John Rusnak, the rogue trader who cost AIB $691 million, has said he will not testify at a US trial in which the bank is suing Citibank for $872 million (€823 million) relating to his fraud.
AIB filed a legal action against Bank of America and Citibank in 2003, a year after Rusnak's fraud was detected, claiming the banks helped him hide his losses at its US subsidiary, Allfirst.
The case against Bank of America was settled, but AIB is pursuing its proceedings against Citibank 12 years later and has said it intends to call Rusnak as a witness.
The trial is scheduled to start on January 25th, 2016. Rusnak, whose rogue currency trading went on for at least five years at the Baltimore-based bank, received a subpoena to testify in recent weeks.
"It is neither my desire nor my intention to testify in the case," he told The Irish Times and declined to comment further.
‘Making amends’
An associate of Rusnak, who lives in
Maryland
where he worked for the former Irish-owned bank, said: “John is focused on moving forward with his life and making amends for past mistakes.
“He feels that because there was so much sin on both sides in the case that he doesn’t feel that his testimony will bring any resolution.”
Rusnak pleaded guilty to defrauding the bank in 2002 and was sentenced to 7½ years in prison under a plea bargain deal.
He served six years in prison and was released in January 2009. He has run a dry-cleaning and laundry business in the Baltimore area and also started a charity called Uncuffed Ministries that helps juveniles being tried as adults in the city’s criminal justice system.
An individual can refuse to testify by pleading protection under the fifth amendment on grounds that their evidence can self-incriminate.
AIB has accused Citibank, which acted as Allfirst’s prime broker on Rusnak’s trades, of helping him in his fraud by engaging in bogus transactions, including hiding cash advances and falsifying trades.
The Irish bank, which is 98 per cent owned by the Irish State, claims Citibank knew about Rusnak’s rogue trading and that his high-volume trading was lucrative and that he was “Citibank’s second most important foreign exchange customer in North America”.
Citibank said in a pre-trial memo this month that it was “remarkable” that AIB was claiming that a trader lost $700 million “through no fault of anyone else at the bank” when it had fired and publicly blamed seven others at the bank.
Star witness
The bank, the third largest in the US based on assets, claimed AIB was seeking recovery of its losses from “a deep pocket” but that the losses were Allfirst’s fault alone.
“No one at Citi committed a fraud or aided and abetted the fraud of anyone else,” said the US bank in the memo.
Citibank has said it – not AIB – had subpoenaed Rusnak and said Corkman David Cronin, the treasurer of Allfirst, was the only former Allfirst employee AIB planned to call to testify live, describing him as the Irish bank's "star witness".
The US bank said Rusnak would testify that “numerous people at Allfirst – including but not limited to the people who were fired – were aware of, and in some instances actively involved in, his wrongdoing.”
A US judge refused to dismiss AIB’s action against Citibank in July, saying she found “credible” evidence that the US bank misled AIB about Rusnak’s trading and did not verify the trades properly.
"Given how lucrative Rusnak's trading was to Citibank, it would not be farfetched to infer that Citibank did so because it was motivated to keep Rusnak happy," said US district judge Deborah Batts.
