In a plea bargain agreement last Thursday, John Rusnak switched his plea from not guilty to guilty in a Baltimore courtroom. He had faced 30 years on the seven counts of fraud prosecutors had charged him with earlier this year. The deal allows for no chance for parole. At the time of his sentencing next January six counts against him will be dropped.
“Rusnak’s position as a high-volume currency trader made him the recipient of luxury trips, expensive dinners, and golf outings underwritten by banks with whom he traded,” read the indictment accepted last week.
“Mr. Rusnak has been remorseful, he has been cooperative with federal authorities and he’s seeking redemption,” said Rusnak’s attorney, David Irwin, before Judge William M. Nickerson.
Dressed in a brown suit, blue shirt and yellow tie, the 37-year-old arrived at court with his lawyer and pastor.
“He’s paid a very big price for this. He has been remorseful ever since the day he made the very decision to plead guilty and cooperate with federal authorities,” his attorney added in a statement.
Prosecutor Thomas DiBiagio repeatedly stressed the “seriousness” of Rusnak’s crime. Rusnak’s trading losses are the largest case of bank fraud since the Nick Leeson scandal in 1995 when British Barings Bank lost more than a $1 billion.
Even with Rusnak’s guilty plea, the investigation is not over.
Asked if Irishman David Cronin, a fellow worker and supervisor of Rusnak in the Allfirst Baltimore-based center is being investigated, FBI officials said, “The investigation continues, and he [Rusnak] continues to cooperate and continues to tell us what he did, how he did it and with whom.”
Cronin, a close friend of Rusnak, was also fired by Allfirst after his oversight of Rusnak’s trades was deemed faulty.
The two men live in the same well-to-do suburb of Baltimore where their children attend the same parochial school.
The prosecutors noted Rusnak’s particular transactions with Bank of America, Citibank, and Merrill Lynch as “his most significant trading partners.”
“Rusnak was considered to be an important and valiable customer to these institutions,” the indictment stated.
“In an effort to cover up trading losses he suffered sometime in the 1990s,” prosecutor DiBiagio stated, “Mr. Rusnak engaged in a series of fictitious currency trades that were entered into the books and records of Allfirst Bank’s computerized system for tracking trading activities that allowed him to earn performance bonuses of over $650,000 in addition to his salary.”
“He did not actually steal money from the bank. He continued in this fraud to maintain his job, to maintain his salary, and to maintain his bonuses,” DiBiagio said.
“We are in a new phase of this investigation. We intend to look at all aspects to determine that all persons who were involved are brought to justice.”
AIB put some distance between the scandal and itself last month when it announced it would sell Allfirst to a Buffalo, N.Y., bank, M&T, for $3.1 billion. The sale, plus some firings and retirements of many of the key personnel tied to the trading scandal, purged many of the chief players from AIB’s ranks.
The plea agreement can be rescinded at any time if the prosecutors or investigators believe Rusnak does not continue with his cooperation.