Glasgow & West Scotland

'Drugs and prostitutes' banker George Kalmar jailed

A former executive at global financial services firm Morgan Stanley has been jailed for embezzling almost £400,000 to fund a lavish lifestyle.

George Kalmar, 39, from Glasgow, spent the money on drugs, prostitutes and top restaurants and nightclubs.

He admitted transferring money to dormant accounts then transferring it on to personal and other accounts.

Jailing Kalmar for two years, Sheriff John Baird told him custody was the "only appropriate sentence".

Glasgow Sheriff Court heard how Kalmar began working for the firm in January 2007 in Budapest, but later moved to its Glasgow office.

'Rising star'

He was once described as a brilliant banker and "rising star" within Morgan Stanley.

He gave instructions to junior staff to make payments into dormant accounts which was later transferred into his personal accounts or to accounts of associates.

Procurator fiscal depute Laura Millar said: "Between September 2012 and February 2013 Kalmar used these dormant accounts and a Morgan Stanley account to transfer Morgan Stanley funds totalling £387,891 and $23,500 to a number of different bank accounts - three of his own; one with Lloyd's Bank, which he held jointly with his wife; and two with Citibank, both in his sole name.

"The other accounts to which Kalmar directly transferred funds either belonged to, or were linked to, a number of female associates in London and Albania."

The court heard that staffing issues in 2012 meant that the department was under pressure.

Ms Millar said: "Any input request made by him was unlikely to be questioned or closely scrutinized."

After drawing up the request for the transaction himself, he sent the majority of them to junior analysts for processing - via the internal messaging system, instead of the usual and more traceable email system.

On the one occasion that the instruction was queried, it was referred up the chain to Kalmar who gave the instruction that the transaction should go ahead.

The dormant accounts he selected had little or no activity and were not set up to generate statements.

'Voluntary admissions'

Investigations were made in early 2013 into the activity of the accounts Kalmar was dealing with and in particular single large payments of up to and over £70,000 were questioned.

Payments were then tracked and investigated and, as they were, other transfers made by Kalmar attracted attention.

In March, he was brought back in from annual leave for a meeting and made "full and voluntary admissions".

Ms Millar told the court: "Following the discovery of Kalmar's actions several senior managers who had either authorised or settled the various cash transfers left their employment with the bank."

The court was told that by the time the fraud was discovered Kalmar had spent or transferred most of the money, the majority of it spent on "adult" entertainment and drugs.

Ms Millar added that "female associates" are women who provided the adult entertainment and that some of them are prostitutes.

The court heard that other "sizeable" payments were made to the Tower Bar and Brasserie in London, Nobu Berkley, a top restaurant in the city's Mayfair, and the five-star London Savoy.

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