Alexander Kostyukov, a well-known swindler in the sector of public utilities, withdrew billions of rubles from the housing and utilities system of the Samara region
“A caste of house eaters”
The scandal associated with a group of companies belonging to Alexander Kostyukov and his partner Evgeny Kruglov, notorious swindlers in the housing and utilities sector, is rapidly gaining momentum in Samara. Housing Utility System, controlled by Kostyukov, owed more than 10 million rubles ($136,701) to the tax authorities. The tax inspectorate of the Soviet district of Samara and the Federal Tax Service of Russia filed his company for bankruptcy. In fact, his modest sum of money was the last straw that exhausted the local fiscal authorities’ patience. Today, it is difficult to calculate how many hundreds of millions rubles were withdrawn from just one city, Samara, by the companies of Kostyukov and Kruglov in three years. Let's give just one (!) example for one year. During 2017, 125,000,000 rubles ($1.71 mln) were transferred in almost equal payments to the accounts of DomCom Invest and Povalikhinsky, the firms controlled by Kostyukov, under very strange contracts with the Samara-based ZhKS company within two weeks. Note that it was just one company. Kostyukov and Kruglov had five or six similar companies in Samara, as we will see. That is, in theory, they could easily withdraw up to 1 bln (!) rubles ($13.67 mln) in one year using this scheme. Once again, from one city within one year. They “worked” for three full years in Samara. Three billion rubles is quite a lucrative deal for the duet. This profit was obtained just from one region out of at least 10 in the country.
These gentlemen left dirty traces all over the country. They profited handsomely in the Nizhny Novgorod region and also outside Moscow where Kostyukov and his partner were involved in the boiler plant fraud in the township of Selyatino. This is an energy complex that supplies heat and water to tens of thousands of people living in the village and a number of settlements. Kostyukov’s firms “made” hundreds of millions of rubles on this boiler house. He used a whole array of criminal methods, from forged signatures, backdated documents and fictitious persons to outright corruption.
These schemes involved many legal entities and time-tested partners. Infrakhit Montazh, Atlantika, Arktika City, Regional Energy Management Company, Covilet, NTEC, and DomCom Invest are just some of Kostyukov’s companies through which more than 300 million rubles ($4.1 mln) were withdrawn within one (!) scheme. Notably, it was budget money.
And what happened in Nizhny Novgorod? In April 2017, the same DomCom Invest bought controlling stakes in 4 major house management companies almost for nothing, as the local mass media wrote in surprise. After that, they started withdrawing money collected from the tenants. This prompted Vadim Bulavinov, a former mayor who later won a seat in the Russian parliament to initiate a prosecutor's check in October 2017. At that time, he also got support of Minister of Energy and Housing and Public Utilities of the Nizhny Novgorod region Andrei Chertkov.
“They [DomCom Invest – ed. note] bought [shares] for 800 million rubles or a billion. In my opinion, now almost all the money was withdrawn from management companies over six months. They have made no running repair or anything. That is why we are appealing to the prosecutor's office,” he said then. As a result, two criminal cases were initiated simultaneously against five management companies controlled by Kostyukov in 2019.
Today, it is safe to say that Kostyukov has formed the so called “caste of house eaters” together with his partner Kruglov and a group of individuals. They run an array of affiliated organizations to use them in criminal schemes. Like spider mites in our gardens, they bite into regional housing and utilities companies to draw out their money. To put it simply, they withdraw money to the accounts of firms under their control. The houses were not maintained or repaired and the service lines and buildings were becoming increasingly rundown. So far, this “duo” has managed to escape with a whole skin. They say that the sneaky “financier” Kostyukov is being protected by some people in power. In particular, Sergei Gordeev, head of the PIK company, Mikhail Abyzov, a former member of the Russian government who is currently under investigation, and several other officials and businessmen from the “inner circle.”
The Samara endgame
Simultaneously with Nizhny Novgorod, Kostyukov and Kruglov began to squeeze dry the city of Samara. Either the people there turned out to be more naïve or the local government was more corrupt, but the profits received by the “duo” were amazing.
Kostyukov’s firms appeared in Samara in 2016. They promised the local government to invest billions of rubles in the Samara public utilities. In a year, Kostyukov gained control over five to six companies (different sources give different figures) that managed about 2,500 residential buildings, or 20 % of all the housing stock of the city. To put it simply, the head of DomCom Invest becomes the biggest player in this segment of the local housing and utilities market.
Kostyukov’s companies included Kommunalnik, Housing and Communal System, UZHK, Kuibyshevsky housing administration and others. Subsequently, they found themselves to be the epicenter of the Samara scandal.
Of course, the “leading Russian company in the sector of housing and utility services” failed to manage Samara houses. Management was not part of Kostyukov's plans. In less than a year, the organizations and their heads were flooded with numerous complaints from tenants about non-fulfillment of obligations. In addition, there were claims from the regional prosecutor's office, which found facts of withdrawal of funds from accounts of the Samara management companies to other regions. More and more scandals occurred.
At the beginning of 2018, a new owner, namely Housing and Communal System (HCS), reportedly withdrew money from management companies. In 2017, this company transferred 190 million rubles ($2.6 mln) to third parties. This aggravated the position of utility companies in relation to the tenants of the serviced houses and resource supplying organizations, to which the company owed 649 million rubles ($8.87 mln.) The Kuibyshevsky housing administration also had big debts. During the year this organization owed more than 267 million rubles ($3.65 mln) to suppliers and contractors.
By April 1, 2020, the size of indebtedness of the Housing and Utility System company to the T Plus energy company was 235.5 million rubles ($3.22 mln). The amount owed by Kommunalnik was 19.7 million rubles ($269,301), and the debt of UZHKK was more than 34 million rubles ($464,783).
Did Kostyukov's businesses become insolvent because tenants did not pay? Not at all. According to SPARK’s data, the income of his management companies grew every year or, at least kept at the same level. In 2017 and 2018, for example. ZhKS received 1.043 ($14.26 mln) and 2.7 billion rubles ($36.91 mln), respectively. Kommunalnik got 113 ($1.54 mln) and 282 million rubles ($3.85 mln.) UZHKK earned 115 ($1.57 mln) and 250 million ($3.42 mln) rubles. Kuibyshev received 25 billion rubles ($341.75 mln) in 2017. The data for 2018 was not disclosed, but we assume that there might be a significant increase. We wonder where the money is.
It is clear that it was not spent on maintenance or repairs of the housing stock, nor was it used to pay suppliers. In winter and spring the roofs leaked, and in some places even caved in under the weight of the snow. Samara residents expressed discontent. In January and February 2018 alone, 2,346 appeals were received by the State Housing Inspectorate of the Samara region about the substandard work of the management companies controlled by the Moscow investor. Most of the complaints, namely, 1,792, were submitted against ZhKS. At that time, the organization managed 902 houses. People began filing complaints not only to the Housing Inspectorate but also to law enforcement agencies, insisting on conducting inspections of Kostyukov and Kruglov firms on suspicion of fraud. However, Interior Ministry bodies refused to initiate criminal proceedings. Perhaps, interested parties at higher levels simply ordered them to leave Kostyukov alone.
Nothing changed in the spring and summer of 2018. The ZhKS, Kommunalnik and Kuybyshevsky management companies did not carry out current repairs. The funds of the owners, paid for future repairs, were regularly sent to Moscow. According to unofficial data, the sum reached about 3 billion rubles ($41 mln) over two years.
Apparently, at some point, the Samara businessmen in the housing and utilities segment stopped suffering from the provincial inferiority complex and decided to challenge the firms from Moscow in the market of residential buildings management. In late 2017, several top managers of Housing and Utilities System, one of the largest management companies in Samara, quit their jobs. Two of them, Konstantin Maevsky and Sergey Fomichev, established their own management companies, Renaissance, Master Kom, and Megapolis Komfort. They began to actively compete with ZhKS, as they got several dozen apartment buildings from Housing and Utilities System. Independent companies such as Remstroyservis owned by Victor Belov and the Association of managing companies belonging to Pavel Gordievsky were also competing against Kostukov's firms.
Of course, personal ambitions and local patriotism were not the only (or the main) stimulus for this process. Tens of thousands of Samara residents were dissatisfied with the state of disrepair into which their houses had fallen through the efforts of the Kostyukov’s “efficient managers.” Forty-eight houses declined the services of ZhKS as a result, and by the end of 2019, it had lost about 300-400 apartment buildings. Whereas the firm controlled about 1100-1200 houses when it was acquired by the Kostyukov-Kruglov team, the number of the apartment buildings decreased to 700-800 during the above period.
The partners’ scheme was about to fail. The tested plan to come to a region, take big bites out of the budget for two or three years, then declare the companies bankrupt and disappear could not work out. All the more so, local firms with the new administration gave Kostyukov and Kruglov a run for their money.
Then, as Samara sources say, Kostyukov began banal gang-ups.
Surveillance, threats, arson
Further events ran in the spirit of bad “cops” shows. In 2017-2018, Viktor Belov’s Remstroyservis became one of the real competitors of Kostyukov and Kruglov. One day, Belov realized that he was under surveillance. He was being watched in the car near his office. He was followed along his route. The professional surveillance could lead one to believe that corrupt police officers took part in this “operation.”
The story then saw some tough action. Unidentified criminals rammed their car into Belov's Land Cruiser as he was driving out of his company premises. A few days later, they blocked his car in the yard near the house where he lived, came to the car, threatened him with a gun, and offered to “come out to talk.”
In February 2018, Belov's car, which was parked outside his house, was set on fire. The act of intimidation was repeated exactly one year later. In 2019, his new car in the yard was torched again. Belov reported the arson to the police. The investigators found the perpetrators and even the one who threatened him with a gun in 2017. After that, the investigation was deliberately delayed. Police stopped the gun threat probe altogether because of the statute of limitations, though the crime was committed in August 2017, and the perpetrators of the crime had not been caught until the spring (around March-April) of 2019.
In all his statements, Belov cited arguments proving his suspicions that Kostyukov was behind all of the above-mentioned attacks. However, the local law enforcement showed an enviable collective blindness and forgetfulness, not bothering to check his facts and arguments. This again makes us believe that they were told not to take action by high-ranking officials who covered up Alexander Kostyukov and his partner Evgeny Kruglov.
New scheme, old designs
Let's return to Kostyukov's companies, hit by a wave of criticism and lawsuits. Their owner decided to cover up his “Moscow” trace and ushered in new persons who allegedly had nothing to do with him or his businesses.
DomCom Invest’s Samara-based companies were transferred under control of a certain Sergei Vorobyov. On September 27, 2019, he took over as CEO of ZhKS. Prior to that, according to the SPARK-Interfax system, he had not held any executive positions. Vorobyov took over from the Penza-based Zhilservis and on October 15, he headed two more companies in Samara, Kommunalnik and ZHKK. Previously, these organizations were also managed by Zhilservis, controlled by DomCom Invest
Soon after the reshuffle, the tax service blocked the Zhilservis accounts due to non-payment of taxes. To be more precise, debts on mandatory deductions exceeded 40 million rubles ($546,803). On October 16, 2019, Sergei Vorobyov was appointed CEO of Kuibyshevsky housing administration. On April 6, 2020, Vorobyov became the sole owner of Housing and Utilities System and Kommunalnik. As a result, the Moscow-based DomCom Invest quickly disappeared from the list of owners of Samara-based companies. Some of them either began liquidating their assets, or creditors filed them for bankruptcy. The pyramid of ownership of management companies in Samara that had been built by Kostyukov and Kruglov collapsed.
The management company ZhKS can serve as an example of shell firm. In 2019, the Arbitration Court of the Samara region received a statement of claim to recognize Kostyukov’s firm bankrupt. This is understandable as the scheme of circulation of funds in the Samara branch of his empire could turn all these firms bankrupt at once at a critical moment. Kostyukov used the intermediary payment agent Tsentr-SBK-Samara to amass payments from tenants. It is likely that the intermediary was also used to launder this money. As a result, hundreds of court rulings to recover money from the management companies could not be fulfilled as the accounts of Kostyukov's management companies were empty. All the money ended up at Tsentr-SBK-Samara.
What is going to happen now? Will Kostyukov and Kruglov leave Samara?
To our thinking, it is not likely. They would just change their tactics and form of presence using an even more elaborate scheme. The old discredited shell companies like ZhKS are replaced by new firms of the duo such as Kvazar. It is noteworthy that it much harder now to find information about their founders or affiliation. Kostyukov and Kruglov spared no effort to change tactics. These companies, headed by natives of Samara seem to be “local,” but the register of shareholders is in Moscow. The “caste of house eaters” will milk Samara dry.
At the same time, companies that are allegedly independent, but in fact associated with the DomCom-Invest owner, report Samara business people to law enforcement and supervisory authorities. Similar techniques from the arsenal of corporate wars of the early 1990s are used, for example, by Tatiana Vepretskaya, CEO of the self-regulating organization National Housing Congress and advisor to Kostyukov. She forwarded inquiries to police and regional prosecutors who are now checking DomCom-Invest’s rivals in Samara and asking tenants to describe the meetings over the change of the management company. By the way, the isolation in connection with the COVID-19 pandemic did not stop their joint activity. Kostyukov and his partner Kruglov were among the speakers of the online conference ‘Housing and utilities during the COVID-19 pandemic,’ which was held by the Ministry of Construction on June 10. In 2018, Ms. Vepretskaya, visited Samara precisely as an advisor to A. Kostyukov. She promised the local housing and utilities sector billions of rubles in investments “from Kostyukov.” Instead, the sector suffered multi-billion losses. The question is whether Vepretskaya will be held responsible for deliberately misleading thousands of people.
There is one more thing. An interesting report appeared on the popular Samara resource Zasekin.ru at the very end of July. As is customary in these situations, certain “patrons” asked through an intermediary the well-known local blogger Tahir Baibekov to remove critical posts about the activities of utilities companies associated with DomCom and Kostyukov from his Twitter. Of course, they would pay for this. Perhaps, it was a traditional “cleansing” of the information field in an attempt to save the tainted reputation of Kostyukov and his firms. Or maybe it was a banal attempt to “frame” the inconvenient blogger in extortion case. If the plan had worked out, there could have been a buzz about the “corrupt” opponents of the innocent swindlers from the capital.
In any case, Kostyukov's team, which has been thriving on the Samara region, is unlikely to leave it until everyone, from officials to courts, police and prosecutors, demonstrates their principled position. Is it possible? Alas, there is no positive answer to the question.
“The billions that circulate in this market make it possible to buy all the responsible municipal or regional officials so that they will have no desire to interfere and engage in reverse redistribution of the market,” Mikhail Matveyev, a politician from Samara, historian and deputy of the Governor's Duma, said in comments on this situation. In addition, Kostyukov and Kruglov have similar businesses and money withdrawal schemes in other regions of Russia.
Studying the management style of this duet, we found traces of their presence in Volgograd, Kemerovo, Kirov, Krasnoyarsk, Naberezhnye Chelny, Nizhny Novgorod, Penza, Tyumen, Sergiev Posad, Chelyabinsk, Tula, and Novosibirsk. However, the Kostyukov-Kruglov tandem has lately become particularly active in the Moscow and Smolensk regions.
We will scrutinize the work of management companies in each of these cities which are somehow affiliated with these individuals and have a poor financial history. To put it simply, we will conduct a separate investigation in each of the above-mentioned cities. As a result, there will be a series of detailed materials about the problems in one of the most important sectors of the Russian economy. We will disclose names and figures because, as you know, every crime has a name, last name, and position.
Well, we’ll make our next stop in the town of Zhukovsky, Moscow Region. To be continued…