Russian and British national guilty of elaborate $1 million fraud following private prosecution

On the 13th December 2017, Andrey Kulich was unanimously convicted in a private prosecution for his involvement in a $1 million conspiracy to defraud Argyn Khassenov, following a four-week trial at Birmingham Crown Court.

Andrey Kulich, a Russian and British national, of Newham Bridge, Worcestershire, was sentenced to a total of 5 years imprisonment and confiscation proceedings will follow.

Commenting on the case, Tamlyn Edmonds, Partner at Edmonds Marshall McMahon who was instructed by the victim of the fraud, Argyn Khassenov, said:

Mr Khassenov came to Edmonds Marshall McMahon due to our expertise in conducting private prosecutions. This was an elaborate, large-scale cross-jurisdictional fraud, in which obtaining material from other jurisdictions was key in securing the evidence that demonstrated Mr Kulich was at the centre of it. This has been a considerable, challenging and time-consuming task. It has been an incredibly difficult journey for Mr Khassenov, who has spent close to a decade and a significant amount of his own money in trying to get the justice he deserves, whilst being taunted by the man who stole it and who believed he was untouchable. We will be working with Mr Khassenov to pursue confiscation and compensation against Mr Kulich to recoup the money that was taken from him.”

Summary of case:

Between mid 2007-2009 Andrey Kulich, together with others, stole just short of US$1.2 million (just under £900,000) from Argyn Khassenov that had been deposited into accounts held at Standard Chartered Bank (‘SCB’) in Hong Kong. Mr Khassenov deposited the money in the accounts thinking he controlled them. He didn’t control the accounts at all, but had been tricked by Andrey Kulich and others into thinking he did by means of an elaborate deception.

Argyn Khassenov, a Kazakh businessman, sought assistance with setting up companies and accounts in UK and HK for his insurance business. Mr Kulich was introduced to Mr Khassenov, and put himself forward as a professional with expertise in company formation and tax. Mr Khassenov agreed to employ Mr Kulich to set up a company and bank accounts that were to be controlled by Mr Khassenov. Instead, by means of a complex fraud, Andrey Kulich, assisted by others, persuaded Mr Khassenov to deposit money into the accounts which they had controlled all along.

Mr Khassenov was persuaded to transfer funds into the account by means of an elaborate trick. He attended a meeting at what he thought were the offices of SCB in Hong Kong to open a bank account, and at which he signed account opening forms. This meeting was completely false. These were not the offices of SCB and the persons he met were not employees of SCB. In fact, a bank account had already been opened in the name of William Le some days earlier using a false passport and a false EDF utility bill for a non-existent address in Oxford. Mr Khassenov returned to Kazakhstan where he logged into an online banking portal (later discovered to be a fake SCB website) using a fake banking verification device which had arrived by DHL. Thinking he was in control of the account, monies were transferred to it.

Andrey Kulich provided Mr Khassenov with an array of false paperwork, designed to make him believe that Andrey Kulich was setting up companies for him in England and Hong Kong, as he had promised. This included false letters and documents from Companies House, the Financial Services Authority, the Foreign and Commonwealth Office and the Hong Kong Inland Revenue Department.

After the funds were paid in, the fraudsters immediately diverted the money into other accounts in early 2009. At this point Mr Kulich, assisted by others, perpetrated a further scam designed to make Mr Khassenov believe that the funds were still in the account but had been frozen due to an investigation by the Hong Kong authorities. Over a period of months, emails and forged documents purporting to be from the Hong Kong authorities were again sent to Mr Khassenov designed to delay, or prevent the detection of the criminality that had taken place. The fraud was uncovered when Mr Khassenov travelled to Hong Kong in late August 2009, only to discover that a bank account with SCB did exist, but he was not the account holder.

After discovering the fraud, Mr Khassenov implored Andrey Kulich to help in recovering the stolen monies. This was to no avail, save for Andrey Kulich offering his services to help locate the stolen funds for a fee.

In 2014, Mr Khassenov instructed specialist firm Edmonds Marshall McMahon to investigate and commence a private prosecution after the Hong Kong Police curtailed their investigation and UK police declined to investigate, citing a lack of cooperation from the Hong Kong Police. Edmonds Marshall McMahon together with BGP Global Services undertook a significant investigation to obtain the necessary evidence to bring a private prosecution, which included High Court proceedings in Hong Kong in order to obtain banking evidence from SCB. It also included gathering evidence from a number of sources to demonstrate that Andrey Kulich was a central part of the conspiracy to defraud Mr Khassenov.

During the course of the trial, Andrey Kulich claimed that he knew nothing of the conspiracy to defraud Mr Khassenov and had played no part in it. Mr Kulich claimed that he had been ‘framed’ and that the evidence against him had been completely fabricated, which was why it pointed toward him. Andrey Kulich claimed to have been acting as a financial investigator, gathering intelligence for a Russian State agency, which had led to his involvement with business associates of Mr Khassenov. However, he denied that he had had any contact with Argyn Khassenov until after the fraud had taken place. He denied that he was the sender of various emails designed to deceive Mr Khassenov and to perpetuate the fraud again him. He claimed that these emails had been forged or hacked, despite expert computer evidence to the contrary.

Addressing the jury on behalf of the prosecution, Gideon Cammerman QC stated: “There is one thing that Andrey Kulich and the prosecution agree about, that is that he is not stupid…the strength of the evidence, and nothing else has driven to the fanciful account that he has given…it is the last lie for him to tell.”

In passing a sentence of five years imprisonment, HHJ Laird QC stated: “It was cross-border fraud- indeed an across the world fraud. Bogus bankers and bogus accountants were involved. Numerous documents of an official nature were forged. Companies were set up, as was a bank account. It was truly a well-executed fraud.

The offence falls into the highest category of culpability. There was the sophistication of the planning I have referred to and you played a leading role in what was going on.”