Pyramid shaped houses

The prosecutor's office filed 32 criminal cases against housing developers

Deputy Prosecutor General for the Central Federal District (CFD) Nikolai Savchenko yesterday announced the detention of the former president of the Construction Initiative and Company partnership Nikolai Karasev as part of an ongoing criminal case of defrauding housing co-investors. The prosecutor's office suspects him of having “entered into a preliminary conspiracy with other employees of the partnership and, through deception and abuse of trust, in seven regions of the country, entered into investment contribution agreements with citizens, allegedly for the construction of real estate.” However, according to the investigation, Karasev “deliberately failed to fulfill” his obligations to co-investors. According to Mr. Savchenko, 92 victims have so far been questioned as part of the criminal case, but the investigation does not rule out that the number of victims of the fraudulent actions of Karasev and his company could reach one and a half thousand people.

As Mr. Savchenko said yesterday, the criminal case of the ex-general director of Construction Initiative was combined into one of 18 previously initiated criminal cases in the Moscow, Voronezh, Kursk, Oryol, Smolensk, Tambov and Tula regions. These cases were initiated at the end of last year, when the number of applications from defrauded housing construction investors exceeded a thousand and mass protests took place in the Moscow region. All this time, an investigative team of 21 investigators from the Prosecutor General’s Office and operatives from the Ministry of Internal Affairs in the Central Federal District tried to get on the trail of the main suspect. Karasev was detained on January 10, 2006. According to the Deputy Prosecutor General, the former head of the partnership, who headed it from 2001 to January 2005, was not only detained, but also interrogated. In addition, as Mr. Savchenko emphasized, the issue of choosing a preventive measure for him is being decided.

Also, according to Mr. Savchenko, the investigation has evidence that the leaders of this partnership, through deception and abuse of trust, received significant funds from citizens to invest in the construction of real estate. However, construction was not carried out, and the money was not returned to investors. At the same time, according to the Deputy Prosecutor General, “Karasev deliberately did not fulfill his obligations - he did not organize the preparation of permits and the actual construction of facilities, he did not return funds to investors, which caused the latter damage, according to preliminary estimates, in the amount of more than 90 million rubles.”

Mr. Savchenko noted that the investigation into Karasev’s case continues. Seizures of accounting and financial documents are being carried out, and it is planned to appoint a financial and economic examination in the case in the near future. According to the Deputy Prosecutor General, this is the largest criminal case out of 32 already initiated related to the deception of citizens by investors. “In fact, these are financial pyramids, only with a construction bias. Of course, some kind of activity is being carried out, and some of the citizens, of course, receive apartments, but the majority are left without money and housing,” said Mr. Savchenko. In his opinion, recently citizens have forgotten about the sad experience with financial pyramids and have become “more trusting,” which is exactly what scammers are taking advantage of. “In many cases, the illusion of rapid construction is even created when swindlers dig a foundation pit for a house supposedly under construction,” said the deputy prosecutor general.

Mr. Savchenko also mentioned that in December 2005, the first verdict had already been rendered in one of the similar criminal cases. The Golovinsky Court of Moscow sentenced the former head of the Forbes construction company, Ms. Teteneva, to four years in prison. Two more criminal cases are pending in the courts. At the same time, the Deputy Prosecutor General noted that the main task of the investigative authorities now is “to take all necessary measures in a timely manner and achieve compensation for damage to all victims.”

Ekaterina KARACHEVA