- Irish lender says Citigroup helped John Rusnak hide losses
- Rusnak pleaded guilty to defrauding AIB subsidiary in 2002
Allied Irish Banks Plc is seeking $872 million from Citigroup Inc. as a 12 year-old dispute over claims the U.S. bank helped rogue AIB currency trader John Rusnak hide almost $700 million in losses nears trial.
In the lawsuit, filed in 2003, AIB said units of Bank of America Corp. and Citigroup joined Rusnak’s scheme in 2000 by opening accounts for him, and that brokers there helped conceal his losses. Bank of America settled with AIB, according to court documents.
AIB is seeking $372 million in damages in the coming trial against Citigroup and about $500 million “in pre-judgment interest,” according to a Nov. 16 filing in Manhattan federal court. The trial is due to start in January, according to court filings.
Citigroup spokeswoman Edwina Frawley-Gangahar in London declined to comment beyond the court filings. AIB spokeswoman Kathleen Barrington wasn’t immediately able to comment.
Rusnak pleaded guilty in 2002 to defrauding AIB’s former U.S. subsidiary where he had worked, Allfirst Financial Inc. and was sentenced to seven-and-a-half years in prison. The Baltimore-based unit was sold to M&T Bank Corp. a year later.
None of its employees “committed a fraud or aided and abetted the fraud of anyone else,” Citigroup’s Citibank NA said in court documents, also dated Nov. 16. “After years of discovery that included 130 depositions and the exchange of hundreds of thousands of documents, the plaintiff has been unable to produce a single document or witness evidencing any Citi employees’ knowledge of or participation in the fraud.”
The case is Allied Irish Banks Plc v Citibank NA, 03-CV-3748, U.S. District Court, Southern District of New York (Manhattan).