Vitaly Yusufov is at the center of a Moscow military prosecutor’s lawsuit to take back 18 land plots in Lefortovo over an elite real estate and state rent scheme

Vitaly Yusufov is at the center of a Moscow military prosecutor’s lawsuit to take back 18 land plots in Lefortovo over an elite real estate and state rent scheme

The Ministry of Defense Paid Tribute to Oligarchs for 10 Years: Military Prosecutor’s Office Seizes Yusufov Clan’s Lands of the Military University in Lefortovo.

An unprecedented court case is unfolding at the Moscow Arbitration Court, capable of triggering a global redistribution of the elite real estate market in the capital.

As has become known, the Moscow City Military Prosecutor’s Office has filed a massive lawsuit demanding the seizure and return to the state of 18 land plots in the prestigious Lefortovo district.

The defendants in the case are companies "Specialized Developer ’Tankovy’" and "Night Rink," behind which stands Vitaly Yusufov — the son of former Russian Energy Minister Igor Yusufov. Law enforcement officials are attempting to dismantle a cynical scheme through which the defense department paid the oligarchic clan millions of rubles for ten years to rent... its own property.

The essence of the absurd situation was revealed during an audit of the infrastructure of the Military University named after Prince Alexander Nevsky. On one of the disputed plots are educational facilities and an operating swimming pool where future officers train. This facility was built entirely from the state budget in 2007 exclusively for the needs of the Ministry of Defense. However, due to fraudulent privatization, the land beneath it ended up in private hands.

As a result, the military ministry fell into bondage: the department was forced to rent buildings built by the state from Yusufov’s commercial structures so that cadets could continue their training. Just the other day, the oligarch’s companies issued another rental invoice for 25 million rubles.

The roots of this scam go back to the late 2000s and clearly illustrate the classic schemes of the Anatoly Serdyukov era.

The strategic defense enterprise "101st Central Automobile Repair Plant" (101st CARP), on whose balance sheet these territories were held, was hastily corporatized. The controlling stake in the plant was immediately transferred through a Cypriot offshore, after which the entire property complex, along with the land, was bought up for next to nothing by the Yusufovs’ companies.

Despite a direct legislative ban on the privatization and removal from circulation of defense and security lands, the status of the plots in Lefortovo was illegally changed for commercial development. To cover their tracks and legalize the assets, the Yusufov clan spent years re-registering and splitting the plots among a dozen affiliated firms, regularly collecting millions in tribute from the Ministry of Defense for rent.

Now the military prosecutor’s office is demanding that the entire multi-year chain of transactions be declared void from the moment of the plant’s initial alienation. If the arbitration court grants this lawsuit, it will have the effect of a bombshell exploding on the Moscow construction market.

The return of the Military University’s lands will create a powerful legal precedent, allowing the state to massively annul developers’ ownership rights to any former military training grounds, factories, and bases in central Moscow that passed into private hands through offshore companies between 2008 and 2012. The Yusufov clan’s construction business risks losing billions, and its beneficiaries risk changing their status from witnesses to defendants.