Bogus Deals Involving Russian Property: Did a Berlin Dentist Swindle Moscow Out of Millions? – DER SPIEGEL International Edition

[M] Ole Schleef / DER SPIEGEL: Paul Glaser / picture alliance / ZB; Kay Nietfeld / picture alliance / dpa; DER SPIEGEL (3)
At first, it had all seemed like a lucrative deal. Real estate investor Sascha Klupp and his business partners bought four plots of land from the Russian government in Berlin’s emerging Karlshorst district – a 17,000 square-meter (4.2-acre) section of the old airfield, as well as three dilapidated residential buildings where Soviet officers once lived.
The investors paid a total of 13.5 million euros, a seemingly reasonable price in the overheated Berlin real estate market, especially given that the airfield, part of which had been declared an historic monument, still offered plenty of space for new, high-quality buildings.
The article you are reading originally appeared in German in issue 20/2022 (May 13th, 2022) of DER SPIEGEL.
But the dream was shattered on March 18. When Klupp tried to step onto his newly acquired property, two Russian Embassy secretaries confronted him and refused to vacate the field. They claimed that Moscow had never sold the plots of land. Berlin police had to be dispatched to calm tempers. Klupp filed a criminal complaint, as did the Russian Embassy, both for fraud.
But who deceived whom?
Since then, a criminal case has been unfolding in the German capital city that has reached the highest levels of politics. In addition to calling in the Public Prosecutor’s Office, the Russian Embassy also asked the German Foreign Ministry for assistance. It soon emerged that even more properties owned by the Russian government were on the sales list without Moscow’s knowledge, even including parts of the embassy complex on Berlin’s grand Unter den Linden boulevard.
Diplomats as well as investigators and intelligence officials are puzzling over what exactly happened. Did corrupt Russian officials sell off old Soviet real estate to enrich themselves? Was the Russian Federation possibly the victim of a Hollywood-esque secret agent conspiracy? Or is it just a particularly brazen case of fraud?
A team of DER SPIEGEL reporters spoke with numerous people involved in the case in recent weeks, including investigators and security experts. Together with the Organized Crime and Corruption Reporting Project, DER SPIEGEL journalists sifted through hundreds of pages of sales agreements and purported powers of attorney from the Russian Presidential Administration along with internal chat logs and company documents.
One name makes several appearances in the documents: Jefim B., a 60-year-old dentist from Berlin’s Grunewald district. The dentist, born in Czernowitz in present-day Ukraine, posed as an authorized representative of the Russian government at land registry offices and to real estate agents. He presented professional-looking powers of attorney from Vladimir Putin’s Presidential Administration, including a stamp and coat of arms with a double-headed eagle, to the notary who notarized the sales agreements. He tried to sell some of the real estate to companies owned by his sons.
Whether the man really intended to steal the valuable properties in Germany from Putin or was tricked himself will ultimately have to be clarified by a court. Investigations by the criminal police suggest that the dentist had an intimate relationship with a mysterious woman who allegedly posed as a high-ranking officer with a Russian intelligence agency. She is said to have obtained the supposed Kremlin powers of attorney for B., before directing him to transfer part of the purchase price to a man with an address in Moscow. But where the money actually ended up, a total of around 1.8 million euros, is unclear.
According to the investigation, the alleged spy isn’t even from Russia. Rather, like the dentist Jefim B., she is from Ukraine. And that raises the question of whether political motives may also have played a role in the allegedly fraudulent real estate transactions. Some of the property deals, after all, were first initiated after Putin’s troops invaded Ukraine.
Until now, details of the delicate matter had not been made public. And many of those involved were likely quite pleased about that fact. Jefim B., the dentist to whom the alleged powers of attorney were issued, could face criminal prosecution, while others – including the lawyers, notaries, judges and bankers who waved through the sale of the Russian properties – will face unpleasant questions at the very least.
Jefim B. is a well-known figure in posh parts of western Berlin, where he likes to walk his dogs among the mansions. He leads an affluent lifestyle, as do many in this part of Berlin. His family lives in a big house with high columns and drives expensive cars.
Jefim B. had been active as an entrepreneur before, albeit in a different field. In the early 1990s, he managed Sesam Spielhallen GmbH before becoming managing director of Vienna Gaststätten- und Video-Betriebs-GmbH in 2004. The purpose of the establishment: “The operation of restaurants, amusement arcades and video equipment with regular film screenings” and “retail sale of sex articles.” In 2007, the enterprising businessman left the industry.
In the ensuing years, B. invested a lot of money in real estate, and his family bought at least four properties in upscale locations. It seemed the dentist had arranged everything for a carefree retirement.
But then he apparently wanted to try to go big. It was a plan that would require plenty of chutzpah, if not a fair amount of criminal energy as well. If the Berlin prosecutors’ suspicions are correct, the dentist and his accomplices wanted to sell Russian real estate in Germany on a grand scale, secretly bypassing the Russian Embassy.
Russia still owns a number of properties in Germany to this day, including old military plots, trade missions and consulates, often in prime locations. Most of that Russian-owned property is in former East Germany, where the Soviet Union maintained numerous military bases and housing complexes after the end of World War II. A small number of those complexes are still owned by the Russian Federation today.
It is unclear how and when the special operation to acquire the Russian properties began. Olena G., the dentist’s mistress, apparently played a key role. The 57-year-old also lives in the Grunewald area of Berlin. She recently wrote in a social media profile: “Love is a state of mind in which people with the strictest rules allow themselves to go crazy!” It was followed by three fire emojis.
In chats, the two addressed each other with terms of endearment and assured one another of their feelings. In between the tender messages, though, business was a primary focus.
At noon on Feb. 22, 2020, the dentist contacted Olena. “Greetings, my love,” he wrote in Russian. In response, she sent him a photo of a power of attorney issued in his name. Above the text were the words: “Moscow, Kremlin.” The document had allegedly been signed by the head of the Presidential Administration. In the short text, the dentist is authorized to sell Russian properties in Berlin.
“You’ll be gobsmacked in a minute,” she wrote. “Look at the data.”
“You’re a gem,” he replied, likely sensing the deal of a lifetime.
According to land registry records, the dentist first approached the relevant district court in Berlin’s Lichtenberg district about the Russian real estate in November 2020. Through a notary, he asked for information about one of the plots of land in Karlshorst, a borough of Lichtenberg. A purported power of attorney from the Russian Presidential Administration was attached. It stated that he was authorized to “request and receive” all documents relating to the properties.
The district court promptly dug up the information he had requested.
There is some evidence to suggest that the dentist really believed he was part of something big. His lover Olena sent him documents that identified her as a colonel in the reserves of the FSB, the Russian domestic intelligence agency. And she also forwarded messages to him that supposedly came from the Kremlin. In the autumn of 2020, he even received an alleged thank you note from the Kremlin “for the tremendous work done,” signed by a purported FSB lieutenant general, who allegedly added that he was looking forward to “further fruitful cooperation.”
The order to discreetly conduct the real estate transactions likewise came from an account called “Moscow, Kremlin,” with a Russian number. “The most important thing is that no information is leaked,” read a chat message that Olena G. forwarded to B. “Money loves silence.”
He answered: “We will try to do everything in silence, but that doesn’t always work.”
In any event, the dentist was fully committed. At the beginning of 2021, he sought contact in the Berlin real estate scene and soon established ties with well-known Berlin property developer Sascha Klupp.
Klupp’s initial reaction was apparently one of skepticism. A major Berlin law firm and a renowned notary were hired to check the powers of attorney. Nobody, though, apparently suspected that the papers from Putin’s Presidential Administration could be forged.
Russian real estate in Berlin’s Karlshorst district (left), Red Army troops withdrawing from Berlin in 1994.
[M] Ole Schleef / DER SPIEGEL: Meißner / ullstein bild; DER SPIEGEL
The sales story also seemed plausible. The properties in Karlshorst have been derelict and falling apart for around 30 years, and many windows of the apartment buildings are boarded up. An issue of the former official Soviet government newspaper Izvestia from 1990 could recently be seen lying on the floor of one of the buildings. The ruins are a constant nuisance for the authorities in Berlin. The fact that the Russians now wanted to get rid of the structurally unsound property at a reasonable price would have made sense.
The deal was finally formalized on Sept. 2, 2021. Real estate developer Klupp and dentist B. appeared before a Berlin notary to sign the purchase agreements for the four properties. On the purchase agreement, behind B.’s name, it was noted that he was acting on the basis of powers of attorney on behalf of the Administrative Office of the President of the Russian Federation. The powers of attorney were attached to the purchase contract, with letterhead and seal.
It did, though, seem unusual that the account into which the purchase price, a total of 13.5 million euros, was to be paid was held at the Deutsche Apotheker- und Ärztebank, a bank whose customers are primarily from the medical professions. And that the account didn’t belong to the Russian state, but rather to a company belonging to the dentist’s family.
The notary seemed a bit uneasy about the whole thing. As a precaution, her law firm apparently filed a money laundering SAR. The notary public nevertheless notarized the purchase contract – with the fees allegedly having amounted to around 130,000 euros. When reached for comment on the multi-million-euro property deal, she demurred, citing a “notarial duty of confidentiality.”
Jefim B., the dentist, also wanted his piece of the pie. He was provided with a 10-percent interest in four special-purpose entities to which the properties were transferred. In other words: The authorized representative of the Russian state sold the real estate to himself, at least partially.
When the purchase agreements were received by the Lichtenberg District Court, a legal officer became skeptical. In addition to having doubts about the powers of attorney, she also raised the question in an internal memo as to whether it might be a prohibited transaction: She noted that B. had acted both as the seller’s representative and as the buyer. Such deals are generally prohibited due to the threat of conflicts of interest.
But the district court judge brushed those concerns aside. A request was made to the notary to submit further documents, but the judge ruled that he did not believe the purchase was a prohibited transaction, since Jefim B. was only the managing director of a non-voting, special purpose entity belonging to the purchaser. But this is demonstratively false. According to the commercial register, he is also indirectly a shareholder, with a 10-percent stake. So why did the judge make the assessment that he made? A court spokesman declined to provide an explanation for the ruling, citing “judicial independence.”
The notary presented further purported Kremlin powers of attorney to the district court and there were no more hurdles standing in the way of the properties’ transfer. On Oct. 15, the judge made a handwritten note that he had “no more concerns.” Klupp and the dentist were registered as owners through the entities they held.
After that deal went so well, the dentist seemed to want even more. DER SPIEGEL found that he sold the next two properties on Feb. 28 with the help of his purported powers of attorney: a lakeside property in Brandenburg for 300,000 euros, where Soviet Embassy staff used to vacation during East German times. Local residents say it is still used by the Russians today. And the former Consulate General of the U.S.S.R. in West Berlin for 1.6 million euros.
This time, however, the buyers were not Klupp and his associates, but rather the dentist’s sons. They acted as shareholders of the firms buying the property, which were represented externally by a suspected straw man. The latter declined to comment when contacted. The defense attorney of Jefim B. also declined to comment. The dentist’s sons also left inquiries from DER SPIEGEL unanswered.
Then, this spring, the family’s real estate fever seemed to grow even more acute. Documents from the Commercial Register and the Land Registry Office suggest that they were now targeting the Russian Embassy complex on Berlin’s Unter den Linden boulevard.
Moscow owns an entire city block not far from the Brandenburg Gate, containing the embassy building, diplomatic apartments and even a tennis court. An administrative building on the eastern edge once housed the state airline Aeroflot, but it has been vacant for some time now.
The prime piece of property, with the address Unter dern Linden 51, was apparently to be transformed into money, as one power of attorney seems to indicate. The sons of the dentist were likely involved in this would-be deal, as well. As with the Brandenburg lakefront property and the West Berlin Consulate General, one of them became a partner in a company that was presumably to act as the buyer. In this case, it carried the name Unter den Linden Living GmbH.
But Moscow caught wind of the whole scam before the sale could be completed. At the beginning of March, the new property management company placed a notice placed at the old airfield in Karlshorst stating that the Russian Federation no longer owned the property.
A copy of the newspaper Izvestia from 1990 in an abandoned apartment building in Berlin’s Karlshorst district
The Russians were alarmed. A diplomat rushed to the Lichtenberg district court and found that the Russian Federation was no longer listed as the owner in the land register. The Embassy immediately took action, filing an official objection and justifying it on the grounds that the powers of attorney used by the seller had been “forged.” The criminal complaint filed by Klupp, who had grown suspicious, is also likely to have averted further damage.
The Russians also called in the German Foreign Ministry. In the finest diplomatic parlance, the embassy assured the Foreign Ministry of its “excellent regard” and was honored to announce that Russia had “not sold” the properties and had “not issued any powers of attorney in this regard.” Russian representatives asked that all measures be taken to “restore” the “integrity” of the properties.
The Foreign Ministry replied just as politely that the diplomatic note had been immediately forwarded to the Berlin authorities. Moreover, they had asked the administration to guarantee the protection of the properties, regardless of the “possibly incorrect land register entry.”
Panic must have broken out in the Russian representation during those weeks in March. Diplomats were already under pressure because of the Russian invasion of Ukraine. Now, there was also the threat of losing property. An unprecedented disgrace. The lines to Moscow were so busy that the real estate scandal even drew the attention of Western intelligence agencies.
The embassy engaged the services of a Leipzig lawyer who sought to reverse the sale of the Karlshorst properties. On March 21, the lawyer turned to the district court in question. The subject line of his letter: “EXTREMELY URGENT!!! FRAUD!!!”
In the letter, the lawyer explained why the deal was invalid. He repeated the accusation that the powers of attorney had been forged and he also lodged serious accusations against the Lichtenberg District Court. The lawyer noted that the court should have realized that an incorrect address had been entered for the responsible Presidential Administration in Moscow. Moreover, it stated that the court had “not applied Russian law correctly.”
But the district court rejected the embassy’s objection at the end of March. It stated that the alleged violations had “not been sufficiently substantiated.” The district judge involved doubted in a memo that the land register was “incorrect at all.” When reached for comment, a court spokesman continues to insist that the necessary documents had been requested from the notary and that, “based on the findings at the time,” there had been no irregularities. In particular, the usual international certifications for documents had also been provided.
At the behest of the Berlin Public Prosecutor’s Office, the properties were nevertheless seized as a precautionary measure – and officials froze most of the purchase price.
Prosecutors quickly recognized the explosive nature of the case and initiated investigations into several suspects. Among them, dentist Jefim B. and his alleged mistress Olena G., the purported colonel in the Russian intelligence service reserves. Prosecutors have accused them of having jointly committed fraud and jointly committed forgery of documents, among other infractions. Like the dentist’s lawyer, Olena G.’s defense attorney also declined to comment.
In the final week of March, Berlin prosecutors had several apartments and offices searched and confiscated numerous documents, mobile phones and storage devices. Concurrently, they also secured land registry files, purchase agreements and bank statements to trace the money from the real estate transactions.
Some the 13.5 million euros paid for the four plots of land in Karlshorst apparently ended up in the hands of a man with a Russian name who allegedly lives in Moscow. In chats, the dentist asked his paramour if he had recorded the man’s data correctly. She corrected the street name. Investigators found that Jefim B.’s real estate company transferred 1.8 million euros to the man.
Investigators do not currently consider it likely that the alleged fraud was politically motivated. At the moment, they say, there are no reliable indications of the involvement of intelligence agencies, and “general criminal motivation” is suspected.
Over the past few weeks, real estate mogul Klupp has been doing everything in his power to try to get his money back. It is said that the dentist has apparently signed a contract promising Klupp a refund of the purchase price and the reimbursement of most incidental expenses. When contacted, Klupp declined to comment on the deal and its consequences, citing the ongoing investigations. The Russian Embassy said it was supporting the prosecution “within the scope of its competencies.” The issue of “restoring the Russian Federation’s ownership rights to the real estate is currently being resolved,” it added.
What is clear is that this story has many losers: a disgraced embassy that allowed real estate worth 13.5 million euros slip through its hands, allegedly defrauded investors and an alleged representative of the Kremlin who was likely just a normal dentist and now has to pay for the damage.
The only thing that hasn’t changed is the state of the Russian properties in Karlshorst. They are still empty. And crumbling.
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Russian real estate in Berlin’s Karlshorst district (left), Red Army troops withdrawing from Berlin in 1994.
[M] Ole Schleef / DER SPIEGEL: Meißner / ullstein bild; DER SPIEGEL
A copy of the newspaper Izvestia from 1990 in an abandoned apartment building in Berlin’s Karlshorst district