In prison, rogue trader pursues humility

Serving time for bank fraud, John M. Rusnak reflects on his crime and the people he hurt.

March 06, 2005|By Laura Smitherman | Laura Smitherman,SUN STAFF

HAZELTON, W.Va. - John M. Rusnak teaches personal finance to his fellow inmates at the federal prison here in the Allegheny Mountains.

"I guess," the man convicted of one of the largest banking scandals in history said with a chuckle, "that is kind of ironic."

Laughing at ironies might come more easily these days to Rusnak in prison, as ironic as that might seem.

He lost $691 million over five years as a currency trader for Allfirst Financial Inc. and schemed to cover it up. The crime, which surfaced in 2002, led to the sale of the Baltimore-based bank and put 1,100 of his fellow employees out of work.

He consented last month to his first interview since his incarceration two years ago after pleading guilty to one count of bank fraud.

He isn't due to be released until 2010 under a 7 1/2 -year sentence and was moved recently to the new Hazelton prison camp a few miles west of Maryland in West Virginia. The minimum-security facility sits on strip-mined land below a more imposing penitentiary ringed by barbed wire.

In the visiting room, Rusnak reflected on life in prison and his future out of it and retraced his descent in the high-stakes world of currency trading.

"Even though I'm in prison, I feel relieved to be away from that," said Rusnak, in a drab-green jumpsuit, hands folded in his lap. "I feel 20 years younger being away from the pressure. There was an atmosphere of corruption that, when I look back on it, it makes me sick."

The 40-year-old looks grayer and thinner than the pudgy, baby-faced man who told a federal judge in Baltimore in January 2003 that he was "very, very sorry" for what he had done. He has lost much of the 50 pounds he put on at Allfirst - stress-induced, he said. He also comes off as self-deprecating, in contrast to the arrogant man he admits he once was.

He responded last month to a written request from The Sun to talk after two years of silence, including turning down several earlier requests for an interview. He agreed to do so against the advice of his attorney, David Norman. He declined, however, to be photographed.

He had "an overwhelming desire to tell people what was in my mind and in my heart," he said. He felt he had earlier missed an opportunity to tell people "that I realize the magnitude of the crime and how much it has hurt people."

Norman said Rusnak's "personal situation is not furthered by discussing it with the press, and that is what I advised him."

Focus on self

Rusnak eschews questions about whether anyone else was involved or aware of his scheme at Allfirst. He made statements that seemed to implicate a broader cast of characters, but he refused to clarify them.

"I've had time to think about everything that happened, and it's best for me and best for my rehabilitation if I focus on what I did and not on the actions of others," Rusnak said.

"If I focus on my deception and my errors, I can accept responsibility for them. Hopefully, that's going to bring about some humility that I lacked in the past and might result in me being a better father, husband and member of society."

In a brief telephone interview, Rusnak's wife, Linda, said she, her husband and their two children are "still trying to be a family" with regular prison visits.

"He's moved on, and hopefully everyone else has, too," she said. "He's a very smart man, and he's got a lot to give."

In prison, Rusnak says, he is trying to spend his time "fruitfully," going to Bible study and exercising. He also teaches a high-school equivalency class to inmates and a course designed to help them better budget their money and understand finance.

With library privileges, he can read the latest business news in national magazines and newspapers. Given what he felt were bottom-line pressures on him to deceive, he said, he isn't surprised by the extent of the scandals across corporate America.

Rusnak lost millions for Allfirst by incorrectly gauging the movement of the Japanese yen against the dollar, then forged paperwork to cover further trades and losses he says he incurred in a failed attempt to win the money back.

After Allfirst announced it had discovered Rusnak's fraud in February 2002, several top officers left or were fired. By that fall, one of Ireland's largest banks, Allied Irish Banks PLC, sold its majority interest in Allfirst to M&T Bank Corp. of Buffalo, N.Y., for $3.1 billion in cash and stock. M&T ordered layoffs, mostly in Maryland.

Allfirst had hired Rusnak away from Chemical Bank in New York in 1993. Some at Allfirst found him to be a hard-working family man. Others said he was abusive and bullied co-workers who questioned him, according to a report by Eugene A. Ludwig. Allied Irish hired Ludwig, a former U.S. comptroller of the currency, to investigate and help quell the scandal.

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