February 16, 2011
By Staff Reporter
Rusnak, who covered up $691 million in bad trades over a 5-year period, did not directly divert cash from the bank for his own use, but was paid almost $500,000 in bonuses for his “excellent” work even while losing millions in risky currency speculation.
The married father of two will start serving the sentence at a federal prison in Fort Dix, N.J., Feb. 18. His only chance for reducing his sentence would be for good behavior. The minimum time he will serve is six years.
The punishment “undoubtedly will weigh heavily on Mr. Rusnak for the balance of his life,” said the presiding judge, U.S. District Court Judge William M. Nickerson.
The Rusnak saga surfaced 11 months ago when AIB officials from Dublin joined with Allfirst staff to publicly reveal Rusnak’s deceptive practices.
AIB, Ireland’s largest bank, insisted there would be no long-standing detriment to its operations and that it could cover the loses without injury to AIB and Allfirst clients.
Rusnak was charged with creating the impression of profitable trading activity.
As a result of his actions, upper management was shuffled, and AIB ultimately sold off Allfirst to another bank.
Following the $3.1 billion cash and stock sale of Allfirst by Allied Irish, the new owners, M&T Bank of Buffalo, N.Y., have indicated they will eliminate 1,100 Allfirst jobs.
Wearing a suit and red tie, Rusnak apologized to both Judge Nickerson and aformer Allfirst colleague at his sentencing.
Allfirst executive Karen Weiss, who was allowed to speak as an injured party during Rusnak’s sentencing, said it was people like her and others who will have to pay for Rusnak’s actions.
“I’m not sure I believe you when you say you are sorry,” Weiss said. “And in my mind, there really is not a sentence that is fair enough.”
An internal probe of AIB and Allfirst by former U.S. Comptroller of the Currency Eugene Ludwig blamed Rusnak for fraud, but also criticized AIB for lax management and poor oversight.
The prosecuting attorney, Thomas DiBiaggio, told reporters after the sentencing that there are still a few “lose ends” that needed to be tied up before his office concludes its investigation into the matter.
Originally, Rusnak faced a seven-count indictment, which left him facing a potential 30-year prison sentence, $1 million fine and 5 years of supervised release on each count.
His attorney, David Irwin, maintained his client was fully “cooperating” with both the FBI and other investigators, and the seven counts were reduced to one.
The actions of several other Allfirst employees and the work of employees at other banks that Rusnak used for transactions like Citigroup Inc, Bank of America, and Merrill Lynch, are still being investigated.
Rusnak remains free on bail until he enters prison next month. He is barred from ever working for a bank again.