Rogue trader Mr John Rusnak has told the FBI he lost €864 million from Allied Irish Banks' American subsidiary trying to make up his losses, it emerged today.
The Allfirst foreign exchange dealer shocked the banking world by losing the cash and was suspended and put under investigation earlier this week.
Bank officials say he is "missing" and being sought by the FBI, a claim disputed by his lawyers and thrown into doubt when a tired and anxious-looking Mr Rusnak emerged last night from his family home in an affluent city suburb.
Today FBI officials said they did not believe Mr Rusnak had hidden the cash as he did not fit the profile of a fraudster.
Mr Rusnak has told FBI fraud specialists that he made a series of bad investments on behalf of the bank.
He then tired to develop a secret strategy to recover the losses without having to admit them to managers, the Wall Street Journalreported.
A law-enforcement official told the newspaper: "He said he was investing in various enterprises and the stock market dropped on him, so he tried to recoup the losses and he just got deeper.
"Whether he was authorised to make those investments is one of the questions now."
The FBI said its probe is at its preliminary stages and a search is still under way to see if Mr Rusnak embezzled cash from the bank and hid it elsewhere.
But the agency said his behaviour was not that of a typical fraudster, and an official said: "He hung around Baltimore.
"It isn't looking like he embezzled $750 million and has an island in the Caribbean."
Today the 37-year-old father-of-two's lawyers said their client was not a thief and they planned to show his bank's controls were not up to scratch.
Mr Bruce Lamdin, one of the trader's two lawyers, told the New York Times: "We've certainly proved that he's not a fugitive.
"We'll prove he wasn't a thief either."
Mr David Irwin, the other lawyer, said: "I suspect we will find that the regulation and audit standards were not up to large corporate standards.
"I'm pretty sure the investigation will show that there's no theft by my client."
The American Federal Reserve has joined the investigation into the Allfirst trader, while Ms Mary Louise Preis, commissioner of financial regulation in the state of Maryland, has also launched an investigation.
Officials from the state's department of financial regulation are concentrating on the bank's treasury unit.
Ms Preis told the Baltimore Sun: "They have people there looking at the way trading operates there.
"They are looking at computer systems and computer printouts and whatever develops, to try and learn what was going on."
She added: "The controls were there. The policies and procedures I believe were accurate. No control is going to be foolproof."
PA