Rusnak indicted in US court over Allfirst scandal

 

The US currency trader accused of hiding $700 million (€740 million) in trading losses has been indicted by a US federal grand jury.

Former Allfirst trader Mr John Rusnak was indicted on seven charges of bank fraud, false entry in bank records, and aiding and abetting. The indictment followed a four month investigation into trading from 1997 to 2001.

Each count carries a maximum penalty of 30 years in prison and/or a $1 million fine.

Mr John Rusnak

Allied Irish Banks, Allfirst's parent company, has accused Mr Rusnak of fabricating purchase options contracts.

He allegedly forged the contracts to give the bank insurance for his losses, which came mostly in Japanese yen.

Mr Rusnak's lawyers have said he did not personally profit from the deception, but AIB claims he received hefty bonuses in reward for what appeared to be profitable deals.

The case prompted AIB to hire Mr Eugene Ludwig, a former US Treasury Department banking regulator, to investigate the bank.

The Ludwig report blamed managers at Allfirst for permitting the alleged fraud to take place, prompting the bank to fire six Allfirst managers.

AIB has agreed with US, Irish and Maryland regulators to conduct reforms in wake of the fraud.

AP