Fake Bonus Plot Put Trader on Millionaires' Row, Jury Toldby
Four accused of 15-month fraud and money-laundering scam
Traders used fake bonuses to steal funds, prosecutor says
A former Otkritie Financial Corp. banker bought a house on millionaires’ row in London from the proceeds of an elaborate scheme with colleagues to steal more than $100 million from their employers, U.K. prosecutors said at the start of a trial.
Otkritie banker George Urumov, his colleague Alessandro Gherzi, and Vladimir Gersamia at Threadneedle Asset Management Ltd. are accused of using fake Argentine warrants and bogus bonuses over a 15-month period in 2010 and 2011 to fund a lavish lifestyle, including mansions and high-end hospitality, Robert O’Sullivan, the prosecution lawyer, said Thursday in his opening arguments.
"This case is about city traders and the dishonest lengths that they go to make money,” O’Sullivan told jurors at the beginning of a four month London trial. “Lots of money."
Urumov, 36, is accused of siphoning off millions from signing bonuses to offshore accounts after negotiating a deal to move to Russian investment bank Otkritie from another trading house for himself and four fixed-income traders.
"Urumov is not one of nature’s shrinking violets," O’Sullivan said. His forceful personality and self-confidence "pervades the events that we are going to follow."
All the defendants have pleaded not guilty.
While the Russian bank agreed to pay a $5 million upfront fee to each of the five bankers, the reality was that Urumov paid himself $23 million and the others received a minor share of the proceeds, O’Sullivan said.
At the fraud’s height, Urumov and his wife, who is charged with money laundering, bought a house for 19 million pounds ($24.7 million) “in what can genuinely be called Millionaires’ Row" in London, O’Sullivan told the jury. "This was not a fraud that was done on the cheap."
The prosecution is focused on two separate Argentinian warrant trades in February and March 2011 that were the "brainchild" of Urumov shortly after he joined the bank, O’Sullivan said. The men are accused of manipulating the U.S. dollar-Argentine Peso exchange rates of the warrants.
"By any view, the plan to get Otkritie to agree to the" trades "was an audacious one," he said. The first trade involved the purchase of 100 million warrants for $13 million and sold for profit of over $2.4 million. The second involved the purchase of 1.65 billion warrants that were never sold on.
"In order to falsely state the currency the fraudsters physically altered the electronic records which record the currency in which the buy and sell deals were made," O’Sullivan said. The men repeatedly reassured management that the warrants were traded in dollars where in fact they were traded in pesos.