Court Fines Bankers Over 5 Billion For Fraud

Reykjavík District Court ordered former Milestone investment bankers to pay a 5.2 billion ISK  fine yesterday and sentenced them to prison for breach of trust, distorting financial statements and cooking the books, reports RÚV.

Brothers Karl and Steingrímur Wernersson, who owned the now-bankrupt investment firm Milestone, as well as Milestone’s former Managing Director, Guðmundur Ólafsson will have to pay over 5 billion in damages for fraudulent activity that took place prior to Iceland’s economic crash in 2008.

In 2005, the brothers Karl and Steingrímur shared ownership of Milestone with their sister Ingunn and agreed to buy out her shares. However, instead of paying for her shares with their own money, they used Milestone funds to buy her out to the tune of 5.2 billion (reflected in the fine issued by the court).

The court ruled that the brothers had made the deal to buy Ingunn’s shares, not the company and therefore the brothers were accountable for the cost, not Milestone.

In addition to this, Karl Wernersson was handed a 3 year prison sentence, his brother Steingrímur got two years and the former managing director Guðmundur three years.