Bank of Crete Sues Former Chairman, Arrested as Fugitive
NEW YORK (AP) _ The Bank of Crete filed a $34 million lawsuit Monday against its former chairman, a Greek banking and publishing magnate sought by his homeland for an alleged massive embezzlement scheme.
After the lawsuit was filed in federal court in Manhattan, a judge froze at least $30 million of defendant George Koskotas’ assets in this country pending a hearing Dec. 6.
The Greek-based bank sued Koskotas ″to recover its stolen funds, some of which are in New York,″ according to court papers.
Earlier this month, the 34-year-old Koskotas fled Greece, where he had been indicted on five counts of fraud and embezzlement alleging he siphoned more than $135 million from the Bank of Crete.
The scandal has embarrassed the government of Premier Andreas Papandreou and prompted the resignations of two government ministers.
Koskotas had been ordered to remain in Greece while officials investigated alleged irregularities at the bank.
But he was arrested last Wednesday night by FBI agents at an airfield about 15 miles west of Boston, after arriving in a private jet.
Koskotas’ lawyer has said his client came to the United States from Brazil for his own safety.
The lawyer, Ron Liebman of Washington, declined to comment on the civil lawsuit, saying he hadn’t seen the court papers.
Also named in the bank’s lawsuit were Koskotas’ wife, Kathy, a naturalized U.S. citizen; and his brother, Stavros Koskotas, a Greek citizen.
Leibman said Mrs. Koskotas was not arrested with her husband Wednesday although she was in the United States. He refused to give her exact whereabouts.
In Boston on Monday, Assistant U.S. Attorney Victor A. Wild said Koskotas remained jailed without bail pending extradition proceedings.
Court papers claimed Stavros Koskotas and his family disappeared from Greece ″and have been reported to be in Colombia.″
Under the civil aspects of the federal racketeering laws, the trio was accused of forming a racketeering enterprise that allegedly looted the Bank of Crete of millions. If the bank can prove the racketeering allegation to a jury, it could seek three times the amount of damages claimed.
The court papers claimed that some $30 million of the Bank of Crete’s missing assets allegedly were hidden in accounts maintained by the Koskotases or companies they controlled.
U.S. District Judge Miriam Goldman Cedarbaum ordered more than $13 million in a Merrill Lynch account and more than $17 million in an Irving Trust account frozen pending a hearing early next month.
George Koskotas was arrested in Washington last year on a 1980 federal fraud conspiracy indictment but a federal judge dismissed the case, now under appeal by prosecutors.
In Athens last week, Spyros Papadatos, the temporary commissioner appointed by the Greek government to investigate the case, said in a report that Koskotas used bank money for $200 million in loans without collateral and gifts to soccer clubs, athletes, business associates, journalists and friends.
According to court papers in New York, the lawsuit was brought at the direction of Papadatos.
Koskotas was suspended Oct. 20 as chairman of the Bank of Crete. He had acquired a controlling interest in the privately-owned bank in 1984 after working in its central Athens branch for two years as an accountant. He also built a publishing empire and bought a controlling interest in an Athens soccer club.