Summary: The lawsuit alleges that Citibank helped a foreign currency trader avoid internal controls on traders with Allied Irish Bank.
Highly profitable Allied Irish Bank trader, John Rusnak, was covering over $690 million in losses with the possible assistance of Citibank between 1997 and 2002. Citibank served as his prime broker for foreign currency trading from 2000 to 2002.
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The lawsuit filed by Allied Irish Banks is finally moving forward after 12 years. The federal judge ruled that Allied Irish Bank has provided enough evidence that the Rusnak’s fraud “would have been discovered earlier but for Citibank’s alleged fraud.” Certain red flags would have been easily apparent to an honest establishment, concluding that Citibank was somehow involved.
Southern District Judge Deborah Batts stated in her denial of Citibank’s motion for summary judgement that “Citibank made no effort to verify the propriety” of particular “unorthodox requests” that Rusnak had made to alter or restrict access of Allied Irish Bank to documents Citibank was required to produce to the auditors in charge of investigating fraud.
In February 2002, Allied Irish Bank discovered the fraud. Rusnak worked at their Allfirst unit in Baltimore. In October, Rusnak plead guilty to federal charges. He served in prison for almost six years and now manages a chain of dry cleaners in Southern California.
Thomas Moloney of Cleary Gottlieb Steen & Hamilton is representing Citibank.
Alan Levine of Cooley is representing Allied Irish Bank.
Read about Citibank’s other legal issues: “Did Citibank Conspire to Hide Dewey’s Financial Weaknesses?” and “Citibank Denies Duty to Warn Former Partners of Dewey on Capital Loans”
Source: http://www.newyorklawjournal.com/home/id=1202731247099
Photo: theguardian.com
