John M. Rusnak, the Allfirst Financial Inc. currency trader accused of losing $691.2 million over five years, pleaded not guilty yesterday to seven charges of bank fraud and making false entries in bank records.
Rusnak, 37, also requested and was granted a jury trial scheduled for Feb. 10. Legal experts and his attorney suggested that a plea agreement is likely.
Rusnak was arraigned in U.S. District Court before Magistrate Judge Paul W. Grimm in a procedure that lasted seven minutes and was attended by nine people. Rusnak's wife, Linda, did not attend.
Rusnak was indicted last week by a special federal grand jury in Baltimore on seven counts of bank fraud and false entries. If convicted, he faces a maximum of 30 years in prison and a $1 million fine for each count.
Seated next to his attorney at a small table, Rusnak appeared relaxed and composed as Grimm flipped through a file of papers and read the charges against him.
"Mr. Rusnak, do you understand the charges that are brought against you?" the judge asked.
"Yes sir, your honor," said Rusnak, who wore a dark brown suit, blue shirt and yellow tie.
Rusnak was asked to state his full name and birth date, and how he would plead to the federal government's charges.
"At this time, pending discovery, we are pleading not guilty to all charges," interjected his attorney, David B. Irwin, who informed Grimm that his client requested a trial by jury.
Before he left the courtroom, Rusnak was overheard telling a woman that he hoped one day to no longer be in the spotlight. "Someday, no one will care about me anymore."
After the arraignment, Rusnak and Irwin met a small group of reporters at the entrance of the federal courthouse on Lombard Street. Rusnak smiled but let his attorney do the talking.
Irwin said he hopes to resolve the case before the trial begins. He said no negotiations are under way with federal prosecutors but that a chance exists that a plea agreement could be worked out.
"Most of the federal criminal prosecutions work out in guilty pleas," Irwin said. "... There is always a good chance that some common ground can be found and we hope there will be."
Rusnak is at the center of one of the biggest banking scandals in history, which came to light Feb. 6 when Baltimore-based Allfirst and its parent, Allied Irish Banks PLC of Dublin, Ireland, accused him of losing millions by making bad currency trades and then concealing his mistakes.
Rusnak, who was fired, was not charged with stealing any of the money. But prosecutors said he engineered "complex and sophisticated" scheme that helped him make nearly $550,000 in bonuses as his fake trades falsely inflated bank profits.
The indictment alleges that Rusnak hid millions in losses over a five-year period by skirting internal controls and entering fictitious trades and data into Allfirst's computer system.
At one point, Rusnak created a fictitious businessman with a mail drop at a Mail Boxes Etc. in New York to confirm a fake currency trade with Allfirst's independent auditors, prosecutors said.
Herbert Better, a Baltimore criminal defense attorney, said Rusnak's not guilty plea is a formality and that the chances that the case will go to trial are slim.
"The bottom line is that he came in today and pleaded not guilty. You can't take anything of significance from it," Better said. "You can't take from that that there has been a breakdown in negotiations."
Lawyers expect Rusnak to reach a plea agreement with prosecutors, with whom he has been cooperating since February. He has been free on his own recognizance since June 5.
Rusnak was asked how he was holding up under the pressure of the case and the possibility that he could face time in prison.
"As the days and weeks go by, he is holding up much better," said Irwin, answering for Rusnak. "He and his family are doing fine. I am very proud of the way he is holding up."