The First Department of the New York State Supreme Court's Appellate Division, has affirmed the trial court’s decision that Rizal Commercial Banking Corporation (RCBC), along with its two most senior executives, Lorenzo Tan and Raul Victor B Tan, and Wong Sin (Kim), can be tried in court for their involvement in the theft of approximately $81 million from Bangladesh Bank’s bank account at the Federal Reserve Bank of New York (NY Fed).
The Bangladesh Bank (BB) informed the media in a press release about the development on Monday.
“In its decision, the First Department confirmed that these defendants can be held to account for their participation in the wrongs committed against the people of the Republic of Bangladesh, whose interests and funds Bangladesh Bank manages.”
The central bank also stated that on February 29, the NY State Supreme Court's First Appellate Department – the state's intermediate state appeal court –delivered the decision in Bangladesh Bank’s favor.
The decision was a win for Bangladesh Bank and confirmed that New York will be the venue for litigation arising out of RCBC, its employees, and Wong Sin (Kim)’s theft of Bangladesh Bank’s funds out of New York.
Observations
The First Department stated that RCBC and its senior management, the Tans, and Kim Wong can be held accountable in connection with the fraud perpetrated on Bangladesh Bank, by which the theft occurred.
The court also held that Bangladesh Bank may pursue these defendants for, as Bangladesh Bank alleged in its complaint, the money they controlled whilst they knew full well that they were the bank’s stolen funds, yet allowed to be laundered through foreign exchanges and the RCBC Treasury, rather than responding to Bangladesh Bank’s stop payment request and returning the funds.
Bangladesh Bank also alleged in its complaint that approximately $58.2 million of the stolen funds were transferred out of accounts in the name of fictitious individuals after the stop payment requests had already been received by RCBC, and there could be no doubt with respect to anyone at RCBC that the funds belonged to Bangladesh Bank.
As to RCBC, the court was particularly swayed by allegations as to RCBC’s creation of the fictitious accounts; the use of RCBC’s New York correspondent accounts to accomplish the theft; RCBCs profitable foreign exchange trades on the bank’s stolen funds; and that the hackers worked on behalf of, or at the direction of, RCBC.
Regarding Kim Wong, the court also ruled that the bank had sufficiently alleged his involvement in the conspiracy, including the theft and money laundering; and in so far as Lorenzo Tan, the court highlighted Bangladesh Bank’s allegations that he was a longtime friend of Wong; who advised RCBC personnel to “take care of” Wong; knew about the fictitious accounts; and took no action to return the over $80 million stolen from the bank after they were transferred to the fictitious RCBC accounts.
The court additionally highlighted allegations that Raul Tan was involved in sending a misleading message to the bank in order to thwart the bank’s efforts to immediately seek the return of the stolen funds.
Updates
The February 29 decision also dismissed the case against four RCBC defendants (Ismael Reyes, Brigitte Capiña, Romualdo Agarrado, and Nestor Pineda) for lack of personal jurisdiction.
However, the case could continue against other defendants, and that Bangladesh Bank could move forward with its claims regarding fraud, unjust enrichment, trespass, and money had and received against the defendants; influenced by the fact that the bank had no connection with, and did not do business in the Philippines.
According to the central bank release, they welcomed the opportunity to demonstrate that RCBC was involved from the very beginning; and the First Department’s decision allowed them to move forward with its fraud, and other claims, to hold RCBC accountable in New York.
Bangladesh Bank is considering its further response to the First Department decision; including but not limited to its own appeals or responses to any appeal by the remaining RCBC defendants and Kim Wong; and looks forward to pressing forward in the ongoing discovery process in the trial court, their release added.
