From Yahoo Finance: 2025-05-08 13:25:00

Citigroup must face a lawsuit alleging it caused over $1 billion in losses by concealing a vast fraud at Mexican company Oceanografia. A U.S. appeals court revived the case, citing Citigroup’s involvement in the fraud. The court found Citigroup provided cash advances to Oceanografia despite knowing about forged signatures and excessive debt.

The plaintiffs, including various companies and investment funds, claimed Citigroup advanced $3.3 billion to Oceanografia between 2008 and 2014. Citigroup later discovered fraudulent cash advances totaling nearly $430 million. Former Citigroup CEO Michael Corbat confirmed the bank fired 12 employees, with Mexican regulators holding 10 employees criminally liable under Mexican law.

Circuit Judge Britt Grant stated that Citigroup, as a sophisticated financial institution, should have been aware of Oceanografia’s activities. The court believes Citigroup withheld key information from the plaintiffs for financial gain. The case has been returned to U.S. District Judge Darrin Gayles in Miami for further proceedings.

The plaintiffs, including vendors and bondholders, alleged that Citigroup substantially aided the fraud at Oceanografia. Citigroup’s Banamex unit provided cash advances to Oceanografia for drilling services to Pemex. The U.S. Securities and Exchange Commission fined Citigroup $4.75 million in 2018 over Banamex’s internal controls related to the fraud.

Citigroup spokeswoman Danielle Romero-Apsilos declined to comment on the lawsuit. Plaintiffs’ lawyer Juan Morillo expressed satisfaction with the appeals court ruling. The case, Otto Candies LLC et al v Citigroup Inc, will now be reviewed by U.S. District Judge Darrin Gayles in Miami.

Read more: Citigroup must face $1 billion lawsuit claiming it aided Mexican oil company fraud