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To: Dale Baker who wrote (457)	1/17/2003 2:18:04 PM
From: LPS5	Respond to of 2534

Allied Irish Banks Trader Gets 7.5 Years for Fraud Fri Jan 17,11:11 AM ET by David Morgan BALTIMORE (Reuters) - A former currency trader for Allied Irish Banks Plc was sentenced to seven and a half years in prison on Friday for hiding over $691.2 million in losses at Ireland's largest bank in one of the biggest banking scandals in history. John Rusnak, 38, whose currency portfolio had been seen as a solid performer at AIB's Baltimore-based subsidiary Allfirst Financial Inc. until last February, was also barred for life from working for any federally-insured banking institution. As part of a deal worked out with prosecutors last October, Rusnak pleaded guilty to one count of bank fraud and agreed to the punishment. He admitting that he devised a complex five-year scheme to collect salary and bonuses totaling $850,000 from 1997 to 2001 by hiding risky yen-dollar investments that went wrong and spun out of control. In addition to the prison sentence he must spend five years in supervised release and pay restitution to the company or its economic successor at a rate of $1,000 a month after he leaves jail. He also was ordered to attend drug, alcohol and gambling addiction counseling. He was must surrender to the authorities by Feb. 17. Prosecutors do not believe he stole any of the money lost to AIB, but that he created the false impression of a profitable portfolio to win himself $433,000 in performance bonuses over five years. PHONY IMPRESSION A federal indictment handed down last summer charged him with creating the impression of profitable trading activity with phony bank telex documents, high-risk option contracts and off-balance sheet accounts with other institutions including Citigroup Inc., Bank of America AND Merrill Lynch . U.S. District Judge William Nickerson said he believed it was the harshest sentence ever imposed in a fraud case in the Baltimore courthouse. Rusnak expressed contrition in court. "I am very, very sorry for what I've done," he said. He added: "I'm going to accept (the consequences) without any bitterness," saying he hoped his punishments would "lead me to some sort of redemption later in life." Allfirst employee Karen Weiss, who volunteered to testify on the impact of Rusnak's fraud, said the sentence was not severe enough to compensate for the damage Rusnak caused. She said employees have had to forego pay raises or bonuses because the bank had to write off losses he created. She said to Rusnak: "I'm not sure I believe you when you say you're sorry. I think you're sorry you were caught." Rusnak's attorney David Irwin asked that Rusnak be sent to a low security facility in Fort Dix, New Jersey where he would be more accessible to attorneys from Maryland and New York who are continuing to investigate the case. PILLAR OF THE COMMUNITY As part of his Oct. 24 guilty plea, Rusnak agreed to help federal investigators look into possible involvement by others in the losses that rocked Dublin-based AIB during the early months of 2002. Six other charges contained in a June indictment -- including bank fraud and false entries -- were dropped under the agreement. Rusnak will not be eligible for parole, but could have his sentence reduced for good behavior. Rusnak, once considered a pillar of the community, has remained free on bail pending his sentencing. He has relied on the support of a spiritual adviser, the Rev. Joe Ehrmann, a one-time National Football League star with the former Baltimore Colts who is now pastor at a non- denominational evangelical church. AIB fired six employees over the scandal. It ALSO agreed last autumn to sell its troubled Allfirst unit to M&T Bank Corp. in a $3.1 billion cash and stock deal that would give AIB a 22.5 percent stake in the resulting operation. The deal is expected to close in the spring. Earlier this week, M&T executives told the Baltimore Sun that they planned to cut more than 1,100 jobs at Allfirst, or 20 percent of the scandal-tainted bank's work force. An internal probe at AIB by former U.S. Comptroller of the Currency Eugene Ludwig blamed Rusnak for fraud, but also criticized AIB for lax management and faulty controls. Had Rusnak gone to trial on the original seven-count indictment, he would have faced a maximum penalty of 30 years in prison, $1 million in fines and up to five years of supervised release on each count.