Former Trader Indicted On Bank Fraud Charges

The indictment charged that the trader, John M. Rusnak, used fictitious trades and false trade confirmations to hide losses at Allfirst Financial here and to make it appear that he was actually making a profit as a currency trader.

Based on this fictitious performance, the indictment said, Mr. Rusnak was paid more than $850,000 in salary and bonuses over five years. A $220,000 bonus scheduled for 2001 was not paid after the losses were uncovered in February by Allfirst and its parent bank, Allied Irish Banks of Dublin. The six other counts involved fake trades that Mr. Rusnak made, according to the indictment, to hide other trades in the effort to conceal his losses.

The indictment also said that Mr. Rusnak went to great lengths to hide his losses, including renting a box at Mailboxes Etc. at 2472 Broadway in Manhattan in the fictitious name of David Russell. Then, according to the indictment, Mr. Rusnak told Allfirst to send a request for the confirmation of a fictitious trade to Mr. Russell. Mr. Rusnak retrieved the letter, signed it as David Russell and sent it to the bank's independent auditor, ''all for the purpose of concealing his fraudulent conduct from the bank,'' the indictment said.

The indictment adds the name of a major investment bank that traded with Mr. Rusnak -- Merrill Lynch. Until now, Mr. Rusnak was known to have special trading agreements, know as prime brokerage agreements, with Citibank and Bank of America. Merrill had a similar agreement. The indictment said that the agreements helped Mr. Rusnak conceal details of his daily trading and enter fictitious trades on Allfirst's books.