In RE: CITIGROUP INC. SECURITIES LITIGATION | "Blue Print" Complaint By Motley (Tobacco Litigation) Against Citi Entities Describes Fraud in Detail


In RE: CITIGROUP INC. SECURITIES LITIGATION | “Blue Print” Complaint By Motley (Tobacco Litigation) Against Citi Entities Describes Fraud in Detail

In RE: CITIGROUP INC. SECURITIES LITIGATION | “Blue Print” Complaint By Motley (Tobacco Litigation) Against Citi Entities Describes Fraud in Detail

Via Nye Lavalle

In researching a major case for a client and friend in South Carolina, I was forwarded this great pleading from a great law firm in the South that is as instructional as it is informational about Citi and other lenders and the accounting and transfer schemes they promulgated.

Remember what I have always said!  “Its the accounting dummy!!!”




Plaintiffs, by and through their undersigned counsel, on behalf of themselves and a
class of investors (the “class”) who acquired Citigroup Inc. (“Citigroup”) common stock during the
period beginning January 1, 2004 through and including January 15, 2009 (the “class period”), allege
the following for their class action complaint (the “complaint”) for violations of the Securities
Exchange Act of 1934 (“Exchange Act”). These allegations are based on personal knowledge as to
plaintiffs’ own acts, and are based upon information and belief as to all other matters alleged herein.

Plaintiffs’ information and belief is based upon, inter alia, the investigation by
counsel into the facts and circumstances alleged herein including without limitation review and
analysis of: (1) press releases, public statements, news articles and other publications disseminated
by or concerning Citigroup and the other defendants named herein; (2) Citigroup’s analyst
conference calls and conference presentations, and corresponding transcripts thereof; (3) the filings
that Citigroup and related parties made with the Securities and Exchange Commission (the “SEC”),
the London Stock Exchange (“LSE”), and the Irish Financial Services Regulatory Authority; (4)
securities analysts’ reports concerning Citigroup and its operations; (5) analyses, presentations,
reports and other published materials, concerning Collateralized Debt Obligations (“CDOs”),
Residential Mortgage-Backed Securities (“RMBS”), Structured Investment Vehicles (“SIVs”), and
the U.S. mortgage markets authored, inter alia, by investment banks, credit rating agencies, expert
market practitioners, academic experts, and various governmental/regulatory organizations; (6)
Congressional testimony concerning CDOs, RMBS, SIVs and the U.S. mortgage markets; and (7)
interviews with dozens of former employees of Citigroup and its operating subsidiaries. Many
additional facts supporting the allegations herein are known only to the defendants and/or are within
their exclusive custody and control. Plaintiffs believe that additional evidentiary support for the
allegations herein will emerge after a reasonable opportunity to conduct discovery.

1. This complaint concerns Citigroup’s practices with respect to mortgages and
mortgage-related securities, including principally a class of securities known as Collateralized Debt
Obligations, or “CDOs”. The complaint also concerns Citigroup’s practices with respect to auction
rate securities, leveraged loans, and special investment vehicles (“SIVs”). This action does not
complain of lack of foresight. It does not depend at all on Citigroup’s poor investment decisions.
The complaint arises because Citigroup responded to the widely-known financial crisis by concealing
both the extent of its ownership of toxic assets – most prominently, CDOs backed by nonprime
mortgages – and the risks associated with them. Defendants omitted to disclose the existence or
acknowledge the market value of or risks associated with tens of billions of dollars of financial
instruments. In addition to the conventional failures of disclosure, Citigroup concealed the true facts
by the use of shamelessly fraudulent schemes that had the effect of creating the false impressions that
sales had been made when they had not been, and that risks had been eliminated, spread or hedged
when they had not been.

2. During the class period, Citigroup’s public statements and financial statements
created an impression of a state of financial affairs that differed materially from what actually
existed. During the class period, Citigroup issued a stream of false positives – revenue growth,
earnings growth, improved returns on capital and returns on risk, and strong capitalization ratios
speaking to the company’s fundamental financial condition. Citigroup knew, concealed or distorted
these representations by concealing or distorting its possession of these securities, their associated
values, and risks. How did defendants accomplish this?

[ipaper docId=91110909 access_key=key-1uhtkq35dx919sad90co height=600 width=600 /]


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CONTROL FRAUD | ‘If you don’t look; you don’t find, Wherever you look; you will find’ -William Black

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