Rogue Currency Trader Gets Jail Time

January 17, 2003 ( - A former currency trader for Allied Irish Banks Plc was sentenced to seven and a half years in prison for hiding over $691.2 million in losses at Ireland's largest bank in one of the biggest banking scandals in history.

As part of a plea bargain with federal prosecutors, John Rusnak, 38, pleaded guilty in federal court in Baltimore to one count of bank fraud and agreed that he would be barred from ever working for a federally insured bank, Reuters reported.

In addition to the prison sentence he must spend five years in supervised release and repay the company $1,000 a month after he leaves jail. Rusnak was also ordered to attend drug, alcohol, and gambling addiction counseling.

Rusnak Seen as ‘Solid Performer’

Rusnak had been seen as a solid performer at AIB’s Baltimore-based subsidiary Allfirst Financial Inc. until last February. Rusnak admitted that he had carried out a complex scheme to collect salary and bonuses of $850,000 from 1997 to 2001 by hiding risky yen-dollar investments that went wrong and eventually spun out of control.  

Prosecutors do not believe he stole any of the money lost to AIB, but that he made it look like his portfolio was profitable to win himself $433,000 in performance bonuses over five years.   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, Bank of America, and Merrill Lynch.

As part of his October 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.