In a 500 page complaint from an investor class action suit, Citigroup, Inc. is accused of operating a ponzi type operation to give the appearance of a healthy company.
The Bloomberg news service is reporting this:
Citigroup Inc., the second-biggest U.S. bank by assets, was accused in a lawsuit of repackaging unmarketable collateralized debt obligations it held and re-selling them to itself in order to hide its exposure to the securities.
Citigroup, based in New York, began using the â€œCDO-related quasi-Ponzi schemeâ€ in 2006 to give the appearance that it had a healthy asset base, according to the complaint.
This and other claims are made in a 500-page amended complaint on Dec. 1 in an investor class action, or group lawsuit, originally filed in November 2007 in Manhattan federal court. The new complaint, which is based on an investigation by investor lawyers at Kirby McInerney LLP in New York, seeks unspecified damages based on the bankâ€™s loss of more than $100 billion in market capitalization.
from DGC Blog by Mark