UK court finds two City traders guilty of £141m fraud

Maria Nikolova

Southwark Crown Court jury convicted George Urumov and Vladimir Gersamia on several counts, including conspiracy to defraud.

Two City traders, George Urumov and Vladimir Gersamia, are facing prison sentences in the UK, after, on Wednesday, the Southwark Crown Court found them both guilty on numerous fraud counts, including a conspiracy to defraud.

The victim of the complex fraud scheme was Russian bank Otkritie, with the size of the losses related to the illegal actions exceeding £141 million, according to a report in the Financial Times.

The main components of the fraud were manipulation of the bank’s management regarding a sign-on fee and mispricing of Argentinian warrants.

In February 2014, a London court awarded Otkritie provisional damages of over $150 million because of the fraudulent schemes carried out by its former employees.

The fraudulent actions date back to 2010, when Urumov joined Otkritie Securities Limited, part of Russia’s Otkritie Financial Corporation. He failed to split a “sign-on fee” (its size is $25 million according to the FT, and $23 million, according to Reuters) evenly between himself and four bond traders. Instead, he took the lion share for himself.

In addition, Otkritie paid $213 million for Argentinian warrants in 2011 and later discovered that the actual worth of the securities was $62 million. Also, the bank was assured that the warrants were traded in dollars when in reality they were traded in Argentine pesos. This manipulation led to fraud losses of more than £120 million.

Gersamia had helped Urumov cover the traces of the fraud. Then the money the men took were transferred to numerous accounts abroad. According to the judgement from 2014, the defendants used offshore companies to launder the money generated from the fraud, which was used to purchase properties, diamonds and cars.

On January 25, 2017, Yulia Balk, the wife of Urumov, was cleared of two charges, including arrangements to facilitate money laundering. Balk and Urumov allegedly used a part of the fraud proceedings to purchase a £19m house in St John’s Wood, London.

Urumov and Gersamia are set to be sentenced tomorrow.

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