In a stunning legal twist, Citigroup must face a $1 billion lawsuit accusing the Wall Street titan of playing a central role in a massive fraud scheme tied to a now-defunct Mexican oil services company. The decision, handed down Thursday by a three-judge panel from the 11th U.S. Circuit Court of Appeals, revives a long-dormant legal powder keg that could send tremors through the global banking world.
Alleged Cover-Up, Billion-Dollar Losses, and Fraudulent Signatures
At the heart of the revived suit are claims that Citigroup’s Banamex unit enabled and concealed rampant fraud at Oceanografía, a drilling contractor for Mexico’s state oil firm, Pemex. Plaintiffs—ranging from bondholders and leasing firms to international creditors—allege that Citigroup knowingly funneled $3.3 billion to Oceanografía between 2008 and 2014, despite glaring red flags including forged Pemex signatures and ballooning debt.
The appeals court determined that the plaintiffs presented a compelling case that Citigroup substantially aided the fraud and withheld critical information that could have prevented more than $1 billion in damages.
