A major lawsuit accusing Citigroup of a massive fraud scheme is moving forward after a court ruling. The case, which has been dragging on for nine years, alleges that Citigroup’s actions led to over $1 billion in losses.
Citigroup Accused of Enabling Fraud
The lawsuit claims Citigroup, through its Banamex unit, knowingly facilitated and hid widespread fraud at Oceanografía, a Mexican oil and gas company that’s now bankrupt. Oceanografía was a contractor for Pemex, Mexico’s state-owned oil company. The plaintiffs – around 30 vendors, creditors, and bondholders – say Citigroup provided $3.3 billion to Oceanografía between 2008 and 2014, even though they knew about massive debt and forged documents used to get inflated cash advances.
Court Reverses Earlier Dismissal
A federal appeals court overturned a lower court’s decision to dismiss the case. The appeals court judges stated that the plaintiffs had sufficiently presented their case, and the lawsuit will now proceed. The court noted that the case had already gone through multiple versions and years of legal battles.
Internal Investigation and SEC Fine
Citigroup’s own internal investigation reportedly found nearly $430 million in fraudulent cash advances. In 2018, the U.S. Securities and Exchange Commission (SEC) fined Citigroup $4.75 million for failing to maintain proper internal controls related to Banamex.
Looking Ahead
This ruling means Citigroup will now have to defend itself against serious allegations of fraud and complicity in a billion-dollar scheme. The case is expected to continue its legal journey.