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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: Wolff who wrote (78356)	6/21/2002 4:15:34 AM
From: Wolff	Read Replies (1) \| Respond to of 122087

Grand Jury Indicts Rogue Allfirst Trader of Fraud Over Millions in Losses Wed Jun 5,12:56 AM ET John Rusnak, the Allfirst Financial Inc. currency trader linked to $691 million in trading losses at the bank, was indicted Wednesday by a federal grand jury in Baltimore . Mr. Rusnak made an initial appearance before U.S. Magistrate Judge Beth P. Gesner and released on his own recognizance. The grand jury indicted him on charges of bank fraud, false entry in bank records, and aiding and abetting, said deputy clerk Agnes Finney. The indictment followed a four-month investigation. Mr. Rusnak faces up to 30 years in prison, a $1 million fine and five years of probation on each of seven counts. Lawyers for Mr. Rusnak, who has previously acknowledged having a role in the currency losses at Allfirst, the U.S. unit of Allied Irish Banks (NYSE: AIB - News) PLC , are working out a plea agreement with the U.S. attorney's office in Baltimore , people familiar with the case said. Mr. Rusnak's losses marked the biggest currency-trading scandal since Nick Leeson brought down Barings Bank of the U.K. in 1995. The Baltimore -based trader was apparently able to deceive the bank for nearly five years as a result of a combination of negligence by his supervisors and a shaky risk-management system that allowed Mr. Rusnak to alter bank trading records freely and hide losses that were unusually large for a bank of Allfirst's size. U.S. Attorney Thomas DiBiagio said he "was a very, very smart young man who knew his business." Mr. Rusnak's huge trading losses also underscored the risks and high stakes of trading foreign currencies, a vast, fast-moving and unregulated global market. Allied Irish Banks PLC accused Mr. Rusnak of fabricating purchase options contracts. Mr. Rusnak allegedly forged the contracts to give the bank insurance for his losses, which came mostly in Japanese yen. Mr. Rusnak's lawyers have said Mr. Rusnak didn't personally profit from the deception, but AIB has contended he received hefty bonuses in reward for his often-false reports of profitable deals. Mr. DiBiagio said the defendant collected bonuses of almost $550,000 in the last five years. The case prompted AIB to hire Eugene Ludwig, a former U.S. Treasury Department (news - web sites) banking regulator, to investigate the bank. Mr. Ludwig's report blamed managers at Allfirst for permitting the fraud to take place. The bank fired six Allfirst managers after the report came out. AIB has agreed with U.S. , Irish and Maryland regulators to conduct reforms in wake of the fraud. The scandal has caused officials at the Dublin, Ireland -based company to consider withdrawing from the U.S. market, depending on how well the Allfirst division rebounds. A shareholder lawsuit filed in March accused Allfirst and AIB of failing to pick up on indications as early as 1995 that Mr. Rusnak was doing something wrong. The indictment alleges Mr. usnak made fictitious entries into the bank's computerized record-keeping system that allowed him to conceal his trading losses between 1997 and 2001 and generate false paper profits for the bank. AIB represents about 16% of the total share value of the Irish Stock Exchange. It is the largest retail bank in the Republic of Ireland . The company operates branch networks in Northern Ireland and Britain, and holds a controlling stake in a Polish bank. AIB formed Allfirst in 1999 from the merger (news - web sites) of two Maryland financial institutions. The U.S. operation has about 250 branches operating from Virginia to Pennsylvania . (This story was compiled from reports by the Associated Press, and Wall Street Journal staff reporters Craig Karmin, John R. Wilke, Gary Fields and Michael R. Sesit)