The National Security Agency (DANS) has called the Historical Park amusement park of Velichie party leader Ivelin Mihaylov a ponzi scheme worth 70 million levs. What is more, there is evidence that led DANS to believe that Mihaylov has connections to the Russian secret services. These are the two most important conclusions of the semi-classified report of the Bulgarian security agency, which was sent to the State Prosecution last week.
In addition to allegations of financial fraud and treason, the public part of the report also describes alleged property, electoral and tax fraud. It comes after a Parliamentary committee led by Tsveta Rangelova of Vazrazhdane held hearings with several relevant institutions - the Ministry of Interior, the National Revenue Agency (NRA) and DANS, forcing the state to break its silence on the case of the problematic amusement park that gave rise to the newest populist party and has largely been left untouched by the authorities for several years.
In their report, the MPs unanimously expressed the opinion that Historical Park operated as a financial scam that began with illegal share sales, raised capital in an unregulated manner with unrealistic promises of profits, and then began to finance itself through massive loan withdrawals because of a flaw in the banking system. Some members agree that Historical Park is a Ponzi scheme - something that Capital weekly has long written about after a series of investigations throughout the past few years.
What is known and what remains unknown?
The biggest omission in the committee's work was that the board of directors of the Historical Park company, as well as Anatoly Savov, the majority owner by documents, were never called to a hearing to answer questions from MPs.
Most of the report is public and can be read on the Parliament's website. The classified part, which refers to information from DANS, has been sent to the Prosecution as annexes. It was presented to all MPs on Friday in a closed session. Capital weekly uncovered the details of the secretive part of the report from conversations with MPs who attended the closed part of the National Assembly session last Friday.
Some of them expressed disappointment with the report and, in particular, the work that state institutions have done on the case. According to them, DANS relied mainly on information from public sources, such as Telegram channels, where attendants made separatist calls. The information provided by DANS did not add much to the publicly known facts about the park, and they could hardly make a convincing case in a court of law if it came to prosecution for treason.
The only exception is the information that Mihaylov worked with the Russian secret services, specifically through his ties to the organization Night Wolves, which was sanctioned by the entire European Union (EU) in July 2022. Night Wolves has direct contact with Russian President Vladimir Putin and is funded by the Russian government. It was involved in the illegal annexation of Crimea in 2014. DANS have not given details of how they concluded that Mihaylov was working with them. Some of Capital's sources suggested that the agency had more information than it was giving to parliament.
An estimated 70 million levs scam
The figure of 70 million levs, which appears in the report as an estimate of the financial size of the fraud, also comes from DANS. The agency arrived at it by calculating the total sum of financial flows between the dozens of companies around Mihaylov and the park. Because of the paucity of information, it is not clear whether that total includes money from loans taken out by individuals linked to the park. If they do not, then the bill could grow. If DANS is only referring to data from financial statements in the Commercial Register, this would also further understate the amount.
During his hearing in parliament, Interior Minister Kalin Stoyanov said there were a total of about 30 reports against the park, and Mihaylov and his cronies, which were sent to the prosecutor's office, but each of them ended with a refusal to initiate proceedings. They include reports of crimes under almost every chapter of the Criminal Code. The deputies in the committee, as well as Stoyanov himself, expressed justified concerns about whether this was a cover-up.
According to information provided to Capital by MPs on the committee, it subsequently emerged that all the proceedings had passed through three of the same investigating police officers and were closed by two prosecutors from the Varna prosecutor's office.
The report also places great emphasis on the seizure of the village of Neofit Rilski near Varna, where the park is located, as well as the entire municipality of Vetrino. In particular, the committee has highlighted the huge number of properties acquired - in ten years, more than 1,100 properties have been acquired in the municipality, which has a population of only 5,000. The number of transactions jumped significantly after 2016, when construction of the park began. Some of the properties are documented to have been acquired from third parties and then transferred to companies owned by Ivelin Mihaylov or his ex-wife Vasya.
The issue of tax crimes is more complicated. The park managed to pay part of its debts to the treasury on the day when the director of the NRA Rumen Spetsov visited the parliamentary committee (24 July). The NRA has ordered tax audits going back five years, but it is not clear which companies or individuals they would cover. The five-year timeframe may also be too short - in August 2019, Historical Park had already been raising capital for years, which was not reflected in the company's books because the shares were being sold from individuals to individuals, in violation of the Public Offering of Securities Act. Capital maintains that the NRA did not consider the possibility of falsification of accounting, which, according to MPs, largely renders the probe void.
Next steps depend on the will of the prosecution
The main advantage of the committee's work was that it gave publicity to the Historic Park story. The weakness was finding new information. One of the MPs that Capital spoke to commented that the problem with the financial scam is that it is still operating and therefore the crime is not complete. This is why the committee has decided to focus on property fraud, which is easier to prove, and easier to explain to the general public.
This leaves the outcome with many unknowns. The first is whether the prosecution will act and, if so, on which signals. In the case of the state prosecution, there are many more questions - whether it will be able (and willing) to prove financial fraud, whether it has additional information gathered, and whether the umbrella over Mihaylov is local or national. The prosecutor's office was the only institution that did not respond to the commission's invitation.
The second is how long the scheme will survive financially. For a month now, Mihaylov and his relatives have been campaigning to raise funds to save the park, which has no operating revenue. This situation arose after the National Bank uncovered the scheme to withdraw multiple consumer loans from the same individual within a two-week period. It was this money that kept the park running, with the new funds being used to pay old installments as well as new builds, making it by definition a Ponzi scheme. People who took out loans in this way also spoke to the MPs on the committee. Ivelin Mihaylov has publicly admitted in videos that banks now refuse to work with people and businesses around the park.
According to Capital, the moment when the park, the companies and individuals connected to it cannot pay their debts has probably already come. The suspension of some construction activities points to this. Mihaylov's cronies claim in their videos that through the donation campaign they have raised around 200,000 levs - totally insufficient to sustain the scheme for even a month. The denouement is probably approaching in the next few weeks whereby the bearers of the loans will not be able to cover their repayments and will fall into insolvency. The question that remains is what exactly a bankruptcy of such a patchwork of companies and people would look like.
The National Security Agency (DANS) has called the Historical Park amusement park of Velichie party leader Ivelin Mihaylov a ponzi scheme worth 70 million levs. What is more, there is evidence that led DANS to believe that Mihaylov has connections to the Russian secret services. These are the two most important conclusions of the semi-classified report of the Bulgarian security agency, which was sent to the State Prosecution last week.
In addition to allegations of financial fraud and treason, the public part of the report also describes alleged property, electoral and tax fraud. It comes after a Parliamentary committee led by Tsveta Rangelova of Vazrazhdane held hearings with several relevant institutions - the Ministry of Interior, the National Revenue Agency (NRA) and DANS, forcing the state to break its silence on the case of the problematic amusement park that gave rise to the newest populist party and has largely been left untouched by the authorities for several years.