On 5 April, the Anti-Corruption Court was examining the claim for the confiscation of property of illicit origin of the wanted ex-General Prosecutor Gevorg Kostanyan, his wife Lilit Kostanyan, Arman Galstyan and Ara Kostanyan.

The Department for Confiscation of Property of Illicit Origin of the General Prosecutor’s Office, requires confiscation of:

• One apartment in Yerevan, two private houses in Tsaghkadzor and Jrvezh communities of Kotayk region, and in case of impossibility, their average market value, which is 327 million 200 thousand AMD,
• 173 million 947 thousand 38 AMD as the balance of received illicit income,
• 276 million 193 thousand 454 AMD, which is not justified by the legal income of the person, has an illicit origin, was transferred to a bona fide acquirer or cannot be identified and confiscated.

Lily Drmeyan

According to Iravaban.net, the presiding Judge Lili Drmeyan, did not allow the session to be videotaped, as Varazdat Asatryan, the representative of Gevorg Kostanyan, objected. In addition, one of Ara Kostanyan’s representatives, Smbat Minasyan, was not allowed carry out representation. The power of attorney submitted by the lawyer stated that the latter can provide representation in all courts, including first instance, appeal and cassation: “According to the court you do not currently have the authority to represent the interests of Ara Kostanyan in the Anti-Corruption Court, with this power of attorney.”

The lawyer said that he will present a new power of attorney during the next session, and until then he will sit in the hall. Then Varazdat Asatryan requested to hold the court session behind closed doors. In accordance with the requirements of the Civil Procedure Code, the issue of examining the case or a part of it behind closed doors is resolved behind closed doors. About 15 minutes later, media representatives were informed that the session is still being held open, and the court’s decision will be sent to the parties later.

The representative of Gevorg Kostanyan referred to the protection of the private life of the trial participants, as well as trade secrets.

Then, Nelli Ter-Torosyan, Prosecutor of the Department for Confiscation of Property of Illicit Origin

Nelly Ter-Torosyan

of the General Prosecutor’s Office, briefly presented the basis and subject of the lawsuit, noting that she has a motion to change them. Varazdat Asatryan insisted that the prosecutor submit the claim in full, as he did not have access to the case materials. The court asked the prosecutor to submit the statement of claim to the court in its entirety, except for not reading the information containing the alleged trade secret.

According to the prosecutor, the department started the study of Gevorg Kostanyan’s property in October 2020. The study period has been defined since 1996. “According to the decision of the court, it was allowed to receive confidential information of Gevorg Kostanyan and the persons related to him.”

According to the previous decisions of the court, means of preliminary securing of the claim were applied, Gevorg Kostanyan and his related persons were prohibited from carrying out any operation with the apartment in Komitas avenue, real estate in Tsaghkadzor, and a ban was imposed in the amount of 520 million 55 thousand AMD.

“The data obtained during the study prove that Gevorg Kostanyan and his family members spent at least 368 million 706 thousand AMD, which already exceeds their legal incomes. The expenses incurred for the properties acquired by Gevorg Kostanyan or with his means and for him are not included in the mentioned expenses, which were separately referred to in the claim,” the prosecutor noted and continued.

The total amount of legal income (that is, salary, alienation of real estate and vehicles, interest received from invested deposits, loan) during the period under study, made 262 million 963 thousand AMD. Meanwhile, the expenses amounted to 631 million 670 thousand AMD, that is, the negative difference is 368 million 706 thousand AMD. “There has already been a discrepancy between the legal income-expenditure ratios. Moreover, these expenses do not include expenses for property acquisitions.”

The prosecutor reported that in 1996, Gevorg Kostanyan bought real estate in Tsaghkadzor for AMD 60,000, on which a detached house was built in 1999 (308.74 square meters). In 2003, he bought a plot of land for 243 thousand AMD, which was connected to the territory of the monastery. According to the Prosecutor’s Office, his income was 2 million 324 thousand AMD in the years 1995-2003, while the total cost of construction works for the construction of the private house could be from 82 million 500 thousand AMD to 100 million 880 thousand AMD, the average of which is 91 million 690 thousand AMD. “Thus, there is an obvious inconsistency of the legal income-acquisition ratio.” In 2007, the mentioned real estate was transferred free of charge to Gevorg Kostanyan’s nephew, Ara Kostanyan.

The information about the deposits was not disclosed at the court session.

In 2012, a Toyota Land Cruiser Prado car was registered in the name of Gevorg Kostanyan, the average customs value of which was 4 million 252 thousand AMD, the legal funds at the time of its acquisition were 3 million 833 thousand AMD. “The mentioned car was sold in the same year for 10 AMD, that is, at a significantly lower price than the market price. According to the expert’s conclusion, as of June 2012, the average market value of the car was 9 million 675 thousand AMD. Gevorg Kostanyan sold it to Garik Petrosyan, who later alienated it. The Prosecutor’s Office demands confiscation of 10 percent of the current market value of 7 million 800 thousand AMD, i.e. 780 thousand AMD.

After the publication of the mentioned data, Varazdat Asatryan stated in the court that it is not clear to him which part of the information the plaintiff is reducing. “Apparently, information containing commercial secrets is presented, but the information about bank deposits is not mentioned. What is the logic here? Both are confidential information protected by law in the same domain. It is not the case that simple, ordinary mortals are aware of the range in which the essential terms of the contract were built.”

The lawyer also mentioned that the publication of such information can form a certain position among the parties and mass media representatives. The latter again proposed to hold the session behind closed doors, because “it is not understandable for him by half-presenting the info”.

The prosecutor countered, stating that the published information is not a trade secret; it is a purchase and sale transaction between 2 individuals. The prosecutor also mentioned that on 31 October, 2012 Lilit Kostanyan bought a Lexus GS300 car for 6 million AMD, which was transferred to Gevorg Kostanyan on the same day under a donation agreement. “The car is illicit.”

In addition, in 2012, Lilit Kostanyan bought a Land Cruiser 200 car, which, according to the Prosecutor’s Office, is completely illicit. He later sold it for 27 million AMD.

“As a result of the study, it was found that Harutyun Manucharyan, who is Gevorg Kostanyan’s fellow student and former assistant, bought a Mercedes-Benz G 55 AMG car in 2013 for 18 million 500 thousand AMD, which was alienated to Lilit Kostanyan under a donation agreement the next day. Then Lilit Kostanyan returned the car to Harutyun Manucharyan with a donation agreement, after which the latter sold it to the former senior assistant of Gevorg Kostanyan, Tigran Khechoyan. In 2014, Khechoyan transferred the mentioned car to Gevorg Kostanyan’s son, Samvel Kostanyan, who later sold it for 30 million AMD, according to a donation agreement, Nelly Ter-Torosyan said, adding that the real beneficiary of the transactions is Gevorg Kostanyan, who controlled them from the very eginning.

The Prosecutor’s Office also found out that the Kostanyans’ driver, Martin Badalyan, made deposits and received interest. According to the plaintiff, the latter did not have enough income to attract deposits, and the dates of attracting deposits coincide with the dates of Gevorg Kostanyan’s tenure. The competent body believes that it was Gevorg Kostanyan who was their real beneficiary.

In 2016, Gevorg Kostanyan sold the right to rent real estate on Zakyan Street to his driver for 1 million AMD, after which the latter was sold to Martin Badalyan for 2 million 400 thousand AMD. Then Kostanyans’ driver sold the mentioned real estate for 38 million 400 thousand AMD. “The competent authority has a reasonable doubt that the real beneficiary of those transactions was Gevorg Kostanyan from the beginning and it was considered to belong to him.”

The prosecutor also mentioned that transfers were made to the Republic of Greece, without revealing other details.

According to the documents, Gevorg Kostanyan and Lilit Kostanyan were divorced on 9 October, 2018, but the data obtained by the Prosecutor’s Office, according to the case materials, indicate that their divorce is of a formal nature.

“It turned out that Gevorg and Lilit Kostanyan crossed the RA border many times at the same time and in the same direction. In addition, the latter are still registered at the same address. It is no coincidence that Lilit Kostanyan made the relevant transfers abroad after the divorce. The above proves that through divorce an attempt was made to hide the fact of running a joint economy and the real beneficiary of money transfers aimed at the acquisition of properties. The real beneficiary was Gevorg Kostanyan,” the prosecutor noted, adding that the data obtained in the criminal case also testify to the formal nature of the divorce registration.

Nelly Ter-Torosyan presented some immovable and movable properties in court, which were considered legal.

Further, Varazdat Asatryan presented his objections in the court, stating that the claim is groundless and

Varazdat Asatryan

subject to rejection. According to him, the Prosecutor’s Office is not a proper plaintiff in this case, and the investigation is illegal, it was carried out in violation of the law. In addition, according to the lawyer, the claim of the plaintiff that the persons related to Gevorg Kostanyan did not have other legal incomes does not face reality. “The attached materials, which have become available to us, speak about the opposite. The latter had sufficient resources, which was not properly assessed. Moreover, the process of its assessment is confusing to us. There is a differentiated approach based on the status of the plaintiff, which is unacceptable for us.”

According to the lawyer, the calculations made by the Department for Confiscation of Property of Illicit Origin of the General Prosecutor’s Office lack credibility and cannot be used as the basis of the lawsuit. “…And the basis of the lawsuit is built entirely on those calculations, therefore, the documentation, in that sense, is missing.”

According to Varazdat Asatryan, the evidence presented in the case has a problem in the context of relevance and admissibility. He declared in court that he considers all the evidence unreliable and controversial. “The legal judgments outlined in the lawsuit and the regulations of the law are not consistent. On the other hand, the protection of the plaintiff’s interests in this case.”

In addition, Gevorg Kostanyan’s representative mentioned that the competent body qualified the properties that are legal according to the law as properties of illicit origin.

“Properties that do not belong to Kostanyan were attributed to him, and the judgments of “real beneficiary” regarding them are not consistent with the law. The plaintiff did not present the relevant evidence that would testify about the real beneficiaries of the registered owners of the property,” Varazdat Asatryan noted, adding that the submitted claim is baseless and subject to rejection.

The lawyer told the court that there are many questions regarding the subject and basis of the claim, suggested to postpone the session, to discuss the petition regarding the change of the basis and subject of the claimant’s claim during the next court session.

The judge satisfied the motion presented by Varazdat Asatryan and postponed the court session.

Yevgenya Hambardzumyan