Russia’s Krasnoyarsk: foxes in henhouse. Why are scammers defending their victims in court?
Deceived investors found themselves in a strange situation. Local City Hall MPs working for both public and construction sectors are responsible for about 1 000 families not having housing. The same MPs are heads of commissions that are to protect investors from unscrupulous real estate developers. The people have been waiting for their housing for 10 years. Krasnoyarsk Krai Governor Viktor Tolokonsky suggests prohibiting co-funded construction instead of trying to help the victims. Who will be able to break the vicious circle?
Deceived investors have been living in tents in front of their uncompleted apartments in Krasnoyarsk for 2 weeks. They will not leave until they get apartments they paid for, they say. They are even ready to stay there for the winter. They said they would just use potbelly stoves and keep waiting. They do not have money to rent. They have been waiting for their own housing for 10 years.
The kerfuffle around the house at 28a, Gruntovaya began as far back as in 2007. Krasnoyarets Plus offered local residents buying apartments there. More than 130 families paid the whole price for apartments and began preparing to move in. They were supposed to do it a year later. However, the company has never finished building the apartment house. It went bankrupt 6 years after the deadline. The deceived investors tried filing a lawsuit, but they were told they did not stand a chance in court. Permission to implement the construction project issued by the City Hall was illegal, as it turned out.
A criminal case was opened against Krasnoyarets Plus CEO Aleksandr Rikhau for violation of article 159, part 4 (“Swindling in an Especially Large Scale”) of the Russian Criminal Code in 2008. 300 million rubles he collected from the investors disappeared. Court gave the entrepreneur a 1.5-year custodial sentence in 2012. However, the investors did not benefit from it.
The City Hall strongly hinted that the investors should not make noise and should try to sort the issue out in a friendly way if they want to receive their apartments at all. They only had one choice really: sign a contract with a new developer offered by high-ranking public officials. Sibstroyinvest was the developer. The company was going to gain profit from the project by adding 7 storeys to the 10-storey house and adding 2 more 17-storey houses to it. Public officials visiting meetings of the investors promised them the City Hall would help with utility hook-up and landscaping if they agreed to turn the house over to Sibstroyinvest. They also promised to sort out the issue of the illegally granted permission. Long story short, they promised them everything would be okay. Expect for one thing – they would have to pay for their precious apartments again. However, the price was not too bad – ‘only” 10 000 rubles per m2.
Investors live under canvas
Sibstroyinvest CEO Gennady Torgunakov was acted wildly and decisively. He began building even before the investors agreed to cooperate with him. The investors signed a contract with the strongly recommended developer once they saw the construction site was no longer abandoned. They paid for both the extras and expensive glass installation at balconies that came about out of the blue. Aleksey Korovin, one of the deceived investors, calculated he had to pay extra 900 000 rubles for his 60 m2 apartment. That is almost half the initial 2 million ruble price. He paid 247 000 rubles for the glass insulation alone.
The investors drew consolation from hoping to finally move into their new apartments they paid for 2 times. They will be protected by registration of the co-investment contract at the Russian Federal Service for State Registration, Cadastre and Cartography if something goes wrong this time. They insisted on it this time.
Additional apartments built thanks to changes to the projects were successfully sold for 45 000 rubles per m2. The house was to be commissioned in 4th quarter of 2015.
Construction activities drastically slowed down after City Hall elections in 2013. Torgunakov ran as a Russian Patriots party candidate. He promised the deceived investors to go to prison if the house was not completed. He resigned as the Sibstroyinvest CEO soon after he won thanks to the investors’ support. Kirill Chebotaev took over the company.
Torgunakov lost interest in the project. It was suspended in 2012. There were 470 deceived families now instead of 130 in 2007. The investors tried legal leverages they were supposed to have and complained to various public agencies. The only thing they managed to achieve was an inspection by the public agencies overseeing construction activities that discovered a 210 million rubles embezzlement. The police opened a criminal case for violation of Article 201 (Abuse of Authority) of the Code. Sibstroyinvest did not spend the money on construction but gave them to a third party developer, according to investigators. It happened when Torgunakov still was the CEO. The money would have been enough to complete the troublesome house.
The developer offered the investors paying once more to complete the house. 200 million rubles were needed this time. The deceived investors refused to pay for their apartments for the 3rd time.
Krasnoyarsk public officials promised help once more. However, the time went by and the investors realized they had no other choice but set up a tent camp near their long delayed housing. Security did not let them in.
The investors set up the camp on July 11. Aleksey Korovin went on a hunger strike. “Neither Krasnoyarets Plus’s 2007 promises nor Sibstroyinvest’s 2012 ones were fulfilled! Vitaly Bobrov did not keep his promises made when he was responsible for overseeing architecture and urban development in Krasnoyarsk, too. Sibstroyinvest did not help us at all despite City Hall public official recommending us (there is a video) signing a contract with the company. Bobrov said the City Hall supported him and would help with the project implementation and utility hook-up. He said it was possible a land lot would be allocated. Yet not a single promise was kept!” Korovin wrote on his Facebook page explaining why he did that.
The media got interested in the protest; journalists began visiting the camp. Many City Hall MPs and Krasnoyarsk Mayor Edkham Akbulatov bothered to visit the investors soon after.
The Mayor made another promise to sort out the issue, saying the house will be completed and the investors will receive financial support at the expense of the city budget. However, the Mayor refused to answer how and how much money will be allocated since he thought the question was provocative. That is why not even a mayor’s visit was able to ease the tension.
The only one who did not visit the camp in the 10 days was Torgunakov. The MP denies all accusations. He insists his political opponents used the issue against him; they are trying to damage his stellar reputation.
However, even the government thinks otherwise. Torgunakov was expelled from the Krasnoyarsk Krai inter-agency commission for issues of deceived investors to “avoid damage to (the commission’s) reputation”. Krasnoyarsk Krai public officials thought it was not helpful to have an individual involved with growth of the number of deceived investors represent victims. Russian Patriots had gotten rid of the shady MP for “promoting his own interests” a bit earlier. However, the MP was not upset and immediately joined United Russia that was willing to let the story slide. They even encouraged him shortly before Krasnoyarsk mayoral elections. He was appointed the deputy chairman of the permanent commission for urban development policy in June. The deceived investors called this appointment “a kick in the society’s teeth”.
Torgunakov also serves as the coordinator for the City hall working party for support of investors into co-funded construction projects who fell victims to unscrupulous real estate developers despite the investors’ numerous protests. This conflict of interests does not bother the City Hall.
It is worth mentioning that the MP’s income increased several times between 2013 and 2016. Torgunakov’s first tax return stated he earned 60 000 rubles a year and owned only one 121 m2 apartment in Krasnoyarsk. That is it. He was not driving Lexi around Krasnoyarsk like he does now. His 2016 tax return is quite different – it states he earned 9.28 million rubles and owns a land that is more than 1 000 m2 wide, a 486 m2 house, 2 apartments (184 m2 in total), 3 garages (more than 100 m2 in total), and 4 non-residential underground storeys ( 230 m2 in total). Torgunakov also has 3 cars. It is worth mentioning that he bought the majority of his property in 2016. Torgunakov has recently drank one too many drinks and bragged about buying a luxurious cottage in the Udachny elite housing development for 60 million rubles, according to a source in the City hall, as quoted by crimerussia.com.
Where did Torgunakov find money to live such a luxurious life style? The MP has not been involved with the construction business since 2014, according to the man himself. He owns the RIA Express Media Group consisting of the RIA Express web-site, RIA Express newspaper, and franchised Delovoy Kvartal. Krasnoyarsk magazine. How profitable are such media projects in Krasnoyarsk? Well, not really profitable. They are only beneficial in terms of reputation. One could not afford a cottage in Udachny on income form media business.
Torgunakov stated in his tax return that he bought it all using “savings from previous years”. Where did this money come from? The investors deceived by the MP believe prosecutors should have investigated this question a long time ago. The City Hall colleagues of his are unlikely to get to the bottom of it; the majority of them are not exactly scrupulous developers. A Just Russia party MP Yuti Turov who used to be the chairman of the commission for urban development policy and is the Soyuz owner is one such example. The company is de jure owned by his wife.
The latest scandal the company got itself into was concerned with the house at Botanicheskaya Street 20, Krasnoyarsk. Investors should have received their apartments a year ago. However, they still are not able to move into completed apartments they paid for. The house has yet to be commissioned. The delay is due to painting and decorating not being complete in one of its entrances, according to the official explanation. In reality, it is due to a conflict between the developer and the KrasTEK heating supplier. The latter filed a lawsuit demanding Soyuz is declared a bankrupt due to multimillion debts. This means the investors may never move into their apartments because they may be auctioned for debts. Commercial court ruled the apartments are the bankrupt's estate and Soyuz will pay off its debts using them since they were not handed over to the investors. 420 families fell victim to the unscrupulous developer.
That is why the deceived investors held a rally in the downtown on June 26 and tried getting Turov to explain himself by literary charging his office on June 29. All their efforts were in vain, however. The MP hid from voters. When a Vesti. Dejurnaya Chast journalist finally found him Turov asked him while being recorded “are you immortal?”
The city authorities permitted commission the house once the issue was covered by the federal media. The city authorities tried to draw attention off the scandal in such a manner. However, it still was not easy to receive the long-delayed apartments. When on camera for TVK, a local TV channel, on July 18, the investors complained they are being forced to give up the right to receive penalty payments (about 700 000 rubles for each apartment) and sign documents with open date confirming they agree to be reassigned to a new legal entity (Soyuz). Souzh is a “clone” company that has the same managers and phone numbers. Now it is to accumulate debt to resource providers to later bankrupt the new company as well. That is not the 1st time Turov has used this tactic. KrasTEK Deputy CEO Vyacheslav Dolbnya said Turov’s company collected 130 million rubles for paying for heating from residents. Yet, it did not pay the money to the service provider which resulted in accumulation of debts and eventual bankruptcy. “We are talking dozens, hundreds of millions (of rubles) that are being collected and then disappear”, Dolbnya said angrily. “Turov has people in the police and among the Krasnoyarsk Krai administration high-ranking officials who protect him. That is the only explanation for such a behavior throughout all these years”, Krasnoyarsk Civic Chamber chairman Vyacheslav Dyukov said.
Soyuz is going bankrupt, but what about its owner? The MP lives a pretty good life style. The MP earned 2.6 million rubles last year, according to his official tax return. His wife earned even less than that – 1.9 million rubles. Still, the spouses’ property is impressive. The MP owns a 300 m2 house, a 62 m2 apartment, 42 000 m2 of land, 2 cars, and 2 snowmobiles. His wife owns 3 houses (more than 500 m2 in total), 3 garages (336 m2 in total), 65 000 m2 of land, 3 saunas (320 m2 in total), and 2 transformer substations. Turov’s wife also owns some 203 m2 “building”, 2 non-residential buildings (more than 670 m2 in total), and a 528 m2 “base”.
Does Turov care about people who do not have housing because of him? That is unlikely. The Krasnoyarsk Krai would not have been the worst in Russia in terms of issues of deceived investors if the City Hall MPs did at least something. Krasnoyarsk Krai MP Yuri Shvitkin pointed this out during a June regional meeting session attended by the region Governor Viktor Tolokonsky. Tolokonsky answered by saying “there is not much to discuss. Suggest the Russian State Duma prohibits co-funded construction projects so we do not discuss the same ridiculous issue every year”. Tolokonsky does not care investing into co-funded construction projects is the only way to get their own housing for many people.
The court believes that Anzhela Maria Tsapok could have made the money to buy the house and the expensive car by legal means, since she owned a firm. The court still refused to lift the attachment from her 6 million dollars.