Trader ‘lost €877m in attempt to cover losses’

Bank officials said he was ‘‘missing’’ and being sought by the FBI, a claim disputed by his lawyers and thrown into doubt when a tired and anxious-looking Mr Rusnak emerged last night from his family home in an affluent city suburb.

Today FBI officials said they did not believe Mr Rusnak had hidden the cash as he did not fit the profile of a fraudster.

Mr Rusnak has told FBI fraud specialists that he made a series of bad investments on behalf of the bank.

He then tried to develop a secret strategy to recover the losses without having to admit them to managers.

A law-enforcement official said: ‘‘He said he was investing in various enterprises and the stock market dropped on him, so he tried to recoup the losses and he just got deeper.

‘‘Whether he was authorised to make those investments is one of the questions now.’’

The FBI said its probe is at its preliminary stages and a search is still under way to see if Mr Rusnak embezzled cash from the bank and hid it elsewhere.

But the agency said his behaviour was not that of a typical fraudster, and an official said: ‘‘He hung around Baltimore.

‘‘It isn’t looking like he embezzled 750 million and has an island in the Caribbean.’’

Today the 37-year-old father-of-two’s lawyers said their client was not a thief and they planned to show his bank’s controls were not up to scratch.

Bruce Lamdin, one of the trader’s two lawyers, said: ‘‘We’ve certainly proved that he’s not a fugitive.

‘‘We’ll prove he wasn’t a thief either.’’

David Irwin, the other lawyer, said: ‘‘I suspect we will find that the regulation and audit standards were not up to large corporate standards.

‘‘I’m pretty sure the investigation will show that there’s no theft by my client.’’

The American Federal Reserve has joined the investigation into the Allfirst trader, while Mary Louise Preis, commissioner of financial regulation in the state of Maryland, has also launched an investigation.

Officials from the state’s department of financial regulation are concentrating on the bank’s treasury unit.

Ms Preis said: ‘‘They have people there looking at the way trading operates there.

‘‘They are looking at computer systems and computer printouts and whatever develops, to try and learn what was going on.’’

She added: ‘‘The controls were there. The policies and procedures I believe were accurate. No control is going to be foolproof.’’

As the investigation into Mr Rusnak continued, it was revealed that a worker at Lehman Brothers, one of the biggest stockbrokers on both sides of the Atlantic, has disappeared and may have taken €135.4m of his clients’ money with him.

Frank Gruttaduria, 44, was reported missing from his home in Cleveland, Ohio, in January after leaving a note telling his girlfriend: ‘‘I am not the man you think.’’

Investigators believe he siphoned millions of euro of his clients’ money and forged statements to mislead them.

He wrote to the FBI just before he disappeared and said: ‘‘During the course of the past 15 years, I have caused misappropriation through various methods.

‘‘It is a complicated and substantial interwoven fabric of digression.’’

And he later wrote to his mother and said: ‘‘I don’t know how to live as a fugitive.

‘‘I’m really terrified, but please remember me as a young boy.’’

The stockbroker had a large home, a series of cars, a half-share in a private jet, a Manhattan apartment and a ski lodge in upstate New York.

The FBI are believed to be closing in on him and think he still lives in the United States, while angry clients have launched law suits against Lehman Brothers to try to recoup their losses.

Golda Stout, an 86-year-old grandmother, thought she had more than €2.84m in shares, only to discover that they were worth just €98,765.

‘‘I could kill him now, but as I look back, he was always really, really nice to me,’’ she said.