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Screenshot of a breaking news alert e-mail from Q2 2017
A court in Ekaterinburg, Russia, is set to hear the case against notorious Russian Forex trader Alexey Kalinichenko, with the charges this time concerning money laundering.
The name Alexey Kalinichenko, more commonly known as the “Forex Mavrodi” or the “Ural Mavrodi” has made it into media headlines over the past decade, thanks to the fabulous promises his business UTG FX-Traders Group (UTG) made, and the subsequent high-profile demise of this company. Between January 2003 and August 2006, Mr. Kalinichenko lured investors to pump money into accounts that he stated that he would manage based on his “extensive expertise in the Forex field”. The promised returns on investments were up to 80% per year, with the company in fact operating in the form of a Ponzi scheme insofar as that the funds invested by the new customers were used to pay the earlier customers.
In 2006 Mr. Kalinichenko cashed in the revenues and fled Russia, leaving the company bust and thousands of investors defrauded. Russia’s newspaper “Rossiyskaya Gazeta” puts the number of defrauded clients of the firm at nearly 3,500, with around 3,200 of them being Russian residents. The sum misappropriated from investors exceeds RUB 1 billion (USD 25m).
The bogus FX trader was caught by Interpol in 2010 and extradited to Russia, where he was sentenced to 7 years and 6 months in jail for financial fraud and theft of large size.
Mr. Kalinichenko is set to go back to the court room this year, as an Ekaterinburg judge will hear a set of new accusations against the notorious billionaire, this time on the count of money laundering. New evidence, obtained only recently by investigators, was filed with Ekaterinburg’s court in September this year. The fresh evidence shows that between January 2005 and August 2006 Kalinichenko used money-laundering means in an attempt to theoretically legalize expenses worth some RUB 300 million. As a result, he will be charged on two counts of Russia’s Criminal Code that can land him for up to 10 years more in prison and cost him up to RUB 1 million in fines.
The exact date of the trial is not known, as Kalinichenko’s lawyers are seeking to move the process to St Petersburg.
The legal proceedings against Kalinichenko are grabbing attention because of the hefty sum misappropriated but also because it sets a legal precedent in Russia. The country still lacks a law to regulate the Forex industry and still we see that a Forex fraudster is indicted. This shows that Russia’s legal system has the powers to tackle foreign exchange scams.