Large tax fraud scam surfaces behind a fictitious land deal near Burgas

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Tsvetan Genkov photo Wikipedia

“I still remember the day when Leonid Shopov invited me to do business together. It was some holiday and I was with the cook of our (Bulgarian) embassy in Moscow. We have poured ourselves brandy…,” this is how Tsvetan Genkov, striker of the football club Levski, begins his narrative.

The joint business, however, turned into a nightmare. For four years now, Genkov cannot recover the 200 000 euro against which he received a meadow for 900 levs. The persons, who stung Levski’s central striker, have a close relationship with the Socialist Party (Red) “Gauleiter” and Governor of Burgas, Pavel Marinov. Immune to justice, he personally intervened and intimidated Genkov’s family lawyer.

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The inception happened in Moscow, where Genkov was a footballer in the local Dynamo club and Leonid Shopov was doing business*. Before that, the latter has led the Trade and Economic Affairs Office in the Embassy. Shopov offered the player to “invest” 200 000 euro in land along the “Trakiya” highway, near the Black Sea city of Burgas. The target was two fields of 6 decares each. The properties had only to be listed as plots in regulation and their price would grow headlong – this is how Shopov explained the investment idea. He, himself, has had the opportunity to invest 400 000 euro, but was by 200 000 euro short. This was the “legend” that the diplomatic employee Shopov presented in summary, as business plan, to the naïve, but solvent Bulgarian footballer.

Tsvetan Genkov: “In the initial conversation Shopov said that there were two places (the farming land plots) of 6 decares. He told me: “I have money for one of them. According to him, the two plots were worth 600 000 euro. He said he was short 200 000 euro in order to acquire the second plot. He explained that there was a preliminary agreement for 6 decares and even showed it to me. He said that with 300 000 euro he will buy one of the plots and for the other he had 100 000 euro and if I was to give another 200 000 euro, we would be able to buy jointly the two plots.”

Genkov fell in the trap and authorized Shopov to represent him in the deal. Everything happened while he was in Russia. Based on the preliminary agreement with the owner of the plot, Konstantin Banov Kostov, Genkov made a bank transfer to him for 200 000 euro. Against them, he got a notary deed for a meadow, worth 900 levs

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The footballer realized very soon that Shopov never bought the second meadow; did not invest 400 000 euro and the investment was actually a scam. Four years later, the central striker is still unsuccessfully trying to recover this “investment.” He has sent notary invitations and has alerted the prosecution. But those who have taken the money refuse to return them. They seem to rely on powerful patrons from the currently-ruling Bulgarian Socialist Party (BSP) and have the means to place themselves above any human and legal laws.

The Scheme of the Sting

The tracking of ownership in the Trade Registry reveals how the trap was set for Genkov. On August 14, 2008, Konstantin Kostov bought a meadow with an area of 6 decares from private persons for 1 100 levs. On the same day, he signed a contract for a mortgage with DSK Bank for the amount of 98 500 euro, with the same meadow serving as collateral for the loan. The next day, the mortgage was certified by a notary. How and by whom the amount of the said mortgage, which is well above the market value of the plot, was calculated is another question.

Meanwhile, in Moscow, Shopov persuaded Genkov to buy the meadow. On March 30, 2011, Genkov signed a contract for a money loan with Konstantin Kostov, then wired to him 200 000 euro. An obviously fictitious preliminary contract for the sale of the meadow for 312 500 euro was signed as well, and the remaining money over the 200 000 euro had to be contributed in kind to Leonid Shopov. Obviously, the latter “deal” between the connected parties was made to serve as an alibi for the unreal price of the meadow near Burgas before the victim Genkov and he believed that he had not given his money away.

Immediately after receiving the bank transfer from Genkov, on April 5, 2011, Konstantin Kostov paid off the loan to DSK and the mortgage on the land was deleted.

On May 16, 2011, Kostov and his wife Violeta sold the meadow to Leonid Shopov and Tsvetan Genkov (through his proxy Shopov) for the amount of 900 levs, according to the notary deed!

According Genkov and his lawyer, Shopov actually paid nothing, while Shopov and Kostov shared among themselves the remaining 100 000 euro from Genkov’s money, left after the repayment of the mortgage.

Tax Fraud and Connected Parties

Immediately after returning to Bulgaria, and learning the details of the transaction, Genkov realized that this was a classic swindle. Through his lawyer, he established that Leonid Shopov has not bought the other plot, while the series of transactions and the mortgage on the land, themselves, spoke about a well-planned scam. An independent expert appraisal showed that the real price of farming land in the area of that meadow was at least 5 times lower than the one presented in the preliminary agreement. In order to mislead Genkov to shell his savings for a supposedly “good investment,” he has been earnestly persuaded that the price of the land that will be purchased on his behalf was at least 50 euro per square meter. After the rip-off emerged, he sent invitations to Shopov and Kostov to give him his money back. In subsequent correspondence, Mr. Kostov, without noticing, justifies himself by writing that he did not owe Genkov anything because the land was obtained at market price, while the price in the deed has been simulated. The lawyer wrote quite frankly:

“In the notary deed, the sale price of the property is listed in the amount of the tax assessment in order to pay lower notary fees and local taxes.”

We leave the above to the attention of the National Revenue Agency (NRA), the prosecution and the business police

Kostov also denies signing a loan agreement.

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A significant detail is the fact that the seller, Konstantin Kostov, and Leonid Shopov are connected. Their connection is named Pavel Marinov, a BSP functionary, former candidate for mayor of Burgas and now Governor of Burgas.

Shopov is a business partner of Marinov in the company “International Business Consultancy” JSC since 2001. More recently, he is the manager of the company “Interlog Bulgaria,” an undeclared offshore firm owned by Marinov, for which he has submitted false data in the Trade Registry. (More details about this saga can be found in Bivol HERE).

Marinov is also known as a partner of the main constructor of the Russian “Space Wars” program Sergei Boev, and of other senior Russian persons associated with Russia’s military industry. Bivol also exposed the common ownership between the Burgas governor and the representatives of Russian state interests in the factory for the production of electronic components ZTV, near the town of Kablseshkovo, 20 km from Burgas.

On his part, attorney Konstantin Banov Kostov is authorized to represent “Interlog-Bulgaria” and is in a more-than-close relationship with Marinov. It is known in Burgas that Kostov is the representative of Pavel Marinov’s business, while the latter is holding the office of Regional Governor. Marinov even communicated on behalf of his partner Kostov with Tsvetan Genkov’s attorney and has directly intimidated her with warnings “not to dig in this case.”

“Like a Mutra (Tug)”

Attorney Sylvia Bochukova: By the way, when I went looking for contact with that Konstantin and wanted to explain to him, “Man, I’m aware of what this is about and I am representing Ceco (diminutive from Tsvetan – editor’s note), let’s fix things,” he handed the phone over to Pavel (Pavel Marinov – Governor of Burgas – editor’s note), who, at first, behaved very arrogantly and threatened me: “Be very careful!”

Tsvetan Genkov: He (Pavel Marinov) told her that I should not act like a madman and that I was a sponsor of his mayoral campaign.

Attorney Sylvia Bochukova: I was worried too. He acted just like a thug. I even shared with Miglena (Tsvetan Genkov’s wife) these worries. Then in December 2012, I instigated a meeting with this Konstantin Banov Kostov, the seller, as Leonid was hiding. They asked us to meet near the building of the Parliament. The said Pavel Marinov also came to the meeting.

Tsvetan Genkov: Pavel was candidate for Mayor of Burgas on the BSP ticket.

Attorney Sylvia Bochukova: At the meeting they continued telling me that this plot was a great bargain and that it will go in regulation just now. I told them that the first lie was that the place was almost in regulation, because a road of national importance was to be built there, and that they actually sold him a meadow. I offered them, since the deal was so good, to get back the land against Ceco’s face value and make their profit. Then they began to mumble, and since January 2013, started to hide.

The story of the “sponsorship” of Marinov’s mayoral campaign, and with an amount exceeding the allowable by law, was also initiated by Leonid Shopov

Tsvetan Genkov: … Shopov was so arrogant that he even asked me for another 15 000 euro and I gave them to him, you know? To pay some newspaper for the mayoral campaign. The deal was for 1 month, he repaid them after 6 months… and he gave me back 14 800 euro…”

Currently, the footballer’s claim is wandering between prosecutor’s offices in the country. From Burgas, where it was filed, expectedly, it was transferred to Mezdra because the wire of 200 000 euro was sent from a bank branch there. Prosecutors from Mezdra, on their hand side, transferred the file to Sofia. The refusals of the Burgas Prosecutor’s Office to work on real tipoffs for crimes committed by those in power with influence in the region have been legendary for years.

“I am “crushing” my legs for that money, you know? These were my only savings from the time I played in Moscow. And for him to lie to me and to take it. I have 2 leg surgeries. And the money is mine. I did not steal them,” said Tsvetan Genkov.

Others, however, seem to have set goals to enrich themselves in an unfair and deceptive way, while Genkov was “crushing” his legs in Moscow. Of course, they are relying on solid backing from people in power for impunity for their personal profiteering and tax scams. As documents and facts show, the immune to the laws of Bulgaria “Red” Governor Pavel Marinov stands behind Shopov and Kostov. As early as last year, Bivol proved that he is directly linked to the creation of false documents and declarations before the Trade Registry and the Council of Ministers, but Prosecutors have not charged him with this crime. Prime Minister, Plamen Oresharski, also backed Marinov and refused to remove him from office. According to information from insider Socialist party sources of Bivol, personally BSP leader, Sergey Stanishev, has advocated that Marinov should not be held responsible and he kept the government post, despite Bivol’s revelations of his hidden business ties and his companies that shocked the BSP audience.

On the other hand, current Chief Prosecutor, Sotir Tsatsarov, publicly declared before being elected to the post that tax fraud through real estate transactions with simulated prices was normal practice. Before he was chosen as Chief Prosecutor, Bivol exposed his own spouse, notary Meglena Tsatsarova, in participating in such transactions. The available documents and evidence in Genkov’s case show that the legitimated by the Chief Prosecutor, himself, practice with simulated prices may be a tool to conduct large property dealings.

Bivol also approached for his opinion attorney Kostov, who wished to expose in detail his position in a meeting in person.

Bivol: Have you received a loan of 200 000 euro by Tsvetan Genkov?

Attorney Kostov: So, you see, this was not a loan, this was the price of the real estate property, which was sold to Mr. Genkov and Mr. Shopov as joint ownership. Things are not unambiguous?

Bivol: Is it true that Pavel Marinov, Regional Governor of Burgas, was present at the meeting with Mr. Genkov’s lawyer?

Attorney Kostov: Well …I am telling you again, this is not a matter which is to be discussed over the phone.

Bivol: Meaning this is not to be discussed or he was not present?

Attorney Kostov: At the moment I cannot give unambiguous answers as things are not unambiguous. You obviously know Mr. Genkov’s position and it would be right for me to have the opportunity to present my position.

Bivol: Yes, of course…

Attorney Kostov: Since it is hard to explain all the details over the phone, because I am telling you again, these things are not all black or white.

Bivol: The documents show that this was a simple scam. From an impartial view it emerges that you sold a land plot for 200 000 euro; paid off a mortgage for 100 000 euro, and are ahead with 100 000 euro…

Attorney Kostov: So it seems, but in reality it did not work that way.

Bivol: Do you represent a company jointly owned by Mr. Marinov and Mr. Shopov?

Attorney Kostov: If you are talking about the Trade Registry, yes, I represent them; I have a power of attorney; I have declared acts and I have presented documents.

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