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DUBAI ISLAMIC BANK v. CITIBANK

December 29, 2000

DUBAI ISLAMIC BANK, PLAINTIFF,
V.
CITIBANK, N.A., DEFENDANT.



The opinion of the court was delivered by: Berman, District Judge.

  ORDER

Plaintiff Dubai Islamic Bank ("Plaintiff" or "DIB") filed this action against Defendant Citibank, N.A. ("Defendant" or "Citibank") on or about March 15, 1999. Plaintiff's complaint alleges nine causes of action: (i) breach of contract; (ii) breach of implied covenant of good faith and fair dealing; (iii) negligent performance of contractual services; (iv) negligence; (v) negligence per se; (vi) strict liability for facilitating "financial terrorism;" (vii) unjust enrichment; (viii) violation of 18 U.S.C. § 1962(b); and (ix) violation of 18 U.S.C. § 1962(c).*fn1 Defendant now moves to dismiss Plaintiff's claims pursuant to Federal Rule of Civil Procedure ("Fed. R.Civ.P." or "Rules") 12(b)(6) for failure to state a claim upon which relief can be granted or, in the alternative, for summary judgment pursuant to Fed.R.Civ.P. 56. Plaintiff opposes Defendant's motions and, among other things, seeks discovery pursuant to Fed.R.Civ.P. 56(f).*fn2 Plaintiff also moves to strike the affidavits of Citibank employees James A. Forde ("Forde Affidavit") and Thomas M. Lahiff, Jr ("Lahiff Affidavit"). Oral argument was held on March 27, 2000. (See Transcript).

For the reasons set forth below, Plaintiff's Rule 56(f) application for discovery is granted; Defendant's motion for summary judgment is denied, without prejudice; Plaintiff's motion to strike is denied as moot; and Defendant's motion to dismiss is granted in part and denied in part.

I. Background

The following allegations, which are set forth in the complaint, are taken as true for the purposes of this motion. See Friedlander v. Roberts, 51 F. Supp.2d 385, 386 (S.D.N Y 1999).

In or about 1975, DIB and Citibank commenced a correspondent banking relationship that included the establishment of DIB's correspondent account in Citibank's New York office. At that time, DIB and Citibank entered into a contract for services. The terms of the contract consisted of, among other things. DIB's agreement to pay correspondent banking fees to Citibank and Citibank's agreement to service DIB's correspondent account, perform transactions authorized by DIB, and safeguard DIB's correspondent account by enforcing money laundering and Citibank's so-called "know your customer" rules.

As part of its advertised "know your customer" policy, Citibank represented that it prepares a financial profile for each new customer, and that, among other things, such profile preparation verifies the customer's financial history and source of wealth. Citibank also represented that it undertakes the following due diligence before accepting new Private Bank*fn3 clients: (i) verification of the customer's identity; (ii) verification of the customer's financial history and source of wealth; (iii) review of the customer's credit and character; (iv) understanding the types of transactions the customer would typically conduct; and (v) obtaining at least two detailed references from reliable, independent sources. Citibank's "know your customer" policy also required managers to visit Private Bank customers' homes and businesses regularly.

DIB also alleges that, Foutanga Dit Babani Sissoko ("Sissoko"),*fn4 a reputed international financial terrorist, opened a bank account at the Citibank branch at 460 Park Avenue, New York, New York, within days of his arrival in the United States on or about November 24, 1995. At that time, Sissoko became acquainted with Mona Searles who worked at Citibank as a teller. Within a few days of Sissoko opening his account, Mona Searles introduced Sissoko to her friend and co-worker, Pia Hurst.*fn5 Shortly thereafter, Sissoko opened a Private Bank account at Citibank managed by Pia Hurst.

Beginning on or about November 28, 1995, and continuing until at least January 27, 1998, in excess of $151,000,000.00 (one hundred and fifty-one million dollars) was debited by Citibank from DIB's correspondent account without proper authorization, and the proceeds were credited to numerous locations around the world (including other accounts at Citibank) through a series of financial transactions, each of which was less than $1,000,000.00 in amount, and nearly all of which were amounts of round thousand dollars.*fn6 Sissoko caused these transactions to be made and was assisted by Pia Hurst (and, apparently, Mona Searles).

Citibank caused DIB's correspondent account to be debited and the various accounts of Sissoko and others to be credited, including the following accounts: (i) Sissoko's Citibank Private bank account; (ii) two numbered accounts at Citibank Switzerland held by Sissoko associates Mamadou Diao and Sekou Diao; (iii) Mamadou Diao's account at Citibank International, plc in Paris; (iv) Sissoko's Swiss "Yungo" bank account; and (v) various accounts at four Miami, Florida banks held by Abdou Karim Pouye ("Pouye"), the chief financial officer for Sissoko's purported business interests. None of these debits and credits were properly authorized by DIB's Board of Directors and were contrary to DIB's interest.

On or about November 27, 1997, Commercebank National Association in Miami, Florida ("Commercebank") refused to complete Citibank's request to transfer approximately $400,000 from DIB's correspondent account to Pouye's Commercebank Account No. 1185001811706, because Commercebank had closed Pouye's account for activity Commercebank deemed improper. Despite having notice of Commercebank's refusal, Citibank continued to transfer millions of dollars to accounts held by Pouye after November 27, 1997 and failed to alert DIB that Commercebank had closed Pouye's account as a result of "suspicious" activity.

Citibank failed to notify DIB and failed to take any action to prevent or stop the debiting of funds from DIB's correspondent account and crediting of the accounts of Sissoko and his confederates. As a result of Citibank's inaction, its employee Mona Searles received approximately $516,000 of funds "stolen" from DIB's correspondent account.

Citibank also assisted Sissoko in removing millions of dollars from Sissoko's Citibank Private Bank account in cash and cashiers checks. Under the account management of Pia Hurst. Sissoko used his Citibank Private Bank account to remove millions of dollars through a series of smaller financial transactions.

In April 1998, DIB discovered that Sissoko's scheme had resulted in losses from DIB's correspondent account. Since that time, DIB has undertaken a series of actions to reduce the damage resulting from Sissoko's scheme. By telefaxes dated April 13, 1998, and April 16, 1998, DIB notified Citibank of the scheme and requested Citibank's assistance in preventing further movement of DIB's funds located in the accounts of Sissoko's confederates under the control of Citibank and its affiliates. By telefax dated April 15, 1998, Citibank responded to DIB suggesting that DIB "hire an attorney in the United States."*fn7

On or about March 15, 1998, Mohamed Ayyoub Mohamed Saleh, an alleged participant in the Sissoko scheme, was arrested in Dubai with the assistance of DIB. On or about March 17, 1998, Hussain El Refaie, another participant in the scheme, was arrested in Dubai with the assistance of DIB. Warrants for Sissoko's arrest are outstanding in Dubai and Switzerland.

In April and May of 1998, DIB caused: (i) the account(s) of Sissoko at Banque Multi Commerciale in Geneva, Switzerland to be frozen, and documents concerning the account(s) to be seized; (ii) the account of Helene Assa Camara at Banque Multi Commerciale in Geneva, Switzerland to be frozen; and (iii) the accounts of Mamadou Diao and Sekou Oumar Diao at Citibank, Geneva to be frozen. At the request of DIB, the Dubai prosecutor's office made a mutual assistance request to law enforcement officials in Switzerland, on or about May 19, 1998, in an attempt to recover assets stolen from DIB's correspondent account.

On or about July 1998, DIB filed a civil action in the Isle of Man to block the account of M.K. Musa that contained funds stolen from DIB's correspondent account. On or about December 9, 1998, DIB filed a criminal complaint in France in an attempt to recover assets stolen from DIB's correspondent account. A "Judge d'Instruction" has been appointed to review the complaint, and action has been taken to seize bank accounts at Citibank, Paris, and obtain relevant information. On or about December 18, 1998, DIB filed a criminal complaint in Senegal against Sissoko and his confederates, including Pouye, his wife Yacine Pouye, Oumar Kante, and Helene Assa Camara, in an attempt to recover assets stolen from DIB's correspondent account. Oumar Kante, Pouye, and Yacine Pouye were arrested in Senegal. Oumar Kante and Pouye are in detention.

Citibank's Private Bank is currently the subject of an investigation by the United States Attorney's Office, Southern District of New York, concerning the "know your customer" ...


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