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Judge in Bank of New York Case Concludes Charges are not Frivolous
NEW YORK, DECEMBER 13 (MT) – Today US District Judge Denny Chin once again denied BoNY’s request to halt BoNY’s shareholders investigation into alleged corruption and money laundering by BoNY’s highest management.
Exactly one month ago the judge denied similar application expressing doubts that BoNY management would properly investigate shareholders’ allegations on its own. (See “Judge Doubts the Bank of New York can Investigate Itself (MT, November 13, 2000) Immediately thereafter BoNY’s lawyers, Sullivan & Cromwell, filed additional papers with the court asking the judge to reconsider his decision. The judge denied the motion concluding that the plaintiffs have shown “extraordinary circumstances” requiring discovery to proceed.
A New York law firm Milberg Weiss Bershad Hynes & Lerach, LLP brought the lawsuit against bank’s directors alleging massive corruption and negligence by BoNY’s highest echelon, including its CEO, Thomas Renyi.
The bank has previously claimed that the suit is baseless and the charges ``scurrilous" and "based almost entirely on unsupported allegations provided by Emanuel Zeltser”, a director of the American Russian Law Institute and a lawyer in a companion lawsuit brought against BoNY by depositors of a now defunct Russian bank Inkombank. (See Bank of New York Management Attacks Director of American Russian Law Institute (MT 09/12/2000)
However the judge ruled that the “substantial charges” against BoNY have been supported by “detailed factual allegations” and are "nonfrivolous."
Recently justice Beatrice Shainswit likewise denied BoNY’s motion to halt discovery in a parallel suit brought in the Supreme Court of the State of New York. The bank did not have an immediate comment.
In February of this year, BoNY’s former senior vice president, Lucy Edwards pled guilty to a variety of federal charges, including money laundering and fraud. BoNY itself has not yet been charged with wrongdoing and is reported to be cooperating with ongoing investigations by the FBI and the Federal Reserve Bank of New York. END
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