Ex-employee of Otkritie financial corporation George Urumov and former broker of Threadneedle Asset Management Vladimir Gersamia on Friday were sentenced by London Royal Court of District Southwark to 12 and 7 years in prison, respectively, according to a press release of "Otkritie Holding".
On Thursday, Urumov and Gersamia were convicted of fraud and money laundering. According to the Court, the traders were guilty of defrauding Otkritie of more than 141 million pounds through a series of complex fraudulent schemes. Urumov was also found guilty in withdrawing of $31.5 million to his offshore accounts. In total, the jury found Urumov guilty on five counts, Gersamia — on three. The process lasted for four months.
Chairman of the Board of "Otkritie Holding" Alexey Karakhan said he was satisfied with the decision of the London court, "which gave a clear assessment of the Urumov's action and sentenced him to a long prison term". "We continue to cooperate with law enforcement agencies of other countries, including Switzerland, Israel and Russia to help bring to justice those involved in the fraud and contribute to our efforts to restore the assets," quoted him the press release of "Otkritie Holding".
According to both the prosecution and the court, George Urumov, who came to the Otkrytiye (Otkritie Securities Ltd, OSL) in 2011 from Knight Capital to the position of Head of Fixed Income Instruments Department in London, persuaded the company to give him 20 million pounds ($25 million), pledging to reallocate this amount among the five people from his team at Knight Capital, which he would talk into going to Otkritie. In fact, he embezzled a large portion of these funds, as the court agreed with the prosecution.
Also Urumov deceived the employer with respect to transactions with the Argentine warrants, arguing that they were traded in dollars, while in fact they were traded in the Argentine peso. Therefore, as the Court and the prosecution believed, by purchasing them the corporation overpaid four times, and Urumov pocketed the difference. In this way he was able to steal another 121 million pounds from the company. He then transferred the money to an account at a bank located outside the United Kingdom. From these funds, Urumov and his wife Julia Balk spent 19 million pounds on the house on "the street of millionaires" in the prestigious London district of St John's Wood.
Gersamia helped Urumov to "cover the tracks", according to the court and investigation. Prosecutor Alistair Dixon said that the defendants were successful traders, received generous salaries and great bonuses, but it was not enough. The motive behind their crimes was greed, he said. The investigation was assisted by both Otkritie Securities and Threadneedle Asset Management, providing important evidence.
"I am satisfied that after five years, the story reached the criminal court and that justice for the participants of this heinous crime happened. Urumov was a trusted employee, his hiring cost us dearly (including fraud obtained for the transition of Urumova and his team), and in February 2011, just a few hours after the start of work in the company, he began to lay the groundwork for fraud Argentine warrants," said Neil Dooley, a partner at law firm Steptoe & Johnson LLP, representing Otkritie Holding as the injured party (a quote from the press release). According to him, the length of the prison terms established by the court decision, reflects a number of factors. "This includes the severity of the crimes committed, and, in Urumov's case, his cunning, which manifested in repeated denial of any involvement in the fraud, even though he got $50 million, which were in his bank accounts, a serious lie to the courts, his attempts to blame the innocent employees, and threats that he had made to Otkritie to avoid prosecution," said Dooley.
Urumov was born in North Ossetia, got secondary education in Geneva, and higher education in the Cass Business School and the London School of Economics and Political Science. He is a citizen of Russia and Great Britain. He worked as a trader at HSBC and Lehman Brothers. He was highly regarded in the City. Before entering Otkritie, Urumov led a team of five traders, working with fixed income at Knight Capital (here he worked with Hertz), and received 800,000 pounds per year.
Alessandro Herzen, who was accused of complicity in money laundering and fraud, on Thursday was acquitted on all five counts. Urumov's wife also acquitted, she was accused of complicity in money, the FT reported.
"Three years ago, the High Court in London declared Urumov and his accomplices guilty of fraud. As the result, Otkritie returned the assets worth $100 million, which had been stolen by the miscreants. Also, funds were frozen in Switzerland, where in the near future the criminal proceedings against other fraudsters would start.