Lawsuit Alleging Citigroup Orchestrated and Concealed Fraud, Triggering $1,000,000,000+ in Losses Moves Forward

A revived lawsuit accuses Citigroup of orchestrating a more than $1 billion fraud at Oceanografia, a now-bankrupt Mexican oil and gas services company.

The nine-year-old complaint is back on after a three-judge panel of the 11th U.S. Circuit Court of Appeals in Miami ruled Citigroup must face the allegations, overturning a lower court’s decision to dismiss it.

“For the second time, we consider this long-running dispute alleging a transnational fraudulent scheme resulting in over $1 billion of losses to thirty plaintiffs. The case has cycled through four complaints, and it has languished at the pleading stage for nine years. The district court dismissed all seven counts in the 541-page third amended complaint for failure to state a claim.

We see things differently. Because each of the plaintiffs has sufficiently pleaded the elements of each count alleged in the complaint, we reverse and remand.”

The lawsuit alleges that Citigroup’s Banamex unit enabled and concealed rampant fraud at Oceanografía, which was working as a drilling contractor for Mexico’s state oil firm, Pemex.

The plaintiffs in the case, about 30 vendors, creditors and bondholders, allege that Citigroup provided $3.3 billion to Oceanografía between 2008 and 2014, despite being aware of an incurred massive debt and forged Pemex signatures on authorization forms to obtain inflated cash advances.

According to the ruling, Citibank’s internal investigation found it had issued 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 a system of internal controls related to Banamex.

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