- The Washington Times - Monday, February 11, 2002

BALTIMORE (AP) As authorities continue to look into a suspected massive bank fraud, Allied Irish Banks PLC officials say they will centralize their management and treasury activities throughout the company.
That will include operations at the U.S. subsidiary where an American currency trader is accused of up to $750 million in losses.
Interim Allfirst Treasurer Pat Ryan now will report directly to the parent company. His predecessor, one of four Allfirst employees suspended pending an internal investigation's outcome, had reported to CEO Susan Keating in Baltimore.
The bank has been criticized in the wake of claims that John Rusnak, a currency trader with Allfirst, was responsible for the losses and that no internal alarms were triggered.
The company's board of directors also says it will appoint a high-ranking official possibly from outside the firm to oversee the probe, and has vowed to make changes to prevent similar incidents in the future.
The board has set a 30-day limit on the investigation.
"We're trying to achieve a swift resolution," Allfirst spokesman Phil Hosmer says.
FBI spokesman Peter Gulotta Jr. says that Mr. Rusnak, 37, has not been charged with a crime. Mr. Gulotta adds that a bank fraud and embezzlement investigation is continuing, and that his department is working in conjunction with federal prosecutors.
Virginia Evans, a spokeswoman for the U.S. Attorney's Office, would not comment on the probe, but says that it is ongoing.
Federal Reserve officials were also at Allfirst on Friday, according to Lisa Oliva, a spokeswoman for the Federal Reserve Bank of Richmond, which supervises Allfirst. Ms. Oliva would not elaborate on their activities of the central bank employees, but says they are working with the Irish Central Bank and the Maryland State Banking Commission, which holds Allfirst's charter.
Ms. Oliva says the Fed conducts annual examinations of banks, though she would not say when the last one occurred at Allfirst.
Mr. Gulotta says despite the vast sum of money involved, his department is treating this case no differently than lower-profile ones.
"It's like every other white-collar investigation," he says. "The only difference is that the amount of money is astronomical."
According to the Wall Street Journal, Mr. Rusnak told federal agents he made bad investments on behalf of the bank and then tried to recoup losses before being discovered. But a declining stock market foiled that plan, one FBI official says.
The Journal quoted a second unidentified FBI official as saying Mr. Rusnak's behavior has not been that of an embezzler, as the trader has remained in the Baltimore area.
Mr. Gulotta says those statements are unsubstantiated.
Mr. Rusnak's attorney, David Irwin, maintains his client did not steal the money. Mr. Irwin, who also represented Linda Tripp among other high-profile clients, says that Allfirst is greatly overstating the value of the money lost.
Meanwhile, federal authorities, lawyers, analysts and financial news watchers are speculating about whether Mr. Rusnak profited off of what he's accused of doing.
The Baltimore Sun quoted several legal experts as saying Mr. Rusnak is likely to face prosecution even if investigators find that he didn't pocket any money. Experts say any coverup attempts may be seen as criminal.


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