- The Washington Times - Saturday, January 18, 2003

BALTIMORE (AP) A former currency trader was sentenced to 7 years in prison yesterday for hiding $691 million in losses at Allfirst Financial after bad bets snowballed in one of the largest-ever bank frauds.
John Rusnak, 38, apologized during his sentencing and said he wanted to try to make restitution that could lead to "some redemption later in life."
He faced up to 30 years in prison. The 7-year sentence was part of a plea bargain with prosecutors. Upon his release, he must start paying $1,000 a month for the five years of his probation.
Rusnak will remain on the hook for the full $691 million he lost, but prosecutors said the amount he pays back will depend on how much money he is able to make after leaving prison.
"If he does get [a] book deal or a movie deal or something like that, we're going to get that money," said U.S. Attorney Thomas DiBiagio.
Mr. DiBiagio said Rusnak would not do his time at a halfway house or a camp to work "on some golf course."
"He is going to go to prison with the bank robbers and the drug dealers and the other criminals because that's what he is," Mr. DiBiagio said.
David Irwin, Rusnak's attorney, described his client's sentence as "a very bitter pill."
Rusnak was indicted in June in the biggest bank-fraud case since Nick Leeson lost more than $1 billion on futures trades and caused the 1995 collapse of England's Barings Bank.
At Allfirst, Rusnak ran up the losses over five years, mostly from trading Japanese yen. Prosecutors said he dug himself a deeper hole by taking ever-bigger risks as he tried to recoup the money.
Rusnak didn't directly profit from the losses, but prosecutors said he did rack up bonuses of more than $650,000 by making it look as if the bank were making money instead of losing vast sums between 1997 and 2001.
Prosecutors said the father of two collected about $433,000 in bonuses before the fraud was discovered.
Mr. DiBiagio said Rusnak's white-collar crime was devastating to the bank and precipitated hundreds of layoffs announced this week.
Allfirst worker Karen Weiss, who was allowed to speak as an injured party during Rusnak's sentencing, told her former colleague it was the bank's employees who "took the loss that you incurred."
At the time, Allfirst was under parent company Allied Irish Banks.
AIB, based in Dublin, announced plans in September to sell Allfirst to Buffalo, N.Y.-based M&T; Bank Corp. for $3.1 billion. Earlier this week, M&T; announced that it was phasing out 1,132 Allfirst employees as part of the sale expected to be completed in March.
Leeson served 3 years in the Barings case a scandal that prompted banks worldwide to tighten internal checks.
Mr. DiBiagio said Rusnak will continue cooperating with investigators. He said there were "loose ends to tie up" in the case.

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