, blond and pretty, Becky played on the girls' volleyball team and was a "chantleader" for the boys' wrestling team—a sport where cheering is not permitted.

In 1979, Becky went on to the University of Nebraska at Lincoln, where she majored in education, joined a sorority, made the flag team for the Cornhuskers marching band and met the man who would become her husband. Peter Schafer.

His background was similar to hers. His hometown of Waterloo, Neb. (pop. 470) is a tiny knot in the road 18 miles west of Omaha. While he was growing up, his mother, Jo, worked as a secretary to supplement her husband's sales income.

But there is one striking difference between Peter and Becky. Though Peter was a good-looking, easygoing boy, popular enough to be elected high school home-coming king and senior class president for the class of '79, his own grandmother, Mrs. Alice Slechta, admits that he wasn't ambitious. "He liked his golf and his swimming," she says. "I'm just sick about this."

According to a close friend, Peter met Becky in 1981 when they were both sophomores at the university. He was so smitten with her he took a summer job in Cozad to be near her.

Two years later Becky graduated from the university with a B.S. in education and went to work for a year in a Lincoln bank. Peter never graduated: University records show that he left school in December 1982, though he apparently told friends and family that he had his degree. In August 1984 he got a job as a paralegal in the Manhattan law firm of Cleary, Gottlieb, Steen and Hamilton, reportedly through the intervention of a friend who was also under the impression he had graduated. Becky followed him to New York and reportedly got a job at Merrill Lynch, though the brokerage house refuses to confirm or deny that she worked there. On Oct. 24, Peter and Becky married in a Lutheran church in Lincoln.

In 1985, Becky took another job—reportedly as a trainee—at Citibank. A year later, shortly after Peter had become a paralegal at the prestigious Manhattan firm of Paul Weiss, Rifkind, Wharton and Garrison, the Schafers bought a four-bedroom, two-level house in Toms River for $137,500.

At first the couple fit right in. They complained to neighbors about their burdensome $1,400-a-month mortgage payments and the monthly installments on their used Volvo, and they were unable to replace the carpeting ruined by a former tenant's pets. Then, in the fall of 1987, Becky bought a whole new wardrobe at Ann Taylor, an upscale women's shop.

"She had been wearing the same old wool skirts and a coat." says Kathi Inman, the decorator, "and she said Pete was so sick of seeing her in those things. She said she used to go to Ann Taylor all the time on her lunch hour, and one day she just couldn't stand it and she bought the whole line. She and Pete celebrated by burning her old clothes in the fireplace. She said. 'I don't care. I put my charge card to the max.' "

On Oct. 19, the stock market fell 508 points, casting Wall Street into deep gloom. Yet one week later, a leased BMW 325 appeared in the Schafer driveway.

In January 1988, Kathi Inman says, Becky approached her, speaking vaguely of investments that had "paid off," and asked her to help decorate her house. Kathi was delighted to help her new friend shop. But she was astonished at the way she spent money. Becky, says Kathi, paid $29,000 in a single weekend for a Chippendale wardrobe, loveseats, bookcases and other furniture. They bought so much in an Oriental rug shop, says Kathi, that the salesman called up Kathi later and thanked her. Also, Becky seemed motivated more by a strange compulsion—a passion to purchase—than by any perceived dictates of taste. Taken to see a collection of porcelain, Becky announced she "didn't even like it," says Kathi. Then, two days later, she called Kathi and told her to make an offer of $9,200 for the lot.

At the end of February, saying she was exhausted by her job, Becky asked Kathi to take full control as her decorator. She also suggested Kathi open a checking account in Kathi's name in which Becky would deposit money for purchases. "She said, 'That way you don't have to bother me in New York and I won't have to keep bringing you checks,' " says Kathi. "It made perfect sense."

Kathi opened the checking account in the Toms River First National Bank, depositing what she describes as a "Citibank check, a big one, trust department, for $25,000." A few days later, she deposited the $35,000 Citibank check Becky had left taped to her door.

First National, says Kathi, never questioned her about the account. At first she had no reservations either. But then, a few days after giving her the check for $35,000, Becky asked Kathi to withdraw "either ten or fifteen thousand dollars" in cash and give it to her. That made no sense to Kathi. "You work in a bank," Kathi told Becky. "Why do I have to get you cash?" Becky, says Kathi, explained that her checks were from another branch, which was a long distance away.

When Kathi learned from a friend that the money Becky had deposited in Kathi's account could be considered business income since Kathi was Becky's decorator, and that its source might be questioned by the IRS, she became concerned.

"I just put $60,000 in the bank in my name," Kathi told Becky. "That's what my husband makes in a year. I'm going to get called in by the IRS." Becky was unfazed. "Show a loss," Kathi says her friend told her. "What?" said Kathi. "And say I spent $60,000 in four days? I can't do that."

Upon hearing that Kathi planned to declare the money to the government, Becky "went crazy" says Kathi. Their arrangement was terminated that evening. But instead of demanding the balance in the account, says Kathi, Becky "made" her write checks for the remaining funds to various antiques shops. She also allegedly demanded a check for $7,500 payable to Becky. "She didn't want anything traceable to her." Kathi says.

Becky became pregnant in April 1988, and daughter Meghan was born on New Year's Eve. The Schafers threw an elaborate christening party. Becky flew her sister, Jana, east to be the baby's godmother. There was a flutist, a pianist, champagne. "Don't think we all live like this," Jana told Becky's next-door neighbor, Linda Jones, "because we don't."

That helped focus Jones's suspicions. "People would say, 'What's going on with your neighbors?' " says Linda, a former bank vice president. " 'Every time we turn around, there's a delivery being made.' I thought first they won an out-of-state lottery and they didn't want anyone to know. Then I thought they took out a home equity loan. Then I thought, because I had worked in a bank, embezzling. But after a period of time, the auditors would have caught her, so I crossed that out."

Becky Schafer, whom her neighbors nicknamed the Princess, either didn't notice that people were talking or didn't care. In the company of a neighbor's friend, Carolyn Blake, she reportedly spent "three to four hundred dollars on children's books" in a few hours—when Meghan was only a month old. She had more than 100 pairs of shoes, says Blake, and Peter, not to be outdone, is said to have bought "dozens" of athletic shoes. But he also indulged in grander ways. He bought expensive lawn equipment and, on Valentine's Day 1989, a red BMW 535. Price tag: $43,300.

When the couple attended Becky's high school reunion back in Cozad that summer, they turned some heads. They arrived in the flashy new BMW, and they brought a nanny along for the baby.

In the fall, the Schafers made their most extravagant move. Presenting themselves as successful Wall Street executives, they visited Hallbrook Farms in Leawood, Kans., an exclusive neighborhood outside Kansas City, and contracted to build a home for $350,000. Upon consideration of various enhancements, the cost rapidly escalated to $1 million. When real estate agents pressed Becky about whether she could go that high, she reportedly told them she headed Citibank's corporate bond department and assured them it wasn't a problem. Apparently it was not. From October 1989 through last June, Becky Schafer's signature appeared on six checks, totaling $1 million, made out to her builder. R.M. Standard & Co. All of the checks cleared with no problem. During construction, Peter and Becky made a half dozen trips to Kansas City.

In February 1990, Peter stopped working at Shearson Lehman Hutton—where he had landed after leaving Paul Weiss—though the move to Kansas was not imminent. On June 22, two weeks after writing the last of her checks to her contractor, as well as a check for $30,000 for admission to Kansas City's exclusive Hallbrook Country Club, Becky resigned her job at Citibank and the Schafers sold their home in New Jersey. Awaiting completion of Tara, the couple moved to a $15000 three-bedroom vacation home in Lake of the Ozarks, Mo. The move was abrupt. There was not even the usual exchange of phone numbers with the Toms River neighbors.

Becky Schafer's caper was laughably simple. Authorized to write checks on behalf of Citibank's corporate clients, Becky began writing checks payable to her building contractor and to stores where she shopped. It was a scheme that was bound to fail, taking Becky Schafer down a paper trail that could only betray her. The mystery is that it lasted so long. It wasn't until July that Becky's 20-month spree finally ended. Citibank declines to comment on the case.

Becky's undoing was her bid for country club membership. An official at Hallbrook found it curious that the authorized signatory on a check headed "Corporate Trust Services" was the same person who stood to benefit by the payment: Becky Schafer. According to sources close to the investigation, Hallbrook notified Citibank, who alerted the FBI. Their joint investigation revealed that between December 1987 and June 1990, Becky Schafer, in the words of court papers filed in Kansas and Missouri this summer, "wrongfully took possession of approximately 165 Electronic Check Manager Checks which are negotiable instruments drawn on plaintiff Citibank."

On the afternoon of Aug. 3, an FBI agent arrived at Lake of the Ozarks with a warrant for Becky Schafer's arrest. She spent the weekend in Boone County Jail in Columbia, Mo. Her parents posted a $50,000 bond for her release, listing their home as collateral.

On Oct. 11, Becky, clutching a Vuitton bag, appeared in federal court in Manhattan to enter her guilty plea to one count of bank embezzlement.

"Would you fell me, trying to make it as concise and comprehensible as possible, how you did it?" Judge John F. Keenan asked. "Tell me how you did it, nice and slow."

"As an officer of the bank I had the authority to sign checks on behalf of Citicorp, and I caused checks to be written for my own personal use," said Becky, in a little voice.

"And you knew that was against the law, is that right?" asked the judge.

"Yes." Becky said quietly.

"And the checks amounted to around three million dollars?"

"Yes," Becky said.

Judge Keenan did not ask her why she did it, but he will get a second chance when she appears for sentencing in January. Becky faces a maximum term of 20 years in prison, but, according to sources close to the investigation, she will more likely receive 3½ to five years, since she has cooperated with the authorities.

Perhaps this was simply a case of seduction by credit—of ambition and longing untempered by patience. An investigation of the Schafers' finances six months after Becky made her first illegal withdrawal from Citibank—for the modest sum of $400—showed that Becky and Peter held 14 charge cards, including Ann Taylor, Brooks Brothers, Spiegel, American Express, Citibank Preferred Visa and Mastercard. Bills on six of the cards were between 60 and 120 days past due. There was simply no way the Schafers could pay off what they owed with the money they earned; the choice confronting them was bankruptcy, humiliation and the loss of the treasure that brightened their lives—or something else. Becky had written that first fateful check shortly after she had gone to Ann Taylor and used her credit card like a weapon; now it was time to go back for more. She loved it. She wanted it. She just had to have it.

—Additional reporting by Gavin Moses in Toms River, Vickie Bane in Kansas City and Cozad, Nina Burleigh in Waterloo

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