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To: Dr. Jeff who wrote (200015)	10/24/2002 2:05:15 PM
From: Dr. Jeff	Respond to of 436258

Currency trader pleads guilty to bank fraud BALTIMORE, Oct 24, 2002 (AP WorldStream via COMTEX) -- A former currency trader accused of hiding $691 million in losses at Allfirst bank pleaded guilty Thursday in one of the largest bank fraud cases in U.S. history. Under the plea agreement, John Rusnak will be sentenced to 7 1/2 years in federal prison without parole for making a series of fictitious currency trades to cover up the trading losses he suffered in the 1990s. As part of the agreement, Rusnak, 37, also must cooperate with investigators in an ongoing probe. U.S. Attorney Thomas DiBiagio said the investigation was continuing into the huge fraud scandal, but he said authorities had no other suspects at this time. "We're pursuing the case," DiBiagio said. "We intend to get to the bottom of the fraud, and to make sure everyone that was involved in the fraud is held accountable like Mr. Rusnak." Pressed for further details about the investigation, DiBiagio said: "All I can tell you is that Mr. Rusnak undertook a sustained and concentrated effort to avoid the bank's accountability system, and whether he had help in that at this time has not been determined." Rusnak was indicted in June in the biggest bank fraud case since Nick Leeson, a trader in Singapore for Barings Bank, lost more than $1 billion on futures trades, leading to Barings' 1995 collapse. Rusnak, who remains on pre-trial release, appeared at U.S. District Court in Baltimore Thursday morning with his attorney, David Irwin, to enter the plea. "It's a bitter pill," Irwin said. "It's a lot of time." Rusnak will continue to be free until a Jan. 17 court date, when Irwin anticipated his client would be ordered to surrender to a prison. Rusnak allegedly ran up the losses at Allfirst Financial over five years, mostly from trading Japanese yen. While trying to recoup those losses, prosecutors say, he dug himself a deeper hole by taking ever-larger risks. Rusnak evaded detection by entering false information to the bank's books and records about his trading activity. He also created fictitious trades that appeared to create assets to offset liabilities. Prosecutors said Rusnak did not directly profit from the trading losses, but by manipulating Allfirst's computerized system for tracking trading activities, they said he was able to generate a record appearing to show profits for the bank between 1997 and 2001. "The defendant's conduct actually made it appear that the bank was making money rather than losing millions of dollars," DiBiagio said. That appearance of profits earned Rusnak bonuses of more than $650,000. He collected about $433,000 of that amount before the fraud was discovered last winter, authorities said. "One reason that the deception was permitted to continue for as long as five years is because the defendant understood the bank's oversight mechanism and knew how to defeat them and actively took numerous steps to defeat the oversight system," DiBiagio said. Whether Rusnak will pay anything to Allfirst, and if so, how, will be determined at a court hearing in January, authorities said. A judge will determine that based on a balance between the harm caused to the victims and Rusnak's ability to pay. "Obviously, the judge won't order a $600 million restitution ... They want to make it realistic," DiBiagio said. Rusnak had faced a maximum sentence of 30 years in prison and a $1 million fine. DiBiagio said the 7 1/2-year sentence, plus five year probation after his release, was stiff for white-collar crime. Leeson served 3 1/2 years of a 6 1/2-year sentence before his release from jail in 1998. The Barings case had prompted banks worldwide to tighten internal checks, and Leeson expressed surprise earlier this year that the problems at Allfirst weren't discovered sooner. Allfirst was under parent company Allied Irish Banks at the time Rusnak worked there. Last month, AIB, based in Dublin, announced a proposal to sell Allfirst to Buffalo, New York-based M&T Bank Corp. for about $3.1 billion. AIB denied at the time that the currency trading scandal had anything to do with the sale. "It's a crime that has now impacted on several hundred workers in this area," DiBiagio said. --- On the Net: Allfirst: allfirst.com Allied Irish Bank: aib.ie.