UPDATE 1-Virginia sues 13 banks for $1 bln over alleged mortgage bond fraud

RICHMOND, Va./WASHINGTON, Sept 16 (Reuters) - 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.