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Greek Banker Arrested As Fugitive Now Faces $34 Million Suit

November 29, 1988

NEW YORK (AP) _ A multimillion-dollar lawsuit has been filed against a Greek banker accused in his homeland of embezzling more than $135 million and jailed in this country on a fugitive warrant.

The civil racketeering lawsuit seeking at least $34 million was filed Monday by the Bank of Crete against George Koskotas, the bank’s former chairman.

If the bank can prove the racketeering allegation to a jury, it could seek three times the amount of damages claimed.

U.S. District Judge Miriam Goldman Cedarbaum froze at least $30 million of Koskotas’ assets in accounts at Merrill Lynch and Irving Trust pending a hearing Dec. 6.

Earlier this month, 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.

The scandal has embarrassed the government of Premier Andreas Papandreou and prompted the resignations of two government ministers.

Koskotas, 34, had been ordered to remain in Greece while officials investigated alleged irregularities at the bank.

In Athens last week, Spyros Papadatos, 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.

Koskotas was arrested by FBI agents last Wednesday when he arrived on a private jet at a small airport outside Boston.

Koskotas’ Washington lawyer has said his client came to the United States from Brazil for safety reasons.

The lawyer, Ron Liebman, declined to comment on the civil suit when reached in Beaumont, Texas, saying he hadn’t seen the court papers.

Also named in the suit were Koskotas’ wife, Kathy, a naturalized U.S. citizen, and his brother, Stavros Koskotas, a Greek citizen. The three were accused of forming a racketeering enterprise that looted the Bank of Crete of millions.

Liebman said Mrs. Koskotas was not arrested with her husband Wednesday although she was in the United States; he refused to divulge her whereabouts.

In Boston, Assistant U.S. Attorney Victor A. Wild said Koskotas remained jailed without bail pending extradition proceedings.

Court papers said Stavros Koskotas and his family had been reported to be in Colombia.

Koskotas was suspended Oct. 20 as chairman of Bank of Crete. He had acquired a controlling interest in the privately owned bank in 1984 after working in its Athens branch for two years as an accountant. He also built a publishing empire and bought a controlling interest in an Athens soccer club.

He was arrested in Washington last year on a 1980 federal fraud conspiracy indictment but a judge later dismissed the case, now under appeal by prosecutors.

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