Two London-based traders guilty over defrauding Russian Bank

Two City traders, George Urumov and Vladimir Gersamia, were convicted of multiple fraud offences following a four-month trial at Southwark Crown Court. The pair were handed jail terms of seven and 12 years respectively.

The victim of the complex fraud scheme was Russian bank Otkritie, with the size of the losses related to the illegal actions exceeding £141 m ($176 m), according to a report in the Financial Times.

The first part of the fraud was carried out in 2011, when Urumov joined Otkritie Securities Ltd (OSL) and manipulated the company into paying him approximately $25m as a “sign-on” fee under the false impression that it would be distributed to others also joining the company. 

He later carried out further acts of fraud by trading financial products called Argentine warrants and misled his employer into believing they had been purchased at four times their true cost. Urumov used Gersamia, an employee of investment management company Threadneedle Asset Management, to help cover his tracks.
The money defrauded by the duo was said to have been moved between numerous accounts in countries across the world, including the Caribbean, Switzerland and eastern Europe in an effort to cover up its origins.

The men had repeatedly reassured Otkritie’s management that the warrants were traded in dollars when in fact they were traded in Argentine pesos, causing the bank to overpay for the warrants. That allowed them to buy the assets and keep the difference for themselves, the four-month trial heard.

According to Bloomberg, Urumov is said to have personally gained $40 million from the frauds while Gersamia made $6 million. He and his wife used some of the money to buy a house in St John’s Wood in London.

Urumov was convicted of two counts of conspiracy to defraud, two counts of conspiracy to commit fraud by false representation and one count of conspiracy to commit money laundering.
Gersamia was found guilty of two counts of conspiracy to defraud and one count of conspiracy to commit money laundering.

Otkritie Holding Chairman Alexey Karakhan said in a statement that his group was working with law enforcement authorities in other countries, including Switzerland, Israel and Russia to pursue others involved in the fraud.
"We are more than satisfied with the jury's verdict and the strong message sent by the lengthy prison term given to Urumov," he added.
"From the outset we pledged to do everything possible to ensure that justice would be done and that the fraudsters would be held responsible for their heinous conduct. This verdict completely vindicates our approach."