Sun, May 25, 2003 - Page 11 News List

Irish bank seeking redress for alleged money laundering

AP , NEW YORK

Ireland's largest bank sued Bank of America and Citibank Friday, accusing the two institutions of helping a former currency trader hide US$691 million in losses.

Allied Irish filed the lawsuit in US District Court in Manhattan, alleging that the defendants helped John Rusnak in a fraud that resulted in a 7-year prison sentence for the former employee of Allfirst bank. Allfirst was a subsidiary of Allied Irish.

The suit seeks US$500 million in damages and an unspecified amount in punitive damages.

"We believe the suit is without merit," said Citigroup Inc spokeswoman Arda Nazerian. Citibank is a subsidiary of Citigroup.

A message left with a Bank of America spokeswoman was not immediately returned.

Allied Irish said in court papers that Rusnak hid his losses from 1997 until early last year by booking fictitious trades, manipulating Allfirst's internal controls and engaging in other misconduct.

Rusnak pleaded guilty in October in a court in Baltimore to charges related to the fabrication of currency trades in one of the largest bank fraud cases in US history.

The lawsuit said that Bank of America and Citibank joined Rusnak's scheme in September 2000 by opening "prime brokerage" accounts for him

The suit alleges that the institutions then helped Rusnack hide ever-growing losses from Allfirst.

Allied Irish said Rusnak persuaded both of the prime brokers not to seek margin from Allfirst, an act which would have forced Rusnak to reveal his trading losses.

The lawsuit accused the prime brokers of helping Rusnak undermine Allfirst's controls, even doctoring trade confirmations to cover up fake trades.

"As a result of the prime brokers' actions, Allfirst's losses from Rusnak's scheme ballooned, costing Allfirst an additional US$500 million," the lawsuit said.

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