Victims have secured a review of the case of defrauding equity holders in Sochi.

The Cassation Court upheld the victims' appeals and overturned the decision to dismiss the criminal case regarding fraud involving the funds of equity construction participants in Sochi.

As reported by "Caucasian Knot," in 2019, the chairman of a housing cooperative in Sochi was suspected of defrauding equity construction participants. According to investigators, he knew the building permit had expired, but collected more than 8 million rubles from people to build a house on Bambukova Street.

04:50 12/11/2023

Authorities have counted more than 200 illegal apartment buildings in Kuban

As of early December, 215 buildings were added to the register of illegally constructed apartment buildings in the Krasnodar Territory, more than half of which are in Sochi, local authorities stated.

Sharers of the Sochi housing cooperative "Rus" have secured a review of the case of fraud during the construction of a building on Bambukova Street, the Fourth Cassation Court located in Krasnodar reported, the publication of which was brought to the attention of Sochi1.ru.

According to the case materials, in 2014-2017, the chairman of the board of the housing cooperative "Rus" and his assistant - a member of the board of this housing cooperative - "under Under the guise of reliable developers, they convinced people to invest in the construction of a multi-story building on Bambukova Street, without having either land ownership or a building permit. They collected more than 47 million rubles.

The courts ruled the unfinished building an unauthorized construction.

"To deceive the victims, they created the appearance of legitimacy, signed equity participation agreements with them, and issued receipts for the money. Ultimately, the courts ruled the unfinished building an unauthorized construction and ordered its demolition," according to a publication on the court's website.

A court in Sochi found both men guilty of large-scale fraud and sentenced each to six years in prison. However, the appellate court overturned the verdict and dismissed the criminal case, citing that both defendants had previously been convicted in 2022 "for similar acts, coinciding in content and timing with the crime with which they were charged."

Some of them continued to contribute money even after the court's decision to demolish the building.

The Fourth Cassation Court, reviewing the victims' appeals and the Kuban Prosecutor's submission, found the appellate court's findings to be erroneous.

"In the first case, the defendants stole money from nine victims, and in this case, from an unspecified number of individuals, including 26 specific shareholders who had not previously been named as victims. Some of them continued to contribute money even after the court's decision to demolish the building," the court's press service stated.

The court overturned the appellate ruling. "The case has been sent for a new trial to the Krasnodar Regional Court, but before a different panel," the publication states.

Equity holders: lawyers advise how to avoid fraud

As a reminder, in 2018, shareholders of the Rus Housing Cooperative asked the court to legalize the illegal construction on Bambukova Street, the construction of which stopped at the seventh floor. The plaintiffs believe officials were to blame for the halt.

However, the court disallowed the shareholders' claim. It's common practice in Sochi for developers to first build houses and then try to legalize them through the courts, lawyers said.