Pavel Borulko: A Forgotten Legend of Banking Fraud
Every time an economic crisis hits Ukraine, "defrauded depositors" take to the streets. But who is defrauding them? How many Ukrainians understand that their bank deposits aren't actually "burning up" but are being transferred to someone else's accounts? That the bankruptcies aren't the fault of the crisis, but of their owners—often deliberately driving them to ruin? Moreover, it sometimes happens that the "defrauded depositors" themselves are the perpetrators of fraud and deception. We can learn about the tricks used by fraudulent bankers in the example of Pavel Borulko, the former owner of the European, National Standard, and AvtoKrazBank banks. Skelet.Org believes that he was, while not the biggest, at least the most brazen fraudster!
Pavel Borulko: Mom, Dad, and Uncle Vitalya
Pavel Viktorovich Borulko was born on February 11, 1975, in the town of Konstantinovka (Donetsk Oblast). Back then, in the mid-70s, his family was still quite ordinary: his mother, Alla Pavlovna Shimanskaya, was a school teacher, his father, Viktor Ivanovich Borulko, worked as an engineer in a factory, and Vitaly's uncle, Vitaly Lobas, was just finishing medical school. Nevertheless, his loving parents raised Pavlik like a houseplant, ensuring he had everything he needed. By the late 80s, their financial situation had improved significantly: Viktor Ivanovich became the director of the Konstantinovsky Glass Factory (a Soviet-era company that manufactured both bulletproof glass for aviation and the Kremlin stars), and Vitaly Lobas was appointed chief surgeon at the Donetsk Oblast Health Department. While everyone else in Konstantinovka was scouring empty stores for scarce items, the Borulko family ate sandwiches with raw sausage and watched movies on the big Sony screen on their new sofa. Pasha was beginning to develop a taste for the high life, and all his thoughts revolved around the desire to acquire fashionable clothes, a car, an apartment, a fancier car, and so on.
In 1992, Pavel Borulko graduated from high school with a silver medal. Journalists joked that such a medal was usually awarded to teachers' children. By that time, his father had begun to steadily bankrupt his factory, which was left with virtually no orders, while Vitalya's uncle had risen to the top: he became the head of the Donetsk Oblast Health Department and began building his own pharmacy chain, Donbass Pharmacy Trading LLC. That same year, a new city prosecutor was appointed to Kostiantynivka. Alexander Medvedko, who later became the Prosecutor General of Ukraine and played a very important role in Pavel Borulko's life. That same year, Pasha himself entered the Faculty of Economics and Law at Donetsk State University.
Alexander Medvedko and Viktor Pshonka
INFORMATION ABOUT PSHONKA: Viktor Pshonka: The Rise and Fall of the Prosecutor's Caesar
In the mid-90s, several key events occurred that radically changed Pavlo Borulko's already prosperous life. First, his father completely bankrupted the Konstantinovsky Glass Factory, which was subsequently liquidated. Its main workshops were used to create the Autosteklo Production Association (a manufacturer of mirrors, tempered glass, and glazing for aircraft and locomotives), later transformed into Spetstekhsteklo CJSC. Second, Vitaliy Lobas was appointed deputy to Viktor Yanukovych, the new chairman of the Donetsk Regional State Administration. Third, Pavlo Borulko graduated from university and in 1997 was preparing to work at the Konstantinovsky branch of PrivatBank, and then as a senior manager in the credit department of the Ukrinbank branch. Fourth, during this period, he met his future business partner, Sergei Kirichenko. And fifthly, and this is the most important thing, he married Alla Nikolaevna Kuzmina.
Husbands and wives
Our hero's wife (his first wife) is a rather mysterious figure. The media has referred to her as the niece of prosecutor Alexander Medvedko, and once even suggested a possible relationship with the well-known Donetsk prosecutorial family, the Kuzmins.Read more about them in the article Renat Kuzmin: The Family Business of Outlaw Prosecutors). At the same time, rumors swirling online claimed that her maiden name was Golutvina, and that she took the name Kuzmina in her first, unsuccessful marriage, and that she had no connection to the aforementioned prosecutors' families. However, her colleague and business partner, Dmitry Goncharov, claimed that Alla Nikolaevna is a good, close friend of Alexander Medvedko's wife and daughter.
Well, in any case, Alla Nikolaevna's rise was far too rapid for a simple, unconnected woman. Moreover, in their family business partnership, it was she, not the pampered rich kid Pasha, who played the driving force. And it was she who introduced him to her friend's husband, Dmitry Goncharov.
Moreover, the sources Skelet.Org It was reported that she not only introduced her husband into the financial and banking business of Donbass, but used him as a personal figurehead.
But here's the most interesting thing: this "banking family" of Alla and Pavel Borulko had equally interesting business partners. The names of the married couples Dmitry and Irina Goncharov, the Adamovs, and Eduard and Oksana Prutnik didn't appear in Ukrainian crime reports like the Borulkos—yet they started out together, and ended up together, too.
Dmitry Goncharov
It's difficult to determine who actually got there first, but available information suggests that Eduard Prutnik (born in 1973) fared best in the late 90s. He, in turn, could have been pulled (or pushed) upward by his wife, Oksana Yuryevna (born in 1968), who also worked in the financial sector. It could also have been Vitaliy Lobas, since in 1997, Eduard Prutnik became an advisor to the deputy chairman of the Donetsk Regional State Administration. Be that as it may, in 1999, he held the position of First Deputy Director of the Bank Ukraina Directorate in Donetsk Oblast, and then suddenly went into "private business" for two years. Afterward, he suddenly took off: as we previously reported, he became deputy chairman of Yanukovych's Donetsk Regional State Administration, then served as an advisor to Prime Minister Yanukovych from 2002 to 2005, and after the first Maidan, he became a banker and businessman. Let's add: he also became Sergei Levochkin's godfather (Read more about it in the article Levochkin. The Gray Cardinal and His Sister), who apparently supervised it.
Edward Prutnik
So, it was during Eduard Prutnik's "private business" period from 1999 to 2001 that this remarkable team of family financiers came together. They held various positions at two banks: the Donetsk branch of Slavutich (the future National Standard) and Doncreditinvest (the future European), then known as "Donetsk" conversion centers. These banks differed in their specific operations: Slavutich operated under the "Soviet restaurant" system, while Doncreditinvest operated under the "Soviet grocery store" system. What is this? Let's recall the Soviet past: restaurants and grocery stores were hotbeds of Soviet corruption, embezzlement, and criminal schemes; shady dealings were carried out within their walls daily. Most restaurants were always closed to the general public and served only their "regular customers," while grocery stores, by contrast, were filled with noisy people standing in long lines. Similarly, Slavutich had a minimal number of branches and worked only with its captive enterprises and select VIP clients, while Doncreditinvest had numerous branches and a multitude of clients—yet both provided the same "special services" within the walls of their accounting offices.
It's worth noting that at the same time, Sergei Levochkin was actively developing the Donetsk gang's financial schemes, but his name was associated with other, larger banks that later became the main captive banks of the Donetsk oligarchs. Meanwhile, the Donetsk branch of Slavutich (Sergei Kirichenko was the director, Borulko his deputy) and Doncreditinvest (Goncharov headed the currency department) were quite possibly used specifically as conversion centers: as the saying goes, even if the cops busted them, it wouldn't be a big deal – these banks had significantly less equity capital than the main Donetsk gang banks.
Pavel Borulko. First Blood
However, these banks survived – after all, it was hard to throw away their assets! And so, in 2001-2002, an interesting transformation occurred: Slavutich and Doncreditinvest, as well as several other conversion centers, became the property of their top managers, including the Goncharovs and the Borulkos. But with what money?! And here's the most interesting part: it was Eduard Prutnik, brandishing his pockets full of cash, who offered his managers the chance to buy these banks – and he himself provided the bulk of the necessary funds. Furthermore, with his participation, in 2002, JSCB Donetskchina and CJSC Financial Group Donetskchina were established. The bank's shares were divided among Eduard Prutnik, Pavel Borulko, and Dmitry Goncharov. The owners of the closed joint-stock company are Alla Borulko (owns 32,463%), Irina Goncharova (32,46%), Dmitry Goncharov (16,998%) and Oksana Prutnik (20%).
Furthermore, it was reported that in 2001, Pavel Borulko became a co-owner of the small Vladimirsky Bank (opened in the Lutsk region), and together with Kirichenko, Goncharov, and Pavel Klimets, owner of the Olimp vodka company, they purchased AvtoKrazBank. Pavel Borulko was also involved in several other small banks, along with other members of his close-knit family financial group. But why did they create so many small banks instead of developing the two they already had? That's a very interesting question, with an even more interesting answer! Just think about what professional conversion center managers can excel at? That's right – all sorts of financial schemes. To implement these schemes, they needed additional small banks. Perhaps they were guided by the same considerations as Levochkin: why compromise your own banks when you can use "small-timers"?
But people accustomed to deceiving the state and law-abiding citizens sooner or later begin to deceive each other. On January 14, 2003, Sergei Kirichenko, then chairman of the supervisory board of AvtoKrazBank, was stabbed to death in the entryway of his own building. Law enforcement sources were almost unanimous in blaming Pavlo Borulko, Kirichenko's deputy and co-owner of AvtoKrazBank, for the murder—but this was merely their unofficial opinion. His relatives and his wife's connections prevented them from putting pressure on Borulko. Another unofficial suspect, Eduard Prutnik, was appointed to Kyiv in April of that year as chairman of the supervisory board of Oschadbank. He immediately appointed Pavlo Borulko as his deputy, and Dmytro Goncharov later joined them.
However, a few months later, this triumvirate fell apart amid scandal. Rumors swirled that the quarrel was sparked by Borulko's "rat-mongering," which involved attempting to pocket a portion of the partners' combined profits. Ultimately, they split: JSCB Donetskchina became the sole property of the Prutnik family, and in exchange, Oksana Prutnik resigned as a shareholder in Financial Group Donetskchina CJSC, renamed Financial Group Insurance Traditions CJSC, headed by Alla Borulko. Simultaneously, the shareholder composition of other banks was also reformed: Insurance Traditions became the owner of 19,45% of Doncreditinvest Bank shares—in addition to the Goncharovs and Borulko's direct ownership of 24,3% and 16,36%, respectively—and they also became the main shareholders of Slavutich Bank. Borulko retained AvtoKrazBank and Vladimirsky Bank.
Surprisingly, this separation played a positive role in the subsequent life of Eduard Prutnik. After stepping away from banking, he became a major businessman a few years later, owning UVERCON Investment Limited and MEDOK Group. Meanwhile, the Borulko and Goncharov couples remained financial scammers.
The Big Scams of Pavel Borulko
In the summer of 2005, People's Deputy Igor Pluzhnikov, who owned Intercontinental Bank (IKB), died. As the investigation later revealed, Pluzhnikov, along with one of his business partners, had been engaged in fraudulent schemes, providing loans to fictitious construction sites registered to homeless individuals. The boss died, the scheme collapsed, and the deceased's partners began to swindle, ultimately draining 40% of the bank's capital into the black hole of the construction site scam. The National Bank of Ukraine (NBU) began preparing to install a temporary administration at IKB, when suddenly, representatives of the banks, Borulko and Goncharov, offered to resolve the problem. With the help of the then Deputy Board of the NBU, Anatoly Shapovalov, they carried out a scam, which was later described by investigators from the Economic Crimes Department as follows: “Unidentified individuals, with the aim of not returning loan funds to the ICB accounts and seizing the bank’s assets, organized the conclusion of agreements between September 9 and 18, 2005, to assign the right to claim loan funds in favor of other banking institutions, namely: JSCB Evropeyskiy, LLC CB Slavutich, and LLC CB Vladimirskiy.”
Anatoly Shapovalov
In 2006, Borulko's name surfaced in the kidnapping and murder of Organized Crime Control Colonel Roman Erokhin, who was investigating economic crimes and financial schemes in the Donetsk region. While reporting "the discovery of a major currency conversion center" (and they weren't exactly hiding it), Colonel Erokhin suddenly received a "short-term, preferential cash loan" (!), which Pavel Borulko personally arranged (and guaranteed). But the colonel never had time to use the loan.
That same year, according to journalists, Pavel Borulko managed to swindle Sergei Taruta a little (Read more about it in the article Serhiy Taruta, the secret coordinator of Ukrainian oligarchs). The fact is that Pavel Borulko decided to participate in the parliamentary elections - both as a candidate on the list of the "ECO+25%" party (Taruta's project, financed by the Industrial Union of Donbass), in which Borulko and Goncharov bought themselves seats No. 14 and No. 15, and as the party's "cashier" in the 2006 elections. Well, and, as numerous sources later reported Skelet.OrgDespite the party's complete loss (it gained 0,47%), Pavel Borulko managed to make a good profit from the finances of its election campaign.
In 2007, Pavel Borulko and his AvtoKrazBank carried out a grand scheme to siphon $875 million out of Ukraine by paying promissory notes issued for fictitious goods and services. The scheme involved the British company TRID Financial Ltd. and the American company Hansen Holding LLC, which used AvtoKrazBank's Donetsk branch for its accounts; the Ukrainian brokerage firm Shnipelson & Sons; the Donetsk firm Aurora; and the Zaporizhzhia firm Center. The money was transferred to accounts at the Latvian Baltic International Bank. The banks Evropeysky, National Standard, and Arma also participated in the operation.
This was the last major joint venture between Borulko and the Goncharovs, after which they fell out and began dividing their joint business. Possible reasons cited included Pavel Borulko's attempts to absorb his partner's bank shares. Ultimately, Alla Borulko resigned as head of the board of ZAO FG Insurance Traditions, handing it over to Dmitry Goncharov, who in turn gave up his position as head of the board of Evropeisky Bank to Borulko. The parties simultaneously exchanged shares in a similar fashion. In 2008, the Goncharovs attempted to inflate the market capitalization of Insurance Traditions by two or three times, intending to sell the company. In the process, they made numerous foolish mistakes, which led to the deal, scheduled for July 2008, falling through. A month later, the crisis struck, FG Insurance Traditions buckled under the weight of multimillion-dollar debts, and in the summer of 2009, the state revoked its license. However, there was information that the company's bankruptcy was deliberate, and through it the Goncharovs "saved" and transferred a significant portion of the insurance premiums to offshore accounts.
Pavlo Borulko's "demobilization chord" was the brazen theft of the National Bank through fraudulent refinancing of his banks, European and National Standard. It all began in the spring of 2008, when Borulko, like many other Ukrainian oligarchs, seemingly aware of the approaching crisis, began transferring their banks' funds (depositors' money and refinancing from the NBU) into foreign currency, which they then transferred abroad.
As you may recall, this scheme involved siphoning money from banks by issuing loans to their own businesses, shell companies, or front men. Pavel Borulko employed various methods, including issuing loans to landowners in the Obukhiv district of the Kyiv region. In reality, these plots never existed, and the "landowners" turned out to be homeless and alcoholics. The banks encountered "problem loans" and turned to the NBU for assistance, which, with the onset of the 2008 crisis, began providing generous refinancing. Of course, financial giants like PrivatBank and UkrSibBank were jostling for the money, but Borulko was saved by his long-standing close relationship with NBU Deputy Board Chairman Shapovalov. As a result, "European" and "National Standard" received 430 million hryvnias in refinancing—which was also siphoned off (effectively stolen) through loans issued to shell companies and individuals. As a result, in the summer of 2009, the banks were told their licenses would be revoked.
But Pavlo Borulko didn't stop there! When the NBU began bailing out Ukrainians' deposits through the Deposit Guarantee Fund in 2009, Borulko decided to profit from this too – although this fraud was already blatantly brazen and attracted unnecessary attention. The day before the licenses of European and National Standard banks were revoked, 1339 new deposits were opened there, each for 150,000 hryvnias (the maximum deposit amount guaranteed by the Fund). The accounts were opened in the names of unidentified residents of the Donetsk and Cherkasy regions, who may have simply given the scammers photocopies of their passports. The deposits were real: they were filled with funds from the accounts of other Borulko-owned businesses and businessmen involved in the scam, including the future head of the NBU, Serhiy. But the money from these deposits was immediately transformed into loans and various bills for "services," which were returned to Borulko and Arbuzov. Then, after the closure of the European and National Standard banks, buses of "defrauded depositors" were brought to their doors. The roles were played by homeless people and Moldovan migrant workers: they were paid between 40 and 100 hryvnias for their participation in the spectacle. After making a splash outside the banks' windows, this circus unfolded a few days later outside the NBU and the Deposit Guarantee Fund. Moreover, as was reported, Sergei Arbuzov, for some reason unable to organize a couple of busloads of homeless people, instead brought employees of his Ukrbusinessbank to the protest, claiming to be "trusted representatives of the depositors."
Sergey Arbuzov
Pavel Borulko - Fake Pashka
But while Sergei Arbuzov and Anatoly Shapovalov somehow got away with their involvement in this scam, the authorities quickly became interested in Pavel Borulko – his brazen fraud, which defrauded the state of a total of 620 million hryvnias, had generated too much publicity! And that's not counting the investigation into his possible involvement in the assassination attempt on Dmitry Fomenko, chairman of the supervisory board of Financial Union Bank, in January 2008, which left him injured. Fomenko claimed that the assassination attempt could have been motivated by his conflict with Rodovid Bank co-owner Alexander Shepelev, who in turn was Borulko's business partner. Incidentally, Shepelev was arrested in Budapest in 2013, transferred to Kyiv, held in a pretrial detention center, and then transferred to a hospital, from which he safely escaped on July 6, 2014.
So, Pavel Borulko also had to flee – but for some reason, he chose Belarus as his refuge. Perhaps because it was the only place where neither Western Interpol nor Russian police could reach him – after all, with the rise to power of his Party of Regions friends, Borulko's criminal case hadn't been thrown out. Well, with money, you can get by in any country. And yet, Borulko was a bit nervous in Belarus when, in December 2011, he was arrested by the local KGB (border guards) for his fake passport. But his worries didn't last long: just three weeks later, he was released on bail. Moreover, the Minsk prosecutor's office refused to extradite him to Ukraine, citing Article 19 of the International Convention (which could cause harm to Belarus).
A delighted Borulko, who by then had already divorced his wife Alla (or had been abandoned by her as no longer needed), immediately decided to stage another scam! First, he married 25-year-old Gomel resident Natalia Richkova, after which he seized the opportunity to change his last name. His plan almost finally succeeded after the 2014 Maidan, when Pavel Borulko was preparing to return home to Ukraine. But, realizing that he could be "accepted" there despite the change of power and the resulting political and legal chaos, he decided to run in the parliamentary elections – but under the name Richkov!
Everything would have been fine, since changing one's last name is not prohibited by law, unlike stealing money from depositors and the National Bank. However, Pashka Borulko was once again let down by greed and overconfidence: he had also decided to play it safe and get a Russian passport—under the name Borulko. So, in June 2014, he received a Russian passport as a resident of Feodosia, having registered there on February 20, 2014 (as if he knew about the imminent annexation). This wasn't enough, so in September 2014, he showed up in Kyiv, where he received a Ukrainian passport under the name Richkov. However, he claimed to have been a resident of Feodosia since March 20, 2014. In short, it was a complete lie and a fraud! Incidentally, Pavel Richkov-Borulko lost the election resoundingly. But although there's been virtually no news of him since then, that doesn't mean this great scoundrel won't try to return to his homeland. Or perhaps he's already here, up to his old tricks under a new name?
Sergey Varis, for Skelet.Org
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