Trader made £1m a year. It wasn’t enough

Two City traders are facing jail after they dined in Michelin starred restaurants and stayed at some of the world’s top hotels with the £76m they stole from a Russian bank.

Georgy Urumov, 38, was being paid over £1 million a year – but was so greedy for more he carried out the fraud with fellow Russian Vladimir Gersamia, 34.

Together they swindled finance group Otkritie by recording the currency of two huge trades in American dollars rather than Argentine pesos.

Tens of millions of pounds were moved through offshore accounts they had set up in Panama, Bahamas, British Virgin Islands, Geneva, and Zurich.

Urumov was headhunted by Otkritie Securities Limited (OSL), part of the Otkritie Group, and persuaded by the bank to pay his team of five traders £3.8m each in sign-on fees when they joined in early 2011.

But the Harvard-educated trader – who already earned £1.6m a year before his huge bonuses – kept £16.5m for himself.

In 2014 a High Court judge awarded OSL damages of over £123m after ruling that Urumov had spearheaded two ‘cunning and well-orchestrated’ frauds against the group between mid-2010 and the end of 2011.

Mr Justice Bernard Eder said it was ‘beyond any reasonable doubt’ that Urumov had acted with ‘blatant dishonesty… driven by simple greed and self-interest’.

OSL failed to recover disputed assets after the ruling and was forced to cover the loss themselves, jurors heard.

Urumov and Gersamia were convicted of fraud and money laundering offences today (weds) after a four-month trial at Southwark Crown Court.

Robert O’Sullivan QC, prosecuting, said: ‘This case is about City traders and the dishonest lengths that they go to, to make money, lots of money.

‘The male defendants, were highly paid employees of City investment brokers who used their specialist knowledge and experience to conspire to extract millions of dollars from their employers through bogus trades.

‘They then devised an elaborate plan together with the fourth defendant to launder the proceeds of the fraud, that is to funnel the money through a series of offshore company bank accounts in quite an elaborate scheme.

‘At its height, the first defendant, Mr Urumov, and his wife Yuri Balk, 37, purchased a house on what could be genuinely called Millionaire’s Row.’

Balk was accused of using money from the fraud by spending £19m on a house in ‘Millionaire’s Row’ in St John’s Wood, northwest London.

But she was cleared of involvement after she insisted she did not know the money was made illegally.

Urumov’s fellow Otkritie trader Alessandro Gherzi, 38, was also cleared of involvement in the plot.

Gersamia was working for Threadneedle Asset Management Limited (TAM) when he carried out the fraud.

‘Both OSL and Threadneedle, unbeknown to their senior management, played essential roles in the defendants’ plans and those two companies stood to lose – or did lose – well over £76m,’ Mr O’Sullivan said.

‘You will be travelling to some pretty exotic places round the world – figuratively that is.’

Mr O’Sullivan said large sums of cash ‘whistled from account to account’ as the fraudsters funnelled the money through offshore companies and accounts.

‘When we are in London, which is where they were based and their employers had their offices, you will be dining in Michelin star restaurants and staying in five star hotels in the West End,’ he said.

‘This was not a fraud that was done on the cheap.’

Mr O’Sullivan said Urumov initially asked for a $50million (£38.5m) ‘sign on fee’ from OSL a figure was agreed at $25million (£19.2m) for his trading team of five.

‘Perhaps it could be described as a golden hello,’ the prosecutor said.

‘Highly-educated’ Urumov – who spent a summer studying at Harvard – had an ‘impressive reputation amongst his peers’ which helped him command such a fee.

Urumov had previously worked at a company called Knight Capital where he was paid £800,000 a year.

Before leaving he had a ‘guaranteed package of £2million for the next two years’, the court heard.

Urumov secured a package for the five man team which would see them each get a $5m (£3.8m) payment following a dinner in London and a trip to watch Chelsea play Arsenal.

Thomas Allen QC, for Gherzi, told jurors his client believed the money he was receiving was legitimate.

‘He worked as a salesman, and it was his belief the money he received was commissioned,’ the barrister said.

Caroline Houghey, for Balk, said she was not a financial expert, and only did what her husband told her to do.

She said: ‘Once their daughter was born she took up general admin.

‘He was responsible for the financial matters of the house, and for that reason when he would ask her to transfer money to accounts or open accounts she would.

‘This isn’t unusual in any marriage.’

Urumov, of Ordnance Hill, St John’s Wood, denied but was found guilty of two counts of conspiracy to commit fraud, two of conspiracy to defraud, and one of money laundering.

Balk, also of Ordnance Hill, St John’s Wood, was cleared of two counts concerning money laundering.

Gherzi, of Jermyn Street, Westminster, was cleared of two counts of conspiracy to commit fraud, two of conspiracy to defraud, and one of money laundering.

Gersamia, of Fairmont Avenue, Poplar, denied but was convicted of two counts relating to fraud and one of money laundering.

Urumov and Gersamia will be sentenced on Friday.