Copycat "Belvedere" Scam

Court, Trustee and Company of #Who = Organized Crime Group

How to seize a private business worth over 30 million euro
Екип на Биволъ

Investors from Israel have decided to build a luxury residential gated community near Sofia. For this purpose, they have established and registered under Bulgarian law the firm “Vitosha Resort 2000” Ltd., through which to finance their business project. Construction began ten years ago and ten wonderful buildings that form the eponymous community sprung at the foot of the Vitosha Mountain. By design, the houses there meet all modern requirements for comfort, functionality and quality of life. The construction was entrusted to the Bulgarian construction company “Ultrastroy” Ltd..

The Israeli and the Bulgarian sides have signed a contract to build the community and the construction has been carried out in ten stages. After the completion of each stage, the two sides have exchanged protocols for their work, and then the work has been paid for. Therefore, at the time, the partnership seemed almost seamless, until the very completion of the project, despite some controversy.  Payments from “Vitosha” to “Ultrastroy”  have exceeded 12 million levs. Mutual claims of the parties have been resolved at the time they have arisen, while the construction works have continued.

The completion of the final 10th stage and the payment for it have been the only thing remaining in order to conclude the contracted deal. In construction, this is also the stage of approving the overall structure of the facility, finalizing and filing the entire construction documentation. This is the stage requiring the resolving of any contentions accumulated in the work process; the establishment of a special protocol for the approval of the overall construction and settling any possible additional amounts payable by the developer. The investors have asked to have certain defects removed by the construction company before the final payment. The builders, however, have refused to sign the final protocol and to hand in all construction documents. Instead, they have willfully sent Bills of Quantities based on a unilaterally defined built-up area and have presented a claim for about 1.4 million euro.

In early 2012, the construction company left the site unfinished and removed all its equipment from it. With this, the last due installment remained unpaid because, for the investors, the contract was not fulfilled.

 A scheme to steal others’ business

The subsequent actions by the construction company are strongly reminiscent of the internationally-known “Belvedere” scandal.  The latter revealed how judicial tricks and scams can be used to seize a lucrative business of foreign investors. These tricks involve private companies, official legislative institutions and acting magistrates, teamed up with political cover-up, thugs and corrupt backstage circles. The attempt to seize the French company “Belvedere” through deliberate bankruptcy cases, prompted the-then Ambassador of France to Bulgaria, Xavier Laper de Cabanne, to actively intervene. Criminal proceedings were launched against Judge Rumyana Chenalova and she was suspended from her magistrate post in the Sofia City Court (SCC). Such has been the approach to the Israeli businessmen, who brave and naif enough to invest  in Bulgaria, unaware of the warm connections between the mafia and the judiciary.

Business dispute and mafia finale

Instead of having the dispute legally resolved under the law on business claims, set out in the Civil Procedural Code, the builder has initiated low-cost bankruptcy proceedings against the investor “Vitosha Resort 2000” Ltd..

In the course of the proceedings, in analyzing the financial standing of the company, the Court has required expert reports. Their conclusion is that the accounting records of the company show that is overindebted?! This has given grounds to the Court to agree to the bankruptcy claim. Such practice is not unprecedented in Bulgaria. Ironically, the builder’s receivables are not accounted for, either in its own bookkeeping or in the one of the contracting authority “Vitosha Resort 2000” Ltd. It established that “Vitosha Resort 2000” Ltd. has no liabilities to financial institutions and the entire capital of the company is actually provided by the partners in it – the Israeli investors. The judges’ panel has further failed to take into account the fact that this was actually a textbook case. The company has been established to build a gated community and to restore its investment and generate profit after it is completed. Naturally and undisputedly, it is overindebted to its owners from day one and until the sale and renting of the housing there really begin.

Undisputed is also the fact that all investments were made by the shareholders – foreign nationals. The main grounds of the Court to declare overindebtness are namely the company’s commitment to shareholders to make a profit on their investment.

With absolutely no logic, however, the judges have refused to recognize officially the obligations/debts of “Vitosha Mountain Resort” to the investors and the owners. They have recognized only the debt to the Bulgarian company-contractor.

By using the low-cost legal proceedings – only 250 levs, the builder has not only made the investor compliant to the appointed trustee, but has also prevented “Vitosha Resort 2000” Ltd. from logging a penalties counterclaim over construction defects and delays. The Trade Law does not provide for such a claim, as opposed to the Civil Procedural Code.

Legal oxymorons

The judge, who has allowed the case and has presided over it, is Hayguhi Bodikyan, whose name became known in the case “Belvedere”. In the course of the proceedings, judges and trustees have been replaced and dismissed; nevertheless their actions have remained irrevocable. Namely, trustee Veselin Vangelov has reported that there was a danger of property plundering (for the most part real estate with 24 hour security and video surveillance), and on these grounds has requested  to declare the debtor insolvent. Judge Bodikyan has seen this report as a sound reason to declare the company insolvent, preventing any possibility of recovery. Moreover, the temporary trustee has immediately unlisted the company under VAT, which has inflicted serious additional damage to the investors and problems with the Bulgarian National Revenue Agency.

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Subsequently, judge Bodikyan has withdrawn herself from the case and has been replaced by judge Nelly Aleksieva. She has also endorsed the trustee’s lists of creditors in the bankruptcy case. Trustee Vangelov was removed at the beginning of 2015, after the investors protested in writing before the Ministry of Justice, but his actions and the ones of the judge remained irrevocable. The Sofia Administrative Court (SAS) has confirmed the decision on “Vitosha Mountain Resort’s” overindebtness, even though the company remains indebted only to “Ultrastroy” and has been paying regularly and in full, prior to the last stage, without any indications of inability to pay the last installment as well.

The Sofia Appellate Court has, however, reversed the insolvency decision.

“Vitosha Mountain Resort” has then deposited a recovery plan within the legally required deadline. In such cases, the Court should adopt short statutory deadlines (20 days).Instead, Nelly Aleksieva kept bouncing the ball endlessly and announced her decision almost a year later. But then, the Sofia Court of Cassations (SCC) again declared the company insolvent. The one-year delay rendered the recovery plan irrelevant.

Moreover, the SCC has also failed to take into account the type of the company or the nature of its assets – namely, an investment program and real estate. This way, the well-meaning foreign investors have ended in the absurd predicament of having to present, both, proof of funds they have themselves invested in the company and proof that the contractor should not receive any further payment due to failing to fulfill its obligations under a contract.

The entire case has become even more complicated after “Ultrastroy” assigned part of the contested amount to “Blick Trade” Ltd. The new player, suspected of connectivity, has constituted itself as a third party, i.e. the enabler, as this has additionally slowed the proceedings, turning them into an endless vicious circle of repeated expert reports.

Links from the chain Peevski-Staliyski-Borisov

The assignment of part of the receivables of “Ultrastroy” to “Blick Trade” sheds light on extremely intriguing dependencies and, consequently, on the whole scheme to seize the business of the Israeli investors. “Blick Trade” Ltd. was established in 2007 with retail as its main activity. Nothing would draw attention to the company in question if her manager was not the legendary Iraqi, Samir Iskander Francis (or Ibrahim). The Iraqi national has been known in Bulgaria since the dark mafia times in the 1990s, when he was a partner of current Prime Minister Boyko Borisov in their joint company “Prayhim”.  A classified report of the National Security Services (NSS) reveals that the case with the capture and killing of Bulgarian truck drivers in Iraq is actually connected to outstanding disputes over money from the traffic of amphetamines and Borisov had a direct bearing on the mafia affair, but as Chief Secretary of the Ministry of the Interior at that time.

Samir has become later a business partner of the infamous gangster Zlatomir “the Beret” Ivanov. In March and August 1998, Samir Francis registered two companies with Zlatomir Ivanov: “New Bingo” and “Z.E.S.” in which he was manager.

Bivol has described these connections in its investigation “Boyko Borisov – from the town of Cherven Bryag to Iraq”. The scandalous facts are confirmed in a classified diplomatic cable of the former US Ambassador in Sofia, John Beyrle, (here) and the Congressional Quarterly article on the criminal past of Bulgarai’s current Prime Minister, exposed by US journalist Jeff Stein (interview with Stein here).

People from powerful mafia circles tell stories about Borisov’s exceptional trust in Samir, who has been his own personal driver and bodyguard before the start of Borisov’s political career. After Boyko Borisov became Mayor of Sofia, the business of the Iraqi as property developer flourished. He has earned millions through his companies “Stroy Commerce 2004” and “Bildko”, beneficiaries of scandalous swaps orchestrated by the Sofia Municipality.

Apparently, Samir Iskander is an important person because he has also become son-in-law of General Stoimen Stoimenov, a former adviser on security issues of outgoing President Rosen Plevneliev. Stoimenov was exposed as a former functionary of the Central Committee of the Communist Party.  The general’s son-in-law and former partner of Borisov and Zlatomir Ivanov has also had a joint company “SIT-1” Ltd. with notorious Russian mobster Konstantin Tziganov, head of the criminal group Uralmash, who in 2011 was expelled from Bulgaria for being a threat to national security. The Russian further became famous for his photos with Boyko Borisov at a charity match. He is also a major investor in the construction business in Bulgaria.  With his partner Panpurin, Tziganov has built the concrete jungle “Croco Beach” which destroyed forever the nature of one of the most beautiful bays on the Bulgarian coast – the famous Popski beach near the town of Tsarevo. The complex remains unfinished and has turned into ugly symbol of the mafia rule in Bulgaria.

The hot link between “Ultrastroy” and “Blick Trade” leads to one of the above mentioned companies from the construction business of Samir – “Bildko”, which actually owns “Blick” through the company “Vipbuild 2006”. The assets have been transferred to an old partner of Samir – Stoycho Petrunov Georgiev. Accidentally or not, Petrunov is also listed as the CEO of “Rubin Trading”. The company is the current the owner of the glass factory “Rubin”, which was privatized by the close to Prime Minister Borisov, Alexander Staliyski. This privatization is also one of the topics of the conversations from the scandalous “Yaneva Gate” recordings (here). The companies “Rubin Trading” and “Capital Investment” are behind the backstage privatization of the glass factory through loan assignments worth 30 million. However, there is no proven origin of these companies’ deposits in the now-collapsed Corporate Commercial Bank (CCB). There is evidence that the owners of these two companies are dummies and Alexander Staliyski is the real one. The associated with the controversial lawmaker and media mogul Delian Peevski offshore company “Sibole Bulgaria” is also involved in the scheme. The former CCB majority shareholder, Tsvetan Vasilev, who is in exile in Belgrade, recently said in a TV interview that Staliyski was the person collecting the racket for Prime Minister Borisov.

“Rubin Trading” and “Capital Investment” have the same address in the Bulgarian capital Sofia. This address also houses the company “Big Tree Project Developments”. Its book of shareholders includes the names and the signatures of Alexander Staliyski, his girlfriend Violeta Sechkova and “Capital Investment”.

акции Сечкова-Сталийски

All this gives reasonable grounds to believe that those who have set in motion the scheme to seize the Israeli business are at least associated with current rule of the country and its backstage clans.

#Who is behind “Ultrastroy”?

“Ultrastroy” Ltd. is a trading company whose sole owner is Ivan Borisov Borisov, 43. He is not a well-known person, except that the company is a partner and subcontractor of the associated with Delian Peevski “Vodstroy 98 ” in a number of major public procurement tenders (photo). “Ultrastroy” has worked on the reconstruction of the south wing of the National Museum, known as the Bulgarian Louvre. The company has also been a subcontractor in the repairs at the Sofia Central Railway Station, where the main consortium was between “GLAVBOLGARSTROY“ and “Vodstroy 98”.

Outside public procurement, “Ultrastroy” is working on reconstruction and repairs of private sites related to tobacco manufacturer Bulgartabac Holding, such as the factory for for cigarette filters. In a series of changes in ownership, the factory has passed from the State-owned “Bulgartabac” to offshore companies associated with local high-ranking politicians. In several investigations, Bivol has explored evidence of corruption behind the privatization of Bulgartabac pointing again to Boyko Borisov and Peevski.

“Ultrastroy” is indebted with 8 million levs to the Bulgarian Development Bank (BDB), but, at the same time, it has been chosen to build the Bank’s new headquarters.

Meanwhile, owner Ivan Borisov Borisov says that it is a pure coincidence that one of the managers of “Vodstroy 98” has the same name as him.

Борисов - Борисов

Ултра и Водстрой

The position of Ivan Borisov

Mr. Borisov told our reporter off-the-record that he had been deceived by the Israelis as early as the time of signing the contract. The tenth building has been much larger than the other buildings, therefore, in the final stage Borisov has asked for the additional 1 million levs, which, according to him, has caused the conflict. The construction has been frozen, and then renewed again in 2011.

He has also sent a written statement in which he explains that he feared that “Vitosha Mountain Resort” might transfer everything to another firm of the same investors “Rami Investment “as it was indebted to it. According to Ivan Borisov, there has been a real danger of “Vitosha Mountain Resort” being drained and then he would not have been able to receive the money owed to him. Despite the serious disagreements, the works have been going on fine until the final stage when he has decided to sue for insolvency. This has been the cheapest approach as he could not find the money for the State court fee. Ivan Borisov explains the missing invoice for the money he is claiming as overdue to him with the fact that the Israelis have not accepted his work, therefore he did not invoice the amount.

The Bulgarian contractor sees the whole story around “Vitosha Mountain Resort” as a big scam. He says that the investors have seriously inflated the actual construction costs, but nobody wants to investigate their actions on grounds of money laundering.

Ivan Borisov explains the serious involvement of “Ultrastroy” in some of the biggest construction public procurement projects in the country and in private construction as normal business and declines further comment. He says he did not know Delyan Peevski.

Trustee Christina Stamova

Currently, “Vitosha Resort 2000” is managed by a trustee, appointed by the Court. The trustee is tasked to sell the company’s assets and to settle alleged and accepted by the Court claims. The objections of the investors have not been accepted and have been a priori considered untenable. The liabilities to “Ultrastroy”, with accrued interest, have already grown to over 3.5 million levs. The trustee, who has full rights to sell the luxury community at the foot of Vitosha Mountain, is Christina Stamova.

This is the same Christina Stamova who was appointed conservator of CCB after its closure and after it was placed under special supervision before declaring it bankrupt. This is the time when the infamous loan assignments begun, causing the melting of much of the outstanding loans. This enabled certain companies to “clean up” their long indebtedness to CCB and reduce the insolvency mass. The former owner of the Bank, Tsvetan Vasilev, himself, said in TV interviews that the collapse of the lender was staged in typical gangster style through political means.

Christina Stamova has been transferred later as a conservator to the bank “Victoria”, which was acquired by CCB shortly before its collapse. Together with her colleague Bozhidar Arshinkov, Stamova has been accused by employees of the bank of draining it through shell consulting companies and lawyers (see here). There have been protests demanding to replace her. Reports, published later, showed that in six months Stamova and Arshinkov have received a personal remuneration, determined by them, amounting to 165,000 levs.

Christina Stamova has been recommended and has been appointed solely by “Ultrastroy” as a permanent trustee. Judge Nelly Aleksieva has accepted only the proposal sof the plaintiff in the case, because “Ultrastroy” has been acknowledged as the only creditor and the Israelis have not been allowed to vote. Appraisers, who have concluded that the market value of the assets in the luxury community is 520 euros per square meter, have been appointed in a similar manner. This appraisal is drastically lower than the tax one and three times lower than the sale price of properties of this type.

In the first two public sale auction, there have been no serious buyers. Each subsequent auction has reduced by about 20% the initial price, namely 416 euro per square meter.  Logically, there are not many interested buyers because the buildings lack the so-called Act 16 that would allow their use. According to Bivol sources, this has been masterminded in order to lower the price to a symbolic one, to be followed by direct negotiations with the trustee in which one big buyer will pop up and take the entire development at a price that can be seen as a gift.

It is possible that everything described above is a coincidence and the magistrates involved have acted professionally, but the result is there – seizure of a business of well-meaning foreign investors, who wanted to build a development in Bulgaria and who have never breached Bulgarian laws.



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