Business | Mon Sep 30, 2013 10:55pm BST

Citigroup hit by alleged $42 million ethanol futures fraud

NEW YORK (Reuters) - A Texas man accused of defrauding a bank of $42.4 million (26.2 million pounds) fraud while trading ethanol futures contracts in 2010-2011 worked for Citigroup Inc (C.N) at the time, a Citi spokesman said on Monday.

The Commodity Futures Trading Commission (CFTC) on Friday accused John Aaron Brooks of Texas of knowingly inflating the value of his ethanol futures positions while working for the commodities arm of a "large commercial bank" from November 2010 to October 2011.

The CFTC did not name the bank involved, but a spokesman for Citi has confirmed Brooks was employed by the bank during the time of the alleged scheme. The spokesman declined further comment.

A lawyer for Brooks declined to comment. Brooks did not answer calls seeking comment. A spokesman for the CFTC also declined to comment.

The CFTC said the bank in question lost $42.4 million as a result of Brooks's alleged scheme. The agency is seeking a monetary penalty and trading and CFTC registration bans against Brooks, among other penalties.

The case is U.S. Commodity Futures Trading Commission v. John Aaron Brooks, U.S. District Court, Southern District of New York, No. 13 CV 6879.

(Reporting By Cezary Podkul; editing by Clive McKeef)