Business Irish

Sunday 21 January 2018

Citibank hires famed US lawyer to crush $500m rogue trader claim by AIB

Attorney Ted Wells
Attorney Ted Wells
John Rusnak, 38, former currency trader for Allied Irish Banks PLC
John Mulligan

John Mulligan

Citibank has hired a crack US lawyer, whose high-profile clients have included former New York Governor Eliot Spitzer, in its bid to crush Allied Irish Banks' $500m (€442m) John Rusnak-linked case against it.

Ted Wells (pictured, top) has just been appointed lead trial counsel for Citibank, which has hired a new law firm to fight its case in court.

Mr Wells - regarded as one of the best trial lawyers in America - is also one of a number of legal eagles representing oil giant BP in its fight against alleged securities fraud linked to its Deepwater Horizon catastrophe off Texas in 2010.

AIB, now owned by the State, launched a legal fight against Citibank in 2003 after John Rusnak, who was a trader at AIB's then US subsidiary Allfirst, racked up massive losses that he had hid from the bank.

AIB has accused Citibank of furthering Mr Rusnak's fraud by engaging in his sham transactions.

Citibank argued that it had "no duty to determine or judge the bona fides" of the transactions made by Mr Rusnak (pictured right, bottom).

AIB is seeking an estimated $500m in damages from Citibank.

When the $691m black hole Rusnak concealed was discovered in 2002, the incident was one of the biggest rogue trader cases ever.

Citibank recently failed in an effort to seek an interlocutory injunction, which would have delayed the trial, and also to secure a summary judgment in the case taken by AIB.

The judge hearing the case, Deborah Batts, decided last week that the trial would begin on January 25.

But Mr Wells, a senior partner with law firm Paul, Weiss, Rifkind, Wharton and Garrisson, has told Judge Batts that he might not be in a position to handle the trial on that date.

He's scheduled to take part in the BP securities litigation trial in Texas that's due to begin on January 11. However, he said that trial date may be moved, but that if it isn't, he will have to ask for the trial date for the AIB-Citibank case to be changed.

He said that AIB's lawyers have advised that they would "strenuously oppose" such a request.

In 2008, Mr Wells led the successful defence of Eliot Spitzer when the former Governor was accused of visiting prostitutes.

A New York State attorney said later that year that criminal charges against Mr Spitzer, who admitted making payments to the prostitution service, would not be pursued.

In 2007, Mr Wells unsuccessfully defended former US vice-presidential aide Lewis "Scooter" Libby for lying about the leak of the identity of a US intelligence agent.

Mr Wells has also previously worked on behalf of Citigroup in cases involving British private equity firm Terra Firma, and Italian dairy giant Parmalat.

The top lawyer also helped secure the dismissal of obstruction of justice charges against legendary dotcom investment banker Frank Quattrone.

Irish Independent

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