Bank of New York's Renyi Told to Surrender Phone, Tax Records
By David GlovinNew York, March 1 (Bloomberg) -- The Bank of New York Co.'s chairman Thomas Renyi has been ordered by a U.S. judge to surrender telephone records, tax returns, and credit card statements to lawyers suing him and 18 other officials over their alleged role in a massive money laundering scheme.
Lawyers for Renyi and the bank argued that the plaintiffs were invading Renyi's privacy and would find nothing to corroborate their claims. The bank also fears that witnesses who say Renyi plotted to launder money will use the records to ``construct perjured testimony and forged documents'' to support their allegations, lawyer Richard Klapper said.
But U.S. District Judge Denny Chin said the plaintiffs were entitled to the records. He told Renyi to turn over eight years of phone records, three years of tax returns, and credit card statements reflecting overseas travel. Renyi must also submit to questioning by the plaintiffs' lawyers.
``The documents are to be produced within two weeks from today,'' Chin said.
The lawsuit claims that Bank of New York officers acted recklessly when the bank expanded its correspondent banking business in Russia. Officials are alleged to have allowed the bank to launder money in violation of currency laws, and Renyi is accused of receiving secret payments from offshore accounts used to launder money.
Money laundering allows criminals to move proceeds from drug deals and other crimes through the banking system to hide its original source.
``This is a man who, if the allegations of the complaint are correct, is engaged in the illicit receipt of funds, and is going to try to launder it the best he can,'' plaintiffs' lawyer Karen Morris said as part of her argument for Renyi's tax returns.
The bank calls the case baseless and the allegations ``scurrilous.'' At the hearing today, its lawyers said some of the plaintiffs' witnesses have a history of fabricating or hiding evidence.
Guilty Pleas
Last year, former Bank of New York executive Lucy Edwards and her husband Peter Berlin admitted they had set up an illegal wire- transfer operation to launder billions of dollars through three accounts at the bank. From 1995 until 1999, $7 billion was transferred through the accounts from Russia, prosecutors said.
The investigation is ongoing, and Edwards and Berlin are cooperating with the probe.
The federal lawsuit has been brought by shareholders who claim the officers breached their duty to the bank, the world's largest asset custodian. A similar case against 11 bank officers is pending in state court, although it doesn't make the same allegations against Renyi.
Next week, an appeals court is scheduled to hear arguments on whether New York State Supreme Court Justice Beatrice Shainswit properly denied the bank's bid to suspend the litigation pending an internal investigation by a bank committee created to probe the money laundering allegations.
If the state case is suspended, the bank's lawyers will likely urge Chin to follow suit. Chin has twice refused to do so. But because the federal case is based on state law, a ruling by the state appeals court could offer the bank a new ground to urge suspension.
Separately, a U.S. Senate subcommittee began three days of hearings today examining money laundering through offshore accounts at U.S. banks. A report by the committee's Democratic staff last month cited several examples in which U.S. banks were slow to close offshore accounts even after receiving ``ample evidence'' of misconduct.
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