MOSCOW, May 19 (RIA Novosti) - A Moscow court on Tuesday sentenced the head of a construction firm to 10 years in prison for defrauding home buyers of a total of $38 million in the Russian capital alone.
Investigators said after the sentencing that Nikolai Karasyov's Sotsialnaya Initsiativa company is the subject of another probe into suspected scams totaling $6.8 billion.
The court said Sotsialnaya Initsiativa had accepted full or partial payments for apartments, mainly affordable homes in the suburbs, amid brisk demand driven by a recent economic boom, but never built houses or sold them to multiple buyers.
The firm's three other employees, including Karasyov's wife and daughter, were also found guilty of fraud and received prison terms from seven to eight years.
"The suspects had had no intention of fulfilling their obligations to their customers," the court's verdict said.
The presiding judge said they had had no permits for a series of construction projects and had deliberately misinformed customers on that score. He described the firm as a "financial pyramid."
Defense lawyers acting for Karasyov, who was arrested in January 2006, said they would appeal against the ruling in the next 10 days.
"Our clients were found guilty unlawfully, as they had spent investors' money on the firm's needs, not on their personal needs," lawyer Andrei Semirazum said, adding some 18 billion rubles ($565 million) on the company's bank accounts had been frozen and bankruptcy proceedings launched against the firm.
The chief suspect's daughter, Larisa Moshkina, said earlier on Tuesday that the company would have completed the housing projects or returned money to customers if Karasyov had not been arrested.
"It was like a forcible takeover of the company," Moshkina said. "We have not plundered the money, it is all on the firm's accounts or invested in land plots."
Investigators said the firm had defrauded more than 790 people of around 1.2 billion rubles in Moscow alone.
Russia's main investigative body said later on Tuesday that the probe into Sotsialnaya Initsiativa's dealings in provinces was continuing as about 9,000 lawsuits claiming a total of $6.8 billion in damage had been lodged against the firm elsewhere in Russia.
"More than 8,680 people in 13 Russian regions have been acknowledged as victims [of the firm's fraudulent actions], and the damage caused by the firm has been estimated at $6.8 billion," Investigation Committee spokesman Vladimir Markin said.
Thousands of people lost their life savings in housing scams in Russia in the past decade. People defrauded by construction firms have rallied demanding the authorities reform real estate transactions to curb fraud and deceit. Defrauded customers have rarely won their cases in Russian courts.
