Center Point Journal
18 July, 2013
Center Point Journal
Founders of the biggest Georgian developer company Center Point Group as well as Dexsus company, managing the assets of Center Point, allegedly practiced financial pyramid scheme for years. Now they face penalties amounting to GEL 250 thousand and GEL 100 thousand, respectively. Whether or not they will face imprisonment, will be decided at the court session, scheduled by September 4, 2013.
Maia Rcheulishvili and Rusudan Kirvalishvili, sisters and founders of Center Point Group (CPG), once the largest Georgian developer company,
which mishandled USD 310 million, leaving 6 200 families without promised apartments or reimbursement through an intricate financial pyramid largely known as Ponzi scheme, and Ivane Tsaguria, founder of Dexsus company, managing the Center Point assets since 2010, are called to responsibility. Prosecutor’s Office, which investiged claims of victims cheated by CPG, came to the conclusion that the money paid by the members of ‘Partnership Tabukashvili 88’ [a CPG multi-storied apartment house construction project] were embezzled by Rechulishvili, Kirvalishvili and Tsagura, who consequently were accused of cheating on July 11, 2013. Both Rechulishvili and Kirvalishvili, who is also a former Vice-Speaker of Georgian Parliament and member of the ex-ruling National Movement party, through sundry illegal schemes pocketed more than GEL 11 million, denoted for the construction of ‘Tabukashvili 88’ project and failed to complete the house. CPG- and Dexus-owned real estate was arrested. Prosecutor’s Office demanded to impose GEL one million worth penalties on Rcheulishvili and Kirvalishvili apiece and put Tsaguria under custody; however, on July 13, 2013 civil court imposed GEL 250-250 thousand on the sisters and GEL 100 thousand on Tsaguria who was released from the imprisonment. Rechaulishvili promised to spend the penalty on implementation of unfulfilled obligations in order to be squared with the customers.
Transparency International Georgia (TI Georgia) informed the public past year about the fact that financial machinations were lurking behind CPG”s activities; however no action was taken until the power shift. CPG is a conglomeration of 70 companies, 55 Limited Liability Companies (LLC) and 15 individual partnerships, that according to TI Georgia research, applied a vast “Ponzi” scheme - after being unable to construct houses for the initial investors the CPG started using the funds of subsequent investors to pay for the ever-increasing deficit. Soon, however, the company became unable to meet its obligations to the subsequent investors but also failed to find new investors to allow the continued use of their funds. As a result, 30 construction projects were suspended, nearly 6200 families (approximately 30 thousand individuals) left without promised apartments and around GEL 310 million embezzled totally. As a way-out, in September of 2010 Center Point hired Dexus as a manager company for the heavily indebted assets to solve the crisis and construct all halted projects until September of 2013. However, Dexus rather aggravated than solved the problem extorting more money from the clients while completely ignoring their voice of protest. As a result, out of 30 projects only 8 projects are completed and 13 put under construction at the moment.
However in March of 2013, after Prosecutors’ Office started investigation of CPG victims claims, Rcheulishvili regained its property back from Dexsus by 10 months earlier the contract expire date and pledged to handle with all halted projects construction completely in a year and half. For premature call off the contract Center Point paid USD 1.5 million to Dexsus in compensation. Now Rcheulishvili’s spouse Vakhtang Rcheulishvili assures it was previous authority that forced Center Point to hand its assets to Dexus so as to channel financing for National Movement.
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