The Eight Dwarfs: A New ACF Investigation Tracks the Story of a Criminal Capture of a Million-dollar Business
A family conflict escalated in a war between the partners in the largest elevator manufacturer in Bulgaria. The assets under dispute were companies with a turnover and profit of millions of BGN, real estate across the country, expensive cars, money in bank accounts in Bulgaria and Switzerland, and gold worth over BGN 4 million. As the dispute grew, some institutions also got involved – the Specialized Prosecutor’s Office, the Ministry of Interior, and the National Revenue Agency.
Exactly a year ago, one of the key participants in the conflict, Iliya Zlatanov, received an offer to meet with “influential people” who could help him. In a part of the restaurant “The Eight Dwarfs” inaccessible to visitors, Zlatanov met with lawyer Petyo Petrov. Petrov, better known as “The Euro,” is a former head of the Investigation Department of the Sofia City Prosecutor’s Office, for whom in 2015 the Supreme Judicial Council refused to initiate disciplinary proceedings. According to Zlatanov, at the Eight Dwarfs restaurant’s meeting, attorney Petrov promised to assist for a rapid intervention of the prosecution against his opponents in the conflict for controlling the family business. In return for this assistance, Petrov demanded half of the recovered assets of the Izamet company.
On July 3, 2019, Iliya Zlatanov really submitted another report to the prosecutor’s office, and the next day he was interrogated. Just two weeks later, on July 19, the Prosecutors’ office informed the media that charges had been filed against six people – including Zlatanov’s son, daughter, and ex-wife – for extortion, embezzlement, unprofitable deals, and large-scale money laundering. 565 thousand euros and 35 kilograms of gold worth over 4 million BGN were seized from Zlatanov’s wife and son’s safe deposit box.
However, the services rendered with assistance from the Prosecutor’s Office seemed to come at a price. A day before the seizure, in the office of lawyers recommended by Petrov, Iliya Zlatanov signed a promissory note for nearly BGN 3 million. The note said that the money was due to Lyubena Petrova, Petyo Petrov’s wife. Based on the promissory note, his other assets were also seized – company shares, real estate, cars, and bank accounts. According to documents, the gold seized from the safe deposit box for over BGN 4 million was returned to Iliya Zlatanov. However, his story is different: according to him, the gold disappeared in the trunk of Lyubena Petrova’s car in the parking lot of the Specialized Prosecutor’s Office.
After new meetings and threats about his life and that of his son, who is on a hemodialysis treatment and with a measure of restraint “detention in custody,” Zlatanov signed everything they asked of him and urgently fled abroad. Zlatanov is currently in a country he does not want to reveal and is preparing to file reports with European institutions about what has happened to him.
“The legal analysis of the documentation provided to the ACF shows serious indicators and raises doubts about the Prosecutor’s Office’s adequate and objective reaction in the whole case,” said the ACF’s legal department. “The question is why the Prosecutor’s Office acted just after the intervention of attorney Petyo Petrov?” The swift reaction of the Prosecutor’s Office, as well as some missing documents, notarial entries made outside offices, and during non-working hours and missing signatures under protocols, are just some of the visible irregularities. As established by officials in the commercial register, there are shortcomings in notarization in the electronic register of notaries. Separately, the short message correspondence provided by Zlatanov with persons involved contains information about possible influence exercised on institutions such as the Ministry of Interior and the Prosecutor’s Office, which must be inspected in depth.
Only one of Zlatanov’s lawyers, recommended by Petyo Petrov, agreed to comment on the ACF investigation. “On the appointed day of the meeting, however, the lawyer did not show up at our office and stopped answering her phone,” said investigative journalist Nikolay Staykov of the ACF team. There is no answer from the other lawyer or former investigator and current lawyer Petyo Petrov to his publicly announced phone number. The Specialized Prosecutor’s Office also declined to comment.
The ACF legal team states that it is preparing a report to the Prosecutor’s Office with a request for thorough and independent verification of the information provided in the Izamet case.
To whom the Prosecution had returned 35 kilograms of gold – the material evidence seized after searches – and how? Were all the legal requirements for this return met? Is it possible to transfer companies’ shares in hospital offices? These are the issues investigated in the second part of the Anti-Corruption Fund’s documentary video “The Eight Dwarfs,” published today. It traces the legal conflict over the Izamet group of companies. It also features the names of former Sofia Investigation chief Petyo Petrov and his wife, Lyubena. Lyubena Petrova became publicly known in 2015 as the organizer of the “Plan B” civil association supporting the former Prosecutor-General Sotir Tsatsarov.
The seizure in 2019 of gold coins and bars worth BGN 4 million as material evidence, and their return in March 2020 poses more and more questions about the role of the Specialized Prosecutor’s Office. Unfortunately, the questions remain unanswered to date. “We did not receive an answer from the Specialized Prosecutor’s Office to our second inquiry. We sought a comment from the Prosecution Office’s administrative head at the time, Dimitar Frantisek Petrov. He, too, refused to comment,” said Nikolay Staykov, the investigation’s author.
Iliya Zlatanov, Izamet’s owner, testifies that he never had documents about the gold acquisition. According to him, false invoices were presented to the Prosecutor’s Office to create a seemingly legal basis for its return to him, as was the agreement with his “assistant” in the legal conflict Petyo Petrov. The former magistrate, sought in person at “The Eight Dwarfs” restaurant, again refused to comment. The reason he gave was the “risk of coronavirus.”
Iliya Zlatanov discussed the story about the gold in a Viber chat with a Viber user, “Lyubena.” Iliya Zlatanov’s son – Yavor, the owner of the safe deposit box from which the Prosecution Office confiscated the gold a year ago, also comments in the investigation’s second part. He assures he is the real owner of the gold and can prove the purchase of part of it with documents. If this is true, it would mean that both sides in the conflict confirm the suspicions that the Specialized Prosecutor’s Office returned the gold illegally.
The legal analysis of this return of seized material evidence raises even more questions. The gold was confiscated from Yavor Zlatanov, without indications that the Prosecutor’s Office ever investigated his undoubted claims for ownership as exercising a de facto power. The Prosecutor’s decree ordered its transfer to another person based on invoices certifying that he had bought it. We do not have information on whether the Prosecution Office addressed the other party to clarify a logical question: why, since Iliya Zlatanov was the property owner, it was not in his possession, but in possession of his son Yavor, with whom he was in conflict.
The other case described in the film concerns the signing of a contract for the purchase and sale of shares of Iliya Zlatanov’s company. According to him, he signed it under duress at the Lozenets Government Hospital. The notary who certified the signatures confirmed the location but stated that everything about the signing was legal. However, the new circumstances have not yet been entered in the Commercial Register.
You can watch the video here.