The state of Virginia said on Tuesday that it sued units of Citigroup Inc, Deutsche Bank AG and 11 other banks, accusing them of defrauding the state's retirement fund by selling it shoddy mortgage bonds in the run-up to the recent financial crisis. The lawsuit seeks $1.15 billion in damages from the banks, who allegedly misled the Virginia Retirement System about the quality of loans in investments purchased between 2004 and 2010. The state's attorney general said an analysis showed nearly 40 percent of the mortgages that backed 220 securities the fund purchased were fraudulently represented as posing a lower risk of default than they actually did. Attorney General Mark Herring said the fund lost $383 million when it was forced to sell the securities. The other banks named in the lawsuit include units of Bank of America Corp, Credit Suisse AG, Goldman Sachs Group Inc, HSBC Holdings plc, Morgan Stanley, and JPMorgan Chase & Co. Representatives of the banks either declined comment
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