Owners of Georgia’s once one of the largest real estate developer and construction companies, Center Point Group, which gained notoriety for allegedly duping thousands of its clients, have been charged with large-scale fraud and embezzlement.
Maia Rcheulishvili and her sister Rusudan Kervalishvili, each holding 50% shares of the company, have been charged without being arrested after the interrogation by investigators on July 11. Prosecutors accuse them of skimming off about GEL 11 million.
Kervalishvili was a lawmakers from UNM party and parliament’s vice-speaker in 2008-2012. Although she was holding a high level post in the legislative body, Kervalishvili has never been an active political figure and she completely distanced from politics after serving her four-year term in the Parliament. Maia Rcheulishvili’s husband, Vakhtang Rcheulishvili, was a lawmaker in 1990s and in early 2000s, who quit the politics after the 2003 Rose Revolution; he has been involved in the management of the Center Point Group and more than 50 of its daughter companies, owned directly or indirectly by Kervalishvili and Maia Rcheulishvili.
Up to 6,200 customers of the company complained that that they have been duped in what could have been a pyramid-type scheme. Customers were making down-payments for construction of apartment buildings in which, when and if finished, they would own a flat.
But in 2010 the Center Point Group came on the verge of bankruptcy and announced that it was unable to fulfill its construction obligations before up to 6,200 clients; up to 30 projects were left unfinished.
Clients in one of these 30 projects, known as ‘Tabukashvili 88’ have filed a complaint to the prosecutor’s office based on which the investigation was launched several months ago.
The prosecutor’s office said on July 11 that completion of the project, originally scheduled for 2007, became impossible after the founders of the Center Point Group, Maia Rcheulishvili and Rusudan Kervalishvili, embezzled GEL 11 million through “various illegal schemes.”
Rcheulishvili and Kervalishvili deny charges.
After the Center Point Group announced about being unable to meet its obligations, the company’s management was handed over in September, 2010 to a newly established firm Dexus. The latter has pledged to deliver Center Point Group’s unfulfilled obligations within three years, but for this purpose the managing firm required additional investments and part of it was attracted by offering clients to make additional payments on top of the sum, which they had already paid to the Center Point Group when purchasing yet unbuilt flats. According to Dexus, as of March 2013 it fulfilled obligations before 2,200 clients of the Center Point Group. But the latter canceled management contract with Dexus in March 2013 citing disagreements on how to deliver with obligations before remaining customers.
Also on July 11 the prosecutor’s office said that one of the three co-owners of Dexus, Ivane Tsaguria, was arrested and charged with misspending and providing assistance in fraud. Prosecutor’s office claims that in 2011 Tsaguria helped Rcheulishvili and Kervalishvili to embezzle USD 615,000. He denies charges.