Ex-Credit Suisse banker cites stress in fraud trial

Lescaudron says that starting in 2008, he began to fake orders, cutting out signature and pasting it onto fake orders

GENEVA • A former Credit Suisse Group AG banker, accused of taking millions from rich clients’ accounts to cover trading losses, told the court on a long first day of his trial in Geneva that stress from the financial crisis and his growing losses took a great toll on his health.

Patrice Lescaudron testified into the evening on Monday that he’d worked for two accounting firms and in the luxury-goods industry before he joined Switzerland’s second-largest bank in Geneva. His experience at Credit Suisse started well, but became stressful starting in 2007 as he took on more assets before the financial crisis struck a year later.

The 54-year-old, who faces a sentence of as much as 10 years in prison, is on trial on charges that he defrauded a half dozen Eastern European clients — including former Georgian Prime Minister Bidzina Ivanishvili — out of millions as he battled losses on trades. Lescaudron has admitted to running a frantic shell game with client cash to hide the losses.

“I was treated for hypertension and also depression…and lost some 28kg (62lbs),” Lescaudron, dressed in blue jeans and a grey open-neck shirt, said in a quiet voice on Monday. After two years in a Geneva jail in pretrial detention, he was led in by police and flanked by two officers in court. “I’ve thought a lot about what has happened since 2007.”

The trial of the Frenchman, who has not been released on bail because he’s deemed a flight risk to France, is scheduled to last up to two weeks.

Cut and Paste

Lescaudron said that starting in 2008, he began to fake orders, cutting out Ivanishvili’s signature and pasting it onto fake orders, so that he could then wire money into the accounts of

smaller clients with growing losses. He admitted to doing the same that year with another customer, Vitaly Malkin, a Russian businessman and former senator.

According to the indictment, Lescaudron had already had significant losses for Malkin in 2008, investing in Austrian real estate company Meinl European Land Ltd without Malkin’s permission. The stock lost more than half its value in 2007 after the company was investigated for allegedly misleading investors.

Lescaudron testified after Judge Alexandra Banna rejected bids from the former banker’s victims to delay the trial to allow time for Credit Suisse to turn over more information on the disputed trades and to make changes to the indictment.

Madoff Trial

Banna oversaw the trial of a Geneva fund manager in 2015 who was found not guilty of mismanaging a fund that streamed clients’ money to convicted fraudster Bernard Madoff. This trial is infinitely more complex, with seven plaintiffs, including five Russians, Ivanishvili and Credit Suisse, which has also won itself injured party status in the case.

Vincent Jeanneret, the bank’s lawyer, earlier on Monday drew the court’s attention to the allegation in the indictment that Ivanishvili made US$1.5 million (RM5.94 million) in payments to Lescaudron in 2008 and 2009, which have not been explained.

Lescaudron hadn’t been asked about those payments by Banna before the end of Monday’s session. Ivanishvili isn’t attending the trial because of ongoing medical treatment, according to his lawyer, Maurice Harari.

Lescaudron, who said he still takes drugs for his depression, faced hours of questioning from Banna, who pushed Monday’s opening session past 7pm local time. She grilled him on details of whether other clients ever knew what they were investing in and why he moved certain sums from one client to another without their permission. — Bloomberg