John M. Rusnak, the Allfirst Financial Inc. currency trader who lost $691 million in one of the biggest banking fraud scandals in history, was ordered yesterday to spend 7 1/2 years in prison in what the judge described as one of the stiffest white-collar crime sentences handed down in Maryland.
Rusnak, 38, who pleaded guilty to one count of bank fraud three months ago, will begin serving his sentence Feb. 18 at the Federal Correctional Institution at Fort Dix, N.J.
He was also ordered to serve five years of supervised release after completing his prison term, which will require him to report regularly to a probation officer and be evaluated for substance abuse and gambling.
Rusnak was barred from working at a bank or other federally insured financial institution unless he receives permission from U.S. banking regulators.
Officially, Rusnak was required to reimburse Allfirst the $691 million he lost, although everyone acknowledges that that sum will never be paid. Rusnak, however, must pay the bank $1,000 a month for five years upon his release from prison.
Rusnak is not eligible for parole, though he could have his term reduced by as much as 15 months for good behavior.
The punishment "undoubtedly will weigh heavily on Mr. Rusnak for the balance of his life," said U.S. District Court Judge William M. Nickerson.
Dressed in a dark brown suit, blue shirt and red tie, Rusnak stood before Nickerson and apologized for his scheme, which continued unnoticed for five years and resulted in enormous losses for the bank.
"I am very, very sorry for what I have done, and I want to accept all responsibility for what I have done," said Rusnak, who showed little emotion as he spoke. "I am going to accept that without any bitterness."
But his apology was scoffed at by an Allfirst executive, who attended the sentencing.
"I'm not sure I believe you when you say you are sorry," said Karen Weiss, a senior vice president for health care banking at Allfirst, as she stared into Rusnak's eyes. "In my mind, there really is not a sentence that is fair enough."
Weiss said Allfirst employees have suffered because of Rusnak, and some have not received bonuses or raises because of the losses.
"What John Rusnak did at the bank is going to have an impact on us," said Weiss, who has worked at Allfirst for 14 years. "Every single day we live that sentence with him - every single day."
Rusnak's sentencing comes nearly a year after Baltimore-based Allfirst and its parent, Allied Irish Banks PLC of Dublin, Ireland, revealed the staggering losses and blamed Rusnak, an otherwise model employee who was hired in 1993.
Over five years, Rusnak hid losses by doctoring the company's books, creating fake computer trades and bullying subordinates who challenged him. His deception made it appear as though Allfirst was booking profits when in reality losses mounted.
The fraud led to a sweeping overhaul of Allfirst's executive suite. Rusnak was fired, along with six co-workers and supervisors who failed to detect the losses.
Last spring, Allied Irish brought Eugene C. Sheehy to Baltimore to take over for Chairman Frank P. Bramble, who took early retirement in the wake of the scandal. Susan C. Keating, Allfirst's president and chief executive, resigned in July.
Two months later, Allied Irish agreed to sell Allfirst to M&T Bank Corp. of Buffalo, N.Y., in a $3.1 billion deal that officials say was in the works before the scandal was uncovered.
M&T said Monday that it will eliminate 1,132 jobs, or 20 percent of Allfirst's work force, over the next year.
Maryland U.S. Attorney Thomas M. DiBiagio said he was pleased with the outcome of the case and with Rusnak's sentence.
"This is not a sentence where he will go to some halfway house ... or some camp and work on some golf course," DiBiagio said. "He is going to go to prison with the bank robbers, the drug dealers and other criminals because that is what he is."
DiBiagio said Rusnak will have to relinquish any money he makes on book or movie deals.
"We are going to get that money," he said. "We don't want these criminals to benefit."
Martin Himeles Jr., a white-collar defense attorney at Zuckerman Spaeder LLP in Baltimore, called the sentence "stiff" for a white-collar crime.
"I am not surprised by the sentence, and I think it is an appropriate sentence," he said.
Rusnak arrived outside the courtroom about 9 a.m. with his attorney, David Irwin, and the Rev. Joe Ehrmann, a former Baltimore Colts defensive tackle who has been Rusnak's spiritual adviser for several months.
His wife, Linda, was not in court because Rusnak did not want her to have to "brave the crush of the media," Irwin told Nickerson.
Irwin suggested to Nickerson that Rusnak serve his prison term at Fort Dix because it is close to relatives and law enforcement officials in Maryland and New York, who continue to investigate the case.
Irwin also recommended the prison because it has a substance abuse program, but he declined to elaborate.
"This is a very bitter pill," he said. "His family will be going [through] razor wire to visit him."
After the sentencing, Irwin said that there were no surprises in the outcome.
"To say I am pleased wouldn't be the right way to put it," Irwin said. "I am sorry he has to go to prison for so long."
Rusnak has two young children, and Irwin said that his family has been supportive despite his crime.
"That is the only reason he has got it together," Irwin said.
DiBiagio said his office's investigation into the case will continue for six more months because there are "loose ends to tie up."
When asked whether he believed Rusnak is remorseful, DiBiagio said Rusnak will miss his children's birthdays and the chance to see them grow.
"If he is not sorry now, he is going to be sorry," DiBiagio said. "I think he is sorry. I think that has not been lost on him."