August 26th, 2013

MDM Bank: theft is legal

A recent ruling by St. Petersburg City Court undermines one of the major tenets of the market economy in the country, that is, citizens' confidence in the banking system. In Russia the fate of any multi-million dollar bank account now depends on the mood of clerks with a salary of $ 700. Judicial system and MDM Bank seam to tolerate careless and untrammelled dispose of fortunes, entrusted to the bank.

No clerical mistake
When after the New Year holidays on 11 January 2011 Tamara Kostomarova, CEO at TVK legal consulting company in St. Petersburg, logged on to the online service system of MDM bank, she saw that her money was gone from her account. Or, to be more precise, she saw that not only the money but the whole account was gone, as if she never had one.
She could not believe her eyes. She then thought it was an internal clerical mistake in the system and called the bank to find out when their IT people would fix the problem.
Talking to the clerks made it even worse. Tamara Kostomarova was told that her account was closed by her trustee. The woman was shocked. That account had over 11 million rubles meant for paying for surgery in a French hospital for her diseased son.
She contacted a man with a very influential position in this major credit institution, Konstantin Khaitovich, head of St. Petersburg branch in MDM bank. She wrote an eloquent and detailed claim, which ended as follows:
«When I contacted bank employees, I learnt that my deposit account was closed… on proxy I never gave to anyone. I am therefore asking you to take relevant measures to return my money and to clarify the situation…»
We cannot be sure as to the measures taken by MDM bank staff and their ST. Petersburg branch head, but Tamara Kostomarova developed an opinion that claims and negotiations are worth nothing in this situation. So, she had no choice but to take the bank to court. In June 2011 she filed a lawsuit to Vyborgsky district court of St. Petersburg in charge of the district she lives in.
Claims Tamara Kostomarova put forward were quite impressive: she demanded to recover the deposited amount with interest as of the moment of filing the lawsuit amounting to 11 863 627 rubles, a fine of 11 863 627 rubles, losses amounting to 1 000 000 and punitive damage worth 300 000 rubles. In total, her financial claims to MDM Bank reached 25 027 255 rubles, which anyone would call just as the bank must never treat their clients with such utter disregard.
1 справка Банка о движении денежных средств
«Bank statement certifying withdrawal of money from Tamara Kostomarova's account by the con artists»

So what exactly was it that happened in MDM bank in January 2011 causing Tamara Kostomarova to lose such a significant amount of money?

All at once
On 6 January 2011 a man walked into Kamennoostrovsky office of MDM bank. According to the passport he presented to the bank employees, his name was Mikhail Aleksandrovich Kobyakov. The man also had a proxy letter that gave him the right to manage deposit agreement and the attached account safeguarding some 11 359 316 rubles with interest that was property of Tamara Kostomarova.
2 доверенность Кобякову
«Proxy letter issued to fraudster Kobyakov»

Pseudo-Kobyakov (later it turned out the passport was forged) tried to withdraw all the money but failed due to operational reasons. Kamennoostrovsky office of the branch simply did not have that much money in cash. The man only managed to take out 2 000 000 rubles. The rest of the money he transferred to Tamara's checking account and closed the one with the deposit.
One little nuance: the agreement between the bank and Tamara Kostomarova stipulates that «Withdrawal orders of the client received by the bank are carried out on the next working day».
3 договор вклада
4 договор вклада 2
«Contract between Tamara Kostomarova and MDM Bank»

Why in this case did the bank employees give such an amount to a person acting on a strangle-looking proxy letter? Its ambiguity was striking and stood out like a sore thumb: signature on the letter allegedly signed by Tamara Kostomarova was not at all like her signature that any bank employee could easily see on the deposit agreement she had signed with the bank. Why did the clerk who handed the 2 million rubles to the criminal neglected such a fact?
Moreover, the agreement was terminated prematurely, causing loss of interest amounting to about a million rubles or about 30 thousand dollars. This as well did not strike anyone as suspicious!
No doubt, bank employees must be held liable for all the above mentioned irregularities, liable to law enforcers, not to journalists.
On 11 January 2013 Kamennoostrovsky MDM office saw another visitor, a man who presented a passport issued on the name of Pavel Vyacheslavovich Krylov and another proxy letter empowering the man to manage Tamara Kostomarova's checking account, the one where on 6 January the remaining 9 359 316 rubles from her bank deposit were transferred by the fraudulent proxy holder due to the lack of cash in the office that day.
5 доверенность Крылову
«Proxy letter issued to fraudster Krylov»

Later it turned out that this new passport was also a forged document, so as the proxy letter. Meanwhile, the signature on the second proxy letter was a different one, still not matching the woman's signature on the agreement with the bank.
6 реестр Ашкалуниной Крылову
«Register if notary public Ashkalunina confirming the act of issuance of the fraudulent proxy letter to fraudster Krylov»
7 реестр Чистяковой Кобякову
«Register if notary public Chistyakova confirming the act of issuance of the fraudulent proxy letter to fraudster Kobyakov»

Apart from that, scanned copies of the documents show that even the signatures of Krylov differ from one another: the one in his passport does not match the one on the bank order. It is obvious that the one on the bank order is a forged one. According to the banking rules, the cashier must check the signatures on the order and in the passport, but this was not done.
8 паспорт Крылова
«Passport presented by fraudster Krylov»
9 ордер на выжачу наличных средств Крылову
«Bank order for the cash to be given to Krylov»

Yet, MDM clerks could care less about this fact and they boldly gave the 9 359 316 rubles in cash to the fake Krylov.
In both cases MDM bank employees violated paragraph 2.4.2 of the agreement the bank had signed with Tamara Kostomarova which reads as follows: «The client has the right to empower a third party to manage the checking account by proxy. Proxy letter must come with a supplement of a card containing specimen signature of the entrusted person…» In fact, the bank employees could have at least called the client to make sure if she had had the proxy letters issued to Krylov and Kobyakov to manage such a sensitive amount of money. For some reason they neglected to do even this little thing, and we believe that law enforcement agencies must look into this part of the incident as well.
In fact, this outrageous situation make the Russian realities transparent and shows that cashiers and clerk who earn some 15-20 thousand rubles a month can easily do whatever they want with loads of money with no consequences.
A further twist to this story is that both proxy letters had on them correct information on Tamara Kostomarova passport details. This means that notary public was visited by a woman with a fake passport manufactured especially for this particular case. Usually criminals put personal info they need to use as IDs in passports with random numbers. The tricksters also knew the account numbers; information that is very hard to get except cases when the bank is involved.
Later during litigations witnesses at the notary public testified that indeed a woman came to them and presented a passport with Tamara Kostomarova's personal information in it, but the woman looked nothing like the real Tamara present in court that day. Neither mistakes in family names spelling, nor mistakes in the very name of the entrusting person (they spelled Tomara instead of Tamara, Kastamarova instead of Kostomarova) looked suspicious to the notaries. Moreover, in the framework of proceedings initiated after Tamara Kostomarova filed her lawsuit, investigators at Vyborgsky district court of St. Petersburg questioned notary public Krasnova on 28 March 2012. She claims that the way clients sign their name is no concern of hers and the clients «can draw a castle or a bat» for a signature, if they please. And even this would not make the notary concerned and doubtful.
Following the principle of «know your heroes» so to say, we publicise the names of notaries who registered proxy letters involved in this story. The two people involved are Snezhana Praulova, acting notary temporarily replacing Elena Chistyakova, and Natalia Krasnova, acting notary temporarily replacing Olga Ashkaulina. In fact, both Snezhana Praulova and Natalia Krasnova supported MDM bank in litigations between MDM bank and Tamara Kostomarova.
However, the notaries, bank staff and the criminals who received the money belonging to Tamara Kostomarova faced no charges. Investigation proceedings initiated over the criminal activity was quickly terminated due to the failure of St. Petersburg police to point out the people who should be held liable.

MDM-bank holds no liability for what its personnel is doing
Looks like thieved depositors and no return for stolen money is turning into a common situation for MDM-bank. Tamara Kostomarova is not the only victim whose money was stolen from a deposit in the bank. Last year another actively discussed court trial against MDM-bank emerged as a result of claim filed by Aleksandr Tikhonov, a VIP client of the bank who was robbed of 16 million rubles.
Aleksandr Tikhonov is a resident of Austria. He found out that his money had been stolen only when a Russian investigator contacted him in January 2012. Having arrived in Moscow, Aleksandr learned that his money had been stolen back in 2008 by head of MDM-bank VIP clients service sector Tatiana Burenina. When she joined the bank in 2001, Tatiana was a front desk clerk. In 2003 she was promoted to head of department and in 2005 she began to steal money. Over the four years she robbed several clients. In total she looted about 34 million rubles by cashing out money from clients' accounts or transfering it to other accounts. In August 2009 she was fired by the bank.
Tatiana Burenina was taken to court twice. Her first trial was in 2011 when she confessed having stolen several tens of thousands of rubles from the clients. She was sentenced to a fine of 150 000 rubles and released on parole. At the same time depositor Astakhova won in a civil court trial against Burenina and was awarded 410 000 rubles. Meanwhile, other facts of theft continued to hit the surface. In 2012 Burenina found herself in court once again, sentenced to the same amount of fine reaching 150 000 rubles. But this time she was also sentenced to three years and two months in standard regime penal colony. Bank depositors received a total of 1.12 million rubles in compensation based on their claims.
Aleksandr Tikhonov decided to leave Burenina alone and return his money at the expense of the bank that allowed for theft in the first place. Civil law stipulates that the employer is liable for any damage inflicted by its employees. Investigation described the theft protocol as follows: Burenina forged Tikhonov's signature on bank orders and later received the money from the accounts she had transferred the money to, or she could receive it from the cashier.
The bank did not object to return the money stolen by transfer and in fact returned about 4 million rubles that the woman still had on other accounts in the bank. However, the bank decided to look for an opportunity not to return the money that Burenina had taken out through the cashier, and that is a total of 12.5 million rubles. MDM-bank informed Tikhonov that “it is impossible to verify the fact that money has been stolen from the account”.
The bank decided that only Burenina should be held liable for theft of clients' money. According to the bank, case materials show that Burenina was acting alone and no other bank employee was involved in her criminal activities. However, Tikhonov does not believe that Burenina could carry out the robbery without any assistance from her colleagues as the signature on the bank orders looks nothing like the one of Tikhonov or the one of Burenina. Yet, no other employee was punished or laid off for covering up for Burenina and the protocol for money withdrawal remained the same even after the criminal activity was spotted.
Meanwhile, Aleksandr Tikhonov is pursuing to obtain the whole stolen ammount from MDM-bank.
In an attempt to support their position they voiced ridiculous arguments: “the plaintiff claims to have nothing in common with the two (Ed. Note: Kobyakov and Krylov), which means that she has nothing in common with the money as well”.
Such court rulings undermine the very basis of market economy, i.e. confidence of the residents in the banking system. Confident in the positive outcome of any trial against them, banks do not bother to protect deposits of their clients from criminal activities by fraudsters.
Tomas Gordon, especially for