KIEV, Nov. 1 – Swiss authorities have detained the mastermind of Ukraine’s biggest real estate scam, suspected of pocketing 400 million hryvnias in investor money before fleeing the country in early 2006, prosecutors said Thursday.
Oleksandr Volkonskiy, the chief executive of Elita-Tsentr, a real estate developer, was detained in Switzerland on Oct. 15, on an arrest warrant filed by Ukraine through Interpol, the General Prosecutor Office reported.
“The extradition process has begun, according to the report by competent Swiss authorities dated Oct. 30,” the General Prosecutor Office said.
Volkonskiy, also known as Alexander Shakhov, is believed to have masterminded Ukraine’s biggest real estate investment scam by collecting money from 1,500 investors in the construction of a residential complex.
The construction of the residential complex was never started, but Volkonskiy and other top officials at the real estate developer fled the country with UAH400 million, or $80 million, in early 2006.
Volkonskiy, who holds Russian citizenship, is believed to have been hiding out in Russia, before the latest arrest in Switzerland. He was apparently once detained in Moscow, but had been apparently later released by the Russian police.
The extradition of Volkonskiy to Ukraine may have political fallout following media reports that he may have had close relationship with Stepan Chernovetskiy, the son of Kiev Mayor Leonid Chernovetskiy.
The mayor, who owns Pravex Bank, confirmed his son Stepan knew Volkonskiy, but had denied the reports that Stepan might have been involved in the scam.
Meanwhile, the scam already had political repercussions when it had emerged in February 2006 by sending criticism at Oleksandr Omelchenko, then mayor of Kiev, for lack of oversight over real estate developers.
Less than two months later, Omelchenko lost election on March 26, 2006, to Chernovetskiy, who has been using the Elita-Tsentr scam apparently as a showcase of corruption at the Omelchenko office.(nr/ez)