BALTIMORE, Jan. 17 -- A federal judge today sentenced John M. Rusnak to 71/2 years in prison for covering up $691 million in currency trading losses at Allfirst Bank.
U.S. District Judge William M. Nickerson ordered Rusnak to make full restitution for the losses, which led in part to the decision of Allfirst's Irish parent to sell the Baltimore-based bank to M&T Bank Corp. More than 1,100 Allfirst employees from Pennsylvania to suburban Maryland, including 600 in Baltimore, will lose their jobs in the merger.
Rusnak, 38, is likely to repay only a tiny fraction of the losses, perhaps $60,000. Nickerson ordered him to pay $1,000 a month from any employment he has during the five years of supervised probation. Under the judgment, any future earnings could be seized by the government. The judge also barred him from working in any bank.
In a brief statement, Rusnak told the court: "I'm very sorry for what I've done. I accept full responsibility for my actions." He acknowledged that he hid the trading losses over five years through a series of deceptive transactions that were discovered in a routine audit by the bank only last February.
Soon after Rusnak spoke, Nickerson asked if anyone in the courtroom wanted to make a statement. An Allfirst employee stepped forward and lashed out at Rusnak, saying his actions "will have an impact on us, our bank every single day far beyond any sentence that is imposed."
Karen Weiss, Allfirst's senior vice president for health care banking, said she did not personally know Rusnak. But, she said, "We live that sentence every day, our clients, our families, our co-workers, every single day.
"I'm not sure I believe you when you say you're sorry," Weiss said. "I think you are sorry you were caught."
At a news conference, U.S. Attorney Thomas M. DiBiagio said: "I really have to applaud the woman who came forward today. This was not just about a business losing money, but people not getting bonuses" at Allfirst last year after the bank discovered Rusnak's losses and its parent, Allied Irish Banks, reported that the deception reduced its 2001 profits by $449.3 million.
Nickerson let Rusnak remain free for another month but ordered him to report to a federal prison, yet to be determined, on Feb. 18. Rusnak's lawyer, David B. Irwin, asked that his client be admitted into a treatment program for drug and alcohol abuse. Nickerson agreed and also said Rusnak should be monitored for a gambling problem when he is released from prison.
None of Rusnak's personal problems had previously been disclosed. Irwin and prosecutors declined to discuss why Rusnak should undergo counseling for drug or alcohol abuse, or if gambling was related to his actions at Allfirst.
Prosecutors have not alleged in the year-long investigation that Rusnak stole the Allfirst money, but that he kept hiding losing foreign-currency transactions so that he could continue to keep his job and collect $433,709 in performance bonuses based on bogus trades that appeared to have been profitable for Allfirst. DiBiagio said Rusnak, "more than just keeping his job," was attracted to the "high-stakes gamble" of foreign currency trading.
DiBiagio described Rusnak's term as "a very harsh sentence, one of the harshest sentences ever in the state of Maryland" in a white-collar case. "This is not a sentence at a halfway house or working on a golf course. He'll be in with the bank robbers and drug dealers and other criminals because that is what he is."
Under federal sentencing rules, Rusnak will not be eligible for parole but could receive 131/2 months off for good behavior, meaning he might serve a bit more than six years.