The U.S. Supreme Court has refused to take up Citigroup’s appeal in a long-running lawsuit that accuses the bank of contributing to more than $1 billion in losses linked to fraud at a now-bankrupt Mexican oil services company. By declining review, the justices allowed a lower court ruling to stand, keeping the case alive against the Wall Street lender.
The decision leaves in place a May 2025 ruling from the 11th U.S. Circuit Court of Appeals, which revived claims brought by more than 30 plaintiffs. Those plaintiffs include bondholders, shipping companies, and the Netherlands-based lender Rabobank. They allege that Citigroup played a central role in a scheme that ultimately led to the collapse of Oceanografia, once a major contractor to Mexico’s state oil industry.
Oceanografia provided offshore drilling services to Petroleos Mexicanos before Mexican authorities seized the company in 2014. The firm entered bankruptcy proceedings two years later. Plaintiffs claim that Citigroup’s Banamex unit advanced billions of dollars to Oceanografia over several years despite clear warning signs of financial distress and forged documentation.
Lower court found plausible allegations of misconduct
According to the lawsuit, Banamex advanced about $3.3 billion to Oceanografia between 2008 and 2014. The plaintiffs say the bank knew the company carried excessive debt and relied on falsified authorization forms bearing forged signatures from Pemex officials. Citigroup later discovered roughly $430 million in fraudulent advances tied to the scheme.
Regulators also took action. In 2018, the U.S. Securities and Exchange Commission fined Citigroup $4.75 million for failures in Banamex’s internal controls. The bank has said it uncovered the fraud itself and disputes claims that it knowingly enabled Oceanografia’s misconduct.
In reviving the lawsuit, the 11th Circuit said the plaintiffs plausibly alleged that Citigroup withheld key information while continuing to benefit from interest payments on the advances. The court added that it found it difficult to believe a sophisticated financial institution would remain unaware of the alleged fraud under the circumstances described.
Citigroup asked the Supreme Court to review only the claims brought by bondholders. The bank argued that those plaintiffs should not be allowed to pursue civil claims under the Racketeer Influenced and Corrupt Organizations Act, known as RICO. Citigroup described the case as a routine securities dispute and said RICO did not apply, warning that the ruling conflicted with decisions from other federal appeals courts.
Bondholders countered that Congress did not bar RICO claims simply because regulators like the SEC could pursue securities fraud cases. They also argued that traditional securities fraud claims were unavailable because the case did not involve trading based on misleading public statements.
By turning away Citigroup’s appeal, the Supreme Court left those arguments unresolved at the national level. The litigation will now continue in lower courts, where the bank must defend against allegations that could expose it to treble damages under federal racketeering law.