Events

Imperial Russia’s Criminal ‘Upperworld:’ Credit Fraud and the Limitations of Respectability

April 09, 2012 // 12:00pm1:00pm

Social, cultural, and legal factors of Imperial Russian society enabled swindlers with intelligence and social standing to convince their victims to “part with their money,” argued Sergei Antonov, Adjunct Assistant Professor of History, Baruch College, CUNY at a 9 April 2012 Kennan Institute lecture . Antonov discussed white-collar crime in Imperial Russia before and after Alexander II’s judicial reform of 1864, provided two examples of typical credit scams, and explained the legal mechanisms that enabled fraud as well as exposed it.

Antonov observed that previous scholarship commonly assessed Russia’s pre-1864 legal institutions as dysfunctional and the legal culture as generally peripheral to Russian life.Citing his own research, Antonov argued that prior to and after the 1864 reform, Russian law played a central role in “property ownership, control, and disposition, as well as various social and kinship relationships and structures.”

Antonov focused on the upper level stratum of crime in the tsarist legal system, such as property crimes involving merchants, noblemen, and other well-off individuals. Crimes like fraud, forgery, and embezzlement frequently involved podlog, or the forgery of official or private documents admissible in the court of law, and were an unavoidable aspect of the culture of debt in Russian society at the time.

This culture of borrowing and lending, according to Antonov, persisted due to deflationary government policies and the irregular nature of seasonal income largely based on agriculture. Russian state policies before the 1860s also prevented the development of big banks, thereby forcing people to turn to their friends, relatives, and private moneylenders to borrow money. This environment enabled corrupt credit intermediaries to implement a variety of scams, including two that Antonov recounted.

The first fraud-related crime case occurred in pre-reform Russia and involved Petr Veselkin—a noble-born clerk in his twenties who worked in the Moscow Office of Crown Lands. Veselkin, along with his wife and a team of two merchants, developed a scheme in which they claimed to represent several prominent (and invented) clients such as “Lieutenant Goncharov” from Riazan’, “Prince Kropotkin” of Vladimir province, and others. After forging powers of attorney and mortgage agreements, which they later registered at the Moscow civil chamber, the scammers persuaded wealthy landowners to purchase loans and invest in the fictional real-estate of their “clients.”

Veselkin’s team was well-known among court personnel in Moscow, which simplified the transactions. “Each member of the scam could vouch for and lend an appearance of respectability to the others, which allowed them to earn the trust of their victims,” explained Antonov. The scheme took advantage of the habitual framework of Russia’s informal culture of debt, allowing Veselkin to successfully execute about ten scams. Although incredibly well-planned, Veselkin’s crimes were finally detected, and after his confession he was sentenced to hard labor in Siberia.

The second example Antonov described occurred in the 1880s and involved the attorney Aleksandr Saltykov, a member of the Moscow Bar Association. Acting alone, Saltykov forged numerous debt documents and mortgages, which he then sold to his clients over the course of many years. After suspicions mounted, Saltykov fled and even faked his suicide but eventually confessed and explained—in typical Victorian-era fashion—that his motive was to save his family from debt and financial ruin. Incredibly, Saltykov was acquitted and the case was moved to the civil court. The civil jury made it possible for the victims to eventually receive restitution, an outcome which would be impossible if Saltykov had been sent to Siberia.

The cases against Saltykov were the result of the innovations in the post-1864 Russian legal system. Unlike the first case which Antonov discussed, after the legal reform of 1864 Russian people had more respect and trust in the new legal professionals, which made Saltykov a more attractive credit broker. The qualities such as honesty, confidentiality, education, and a respected position in court establishment enabled Saltykov to carry on his schemes and remain unchallenged for years.

The system that enabled the crimes of the two presented cases eventually also led to the unmasking of the criminals, said Antonov. In both cases the criminals were respectable members of Russian society and a part of the legal and administrative system. In Veselkin’s case, the pre-reform bureaucratic system was based on reliance on paperwork, which Veselkin was skillful enough to forge, but which also created a paper trail that got his frauds exposed. In Saltykov’s case the new legal system provided his clients with a greater sense of confidence, but in fact was unable to prevent Saltykov’s abuse of this trust. At the same time, Saltykov’s public prominence seems to have brought additional scrutiny and exposed his crimes. Antonov concluded that even as the Russian legal system became more reliable in catching some types of credit scams, it also became vulnerable to new types of white-collar criminals.

 

By Elena Volkava
Blair Ruble, Director, Kennan Institute

The Kennan Institute speaker series is made possible through the generous support of the Title VIII Program of the U.S. Department of State.

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Event Speakers List: 
  • Postdoctoral Fellow, Harriman Insitute, Columbia University
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