Alleged investment fraudster released pending investigation
A board member detained at the end of May on suspicion of investment fraud has been released. The criminal investigation is ongoing.
Maksim Sorokin, who was board member of Eesti Arengu Hoiu-laenuühistu, a savings and investment cooperative, was: "Released after the initial procedural steps were taken. At present, the prosecutor's office cannot say when we can consider the pre-trial proceedings in the criminal case as having been completed," state prosecutor's office spokesperson Kairi Küngas said.
Sorokin had allegedly issued loans from Eesti Arengu Hoiu-laenuühistu to companies which he was associated with and whose turnover was marginal, while the funds had come from depositors who had been required to waive rights to any control over their deposits, giving Sorokin a free rein to do what he wanted.
Portal Delfi reports (link in Estonian) that Eesti Arengu Hoiu-laenuühistu filed for bankruptcy at Harju County Court on July 6.
Evening paper Õhtuleht (link in Estonian) wrote last week that the bulk of the loans issued by Eesti Arengu Hoiu-laenuühistu in fact were destined for companies associated with Sorokin, whose income was marginal, meaning that essentially millions were lent to companies that did not have any turnover.
Loans to the tune of €14,451,613 were issued in 2019, the last year the company filed a financial report.
Savings and loan cooperatives in similar cases in the past had required their depositors to authorize board members, which means that the depositors give away all rights to say over the use of their money to the cooperative.
In Eesti Arengu Hoiu-laenuühistu's case, the business register (Äriregister) gives Sorokin the right to be the savings and loan cooperative's sole representative in its transactions, while other board members can only represent the cooperative if they do so along with Sorokin.
Eesti Arengu Hoiu-laenuühistu's last annual report was submitted in 2019; at that time, it had 920 members and deposits in excess of €15 million.
The same source (link in Estonian) states that Eesti Arengu Hoiu-laenuühistu has no debts owing to the Tax and Customs Board (MTA); in Q2 of 2019 it paid state taxes of €52,549 and labor taxes of €52,686, and had one registered employee.
The company's total assets were €17,193,057, total liabilities were €15,649,247 and the cooperative had €1,543,810 in equity.
It had offered customers an interest of 7.5 percent per annum in 2019.
The loans, of over €14 million for 2019, were issued to private clients, principally for real estate-related developments and to a lesser extent for the purpose of corporate investment. The loans were secured by real estate mortgages.
As noted Sorokin allegedly had a hand in more-or-less all aspects of the deals.
Sorokin, 39, was detained by the Central Criminal Police on May 23, on suspicion of providing false information in order to obtain investments.
The criminal proceedings which should follow the end of the pre-trial investigation are likely to establish whether a member of the board had made incorrect statements to the public on behalf of the cooperative regarding the submission of annual reports, the depositors' AGM, and the guarantees and management of deposits and investments, Kairi Küngas said.
Based on evidence gathered, there are reasons to suspect that a member of the cooperative's board has abused their position by intentionally providing false information, and harmed the savings and loan cooperative and thus the interests of the depositors.
These are preliminary suspicion which may be subject to amendment in the course of proceedings, Küngas added.
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Editor: Andrew Whyte