Professional Documents
Culture Documents
[2] On or about August 1st 1996 the Speaker, was hospitalised at the order
of prison medical staff in Germany and placed on intravenous feeding.
[3] On September 2nd 1996, at the order of the German federal prosecutor,
prison medical staff removed the Speaker's intravenous feeding.
German police officers arrived at the prison and carried the Speaker,
unconscious, to an awaiting vehicle.
[5] On September 18th 1996 the Speaker was relocated by the defendant
Bulgaria to a solitary confinement facility at a police detention facility in
Sofia, Bulgaria, he remained there alone. The cell was unventilated,
having no natural light. What was available was a 60 Watt yellow
incandescent bulb. The Speaker experiencing his first beatings here.
[6] On or about the end of October, early November, the Speaker was
again relocated to another facility where he was isolated. His cell there
differed little from that of the previous facility except for toilet facilities
and some natural light. The beatings continued, and the Speaker
reported to Canadian authorities having been drugged on more than
one occasion. He remained in isolation here for an additional period of
two (2) years.
[7] The average maximum detention in such facilities is typically six (6)
months. The Speaker continues to hold the defendant's record for the
longest period in solitary confinement at a police arrest facility since
1991.
[8] On September 7th 1998 the Speaker was moved by the defendant
Bulgaria to solitary confinement facilities located at the Sofia
Penitentiary where he remained an additional 6 months with intermittent
stays at the prisons infirmary.
The Indictment.
[10] On December 10th 1998 the defendant Bulgaria brought final charges,
having entered an indictment for an embezzlement aided by a fraud.
[11] It was alleged by the defendant Bulgaria that the Speaker had
misappropriated funds he had first defrauded from 4831 individuals. The
alleged subject of the indicted crime, embezzlement, was the same
subject of the preceding crime, the fraud, it being alleged that to get the
funds to be embezzled later the Speaker had to first defraud others of
the funds. Needless to say the Speaker and his attorneys at the time
were completely confused by the indictments legal construction.
[12] The Speaker argued estoppel, contending that since the subject of the
alleged two misappropriations was one and the same property, the act
misappropriation by embezzlement could not be linked to the preceding
act of misappropriation by fraud.
[14] The district court allowed bring new elements in the indictment different
from those brought at the time the Speaker was arrested on February
7th 1996 and for which Germany later extradited the Speaker on
September 2nd 1996.
[15] A repeated defence thesis during the Speaker's arraignment was that an
alteration of the extradition elements of the charge violated international
law -the European Convention on Extradition - in the absence of the
extraditing state's - German - consent.
[16] On January 14th 2000, the defendant Bulgaria withdrew the April 16th
1999 indictment and original accusations against the Speaker, raising
instead a new charge, having different circumstantial and factual
elements but the same criminal code qualification, the presiding judge
allowing the new charges.
[17] On March 13th 2001 the Sofia City Court convicted the Speaker of
embezzlement of his companies funds and sentenced him to 23 years
of hard time. The maximum sentence for embezzlement is 30 years.
The only victim of the crime identified by prosecution and the convicting
court was the plaintiffs' wholly owned subsidiary company, "LifeChoice"
incorporated by the plaintiffs and the Speaker in Bulgaria.
The Acquittal.
[18] On August 2nd 2001, on appeal, the Speaker was acquitted of the
charge of embezzlement, the appellate court ruling that the first court
had erred in law and in fact when allowing the new charges and
elements of embezzlement as brought on January 14th 2000.
[19] The Appeal court re-qualified the factual elements as having the
character of a general fraud and convicted the Speaker, sentencing him
to 9 years. The maximum sentence for fraud is 10 years.
[21] On August 22nd 2001 the Speaker appealed his innocence, and the
appeal court having in part erred in law when, inter alia failing to
observe applicable principles of international law on bringing new
elements to a charge of fraud different from those for which the Speaker
had been extradited. Having also erred in fact when finding, inter alia,
that the Speaker had personally effected, at different times and places,
each of the alleged misrepresentations, through intermediaries, and
thereby having alone defrauded more than 2,500 individuals.
[22] As of October 7, 2001 six (6) years and five (5) months have passed
since the defendant Bulgaria acted on the July 7th 1995 request of the
Crown to prosecute the Speaker, its criminal investigation. Five (5)
years and nine (9) months have passes since the Speaker's arrest.
A.1.2.1996
[24] As the Court may recall the Speaker began his detention in Bulgaria on
2nd September 1996.
[25] The conditions in Bulgaria and the treatment the Speaker could expect
and did later encounter were set out in 1996 by USAID [see:
www.usaid.gov/countries/bg/bulseed.htm] it reported:
[2] "The Government generally respects basic human freedoms, but serious human
rights problems remain. Police are not sufficiently accountable for abuses,
[3] "Human rights violations persisted in Bulgaria: they include shootings, torture,
death. The rising number and regional distribution of the reported cases
indicate that they are numerous and widespread. Daily accounts of such
incidents reveal a pattern of casual violence and illegal acts by police officers
[4] "The official statistics on shootings, deaths in custody and complaints of ill
[1] The experiences of this Speaker during his solitary confinement at the
hands of the defendant Bulgaria went unreported. His complaints and
attempts at communicating such complaints severely punished. The AI
(Amnesty International) Report for 1996 goes on to say "Lawyers, non-
government organisations monitoring human rights in Bulgaria as well
we press frequently report incidents of torture and ill-treatment." And:
[6] "In January 1994 a series of gangland killings culminated in an incident in the
suspect, shot dead two anti-terror officers by mistake. The killed officers were
arrest] two police officers responsible for the killing were brought to trial, in
which the hearings were held in camera. Their superior officer at the time,
The Ministry of Interior then reportedly initiated an inquiry into possible links
between police and the criminal underworld but there was no information as to
[1] The significance of the foresaid data to the proceedings before the trial
court can be found in the exchanges of data and requests that occurred
during operative calls and meetings of Ministry of Interior agents with
Crown servants.
[2] Faxes were exchanged and reports made by the Crown to agents of the
Ministry of Interior, including the foresaid Captain Savov, and his
associates, in May of 1995. The Crown inevitably assisting them in their
efforts to cause pecuniary and non-pecuniary injury to the plaintiffs, as
well as to extort funds all or part of the funds identified by the Crown to
Captain Savov's Department of Internal Affairs Unit for Combating
Organised Crime.
[4] AI reported, as this Speaker has documented with his own experiences,
that the defendant Bulgaria regularly refuses to provide proof on
whether complaints against its officials are processed, or to make public
those documents necessary to prove such complaints against the
defendant Bulgaria before foreign courts or international tribunals. Such
conduct has been and continues to be inconsistent with the UN and
European obligations of the Republic of Bulgaria.
[5] AI further reported that year, as this Speaker has insisted to the trial
court, that the defendant Bulgaria does regularly breach the rights of
victims of abuse of official powers (police or judicial). There exist rights,
but no effective remedies to secure those rights in Bulgaria, the
international law principle of a legal remedy against state agencies,
instrumentalities or officials that abuse their powers remains virtually
non-existent before the Bulgarian courts.
A.1.3.1997
[7] Late in 1994 and the beginning of 1995 Stoyanov was paid $15,000
United States Dollars (USD) by the Speakers British Columbia
company. In exchange for these funds, Stoyanov was to obtain
municipal approval for the Speaker's company to install and operate a
micro-refinery and oil treatment plant near the City of Plovdiv. Stoyanov
took the funds but never provided the services promised, prior to the
Speakers arrest he had been forcefully demanding that Stoyanov return
the funds. The money in question became a public issue during the
Speakers detention and at his trial in 1999.
[8] AI reported that 1997 began much like 1996 with "daily reports of torture
and ill-treatment by police officers" of most criminal suspects, some
leading to death. Racial and religious discrimination was often a
predominate factor among police and investigative officers. Medical
attention was often denied victims when still in custody, or alternatively,
as in the Speaker's case, medical reports were provided that were
consistent with police claims and not the truth [see case: AI "Deaths In
1997: Mincho Sartmachev"]. Quoting AI;
[8] "Ill treatment and beatings in police custody are common in Bulgaria and there
[2] Police and investigator violence are a regular pattern utilised to obtain
information or extract confessions from suspects. Prosecutors and
Judicial officials fail to pursue allegations against police and other
officials responsible to them under law. As a result human rights
violations are committed with impunity from prosecution or discipline.
[4] AI expressed deep concern over the failure of the Ministry of Justice
and police to act on complaints, so much so as to suggest to the
government of Bulgaria that it establish a complaints board independent
of these institutions that included the office of the prosecutor and courts.
A.1.4.1998
[5] During March of 1998 the Bulgarian government authorised the release
of a report prepared by the European Committee for the Prevention of
Torture and Inhuman or Degrading Treatment or Punishment. This
report was compiled after the committee had visited the various places
of detention to be found in Bulgaria and concluded that those people
detained there "run a significant risk of being ill treated at the time of
their apprehension and/or while in police custody, and that on occasion
resort may be had to severe ill-treatment or torture".
[6] Of significance to the Speaker is that the report went on to state "that
conditions of detention in the National Investigative Service (NIS)
facilities could be described as inhuman and degrading", prisoner are
held in isolation, often for years and under an "impoverished regime
offering very little human contact". The court may well recall that the
Speaker had been isolated more than two years (1996 to 1999) by the
NIS at facilities described in the European Committee report.
[8] Jews are an invisible minority in Bulgaria society and Bulgaria Jews
maintain a low profile due to Anti-Semitism that is imbued through out
Bulgarian society, particularly police and prosecutors.
[9] The court may recall that the Speaker is of Jewish ancestry. Should this
Honourable Court have cause to review the offensive and actionable
words complained of as slanders and blasphemous libels, framed in the
tort of defamation, it would become immediately apparent that Anti-
Semitism played a significant part in the way the defendant Bulgaria has
treated the Speaker throughout his 6 years of arrest. There is no
exaggeration to the statement made in 1998 by USAID that "Bulgaria
needs to strengthen rule of law; and do more to protect human and
minority rights….Anti-corruption efforts need to be intensified, and
functioning of the judicial system improved".
A.1.5.1999
[11] In May of 1999 the Chief Prosecutor and the Director of NIS both
acknowledged there had been "serious violations of laws, rights and
freedoms of citizens" that were becoming ever more, rather than less,
frequent in the practice of the Ministry of Interior.
[12] The Court is asked to recall the 1995 agreement of the Crown with the
Ministry of Interior, of the defendant Bulgaria, the Crown having asked
the said defendant to "prosecute for whatever" the Speaker or his
company in Bulgaria.
[13] It is recalled from the AI report of 1996 that the defendant Bulgaria's
interior police was known to be co-operating with, and protecting, high
ranking members of organised crime.
[15] The Ministry of Interior was responsible for efforts in Bulgaria connected
to the discovery of the whereabouts of funds the Crown had advised the
said ministry of on July 7th 1995 as having been located in the province.
[16] We find from the facts placed before the trial court that the Crown was
actively engaged with members of an agency of the defendant Bulgaria
having been indicted by international community for gross violations of
human and civil rights.
[17] The plaintiffs are alleging before the trial court, in aggravation of their
claims against the defendant Bulgaria and the Crown, that the beating
of the Speaker, and attempts in Canada to extort money from the
plaintiffs are organised by officers of the Internal Affairs Unit for
Combating Organised Crime, Ministry of Interior of the defendant
Bulgaria.
[18] On February 25th 2000, the United States State Department "1999
Country Reports on Human Rights Practices" [see:
www.state.gov/www/global/human_rights/1999] wrote:
[9] "The judiciary is independent but suffers from corruption and continues to
[10] "Most internal security services are responsible to the Ministry of Interior,
including the Central Service for Combating Organised Crime, the National
agency and therefore not under direct government control. Some members of
[1] The US State Department indicated that, as in the prior years, the
security forces continued to beat suspects and prison inmates. The
Speaker make reference to such fact as it is relevant to his past
treatment and the ever present threats under which he exists.
[3] It can be seen that the defendant Bulgaria's Constitution [see below:
Part 3 "Law and Enactment"] forbids cruel and inhuman treatment or
punishment. Despite this the police, well into the year 2000, commonly
beat criminal suspects and members of minorities.
[4] Such tactics (beatings, drugging and intimidation) had been reported in
previous years as frequently used, as with the Speaker, to extract
information or false testimony. Human rights groups reported that
complaints are rarely received through official channels.
[9] The U.S. State Department reported noting that the Bulgaria
Constitution [as cited below] provided for access to a lawyer at the time
of detention. It further observed that the law required that all pre-trial
investigation to be completed by the prosecutor in the worst case not
more than 9 months.
[13] Of significance to the case before the trial court and the present enquiry
into the conditions from which the Speaker must prosecute his law suit
are the words found in a U.S. State Department report:
[11] "It is alleged that warrants to investigate suspects' private financial records
sometimes are abused to give police broad and openended authority to engage
[1] The court is asked to recall the facts surrounding the Crown's request to
have the Speaker and the plaintiffs company prosecuted by Bulgarian
authorities. It is recalled that the Crown request was in order to aid the
Attorney General of the province to obtain information from Bulgaria for
a criminal investigation in British Columbia [see: "Facts of Case:
Malicious Prosecution " - July 7 1995 Crown Request].
[2] Of some significance to the trial court and the present enquiry are the
independent reports that the "Government exerts an unduly large
influence on the media through official channels" and that "Journalists
frequently colour their reports to conform with the views of the political
parties or economic groups that own their newspapers." This report is
consistent with plaintiffs claims against the Respondent that sound in
the tort of defamation.
A.1.6.2000
[5] AI continued to express concerns in its August 2000 report about the
continuing "high incidence of reports of ill-treatment by Bulgarian police
officers. A questionnaire survey conducted among nearly 1000 convicts
in Bulgaria's prison system on behalf of the Bulgarian Helsinki
Committee in early 1999 revealed over half claimed that they were
tortured or ill treated during arrest", causing AI to conclude that ill
treatment continued to be a "systemic, institutional problem".
[13] "There were reports of ill-treatment and torture by police, and of a death in
police custody. There are also reports that people who complained about torture
further ill-treatment."
[14] "The UN Committee against Torture met in April and May to consider
Bulgaria's second periodic report. The committee found that Bulgarian law
lacked a definition of torture and failed to ensure that all acts of torture are
cases of torture and the failure to bring those allegations before a judge or
Definitions of Torture.
[2] The Appeal Court is asked to extend the widest possible interpretation
to the international obligation of states, and the duty of the judiciary in
protecting against abuses, whether physical or mental, including the
holding of a detained or imprisoned person in conditions which deprive
him, temporarily or permanently of the use of any of his natural senses,
such as sight or hearing, or of his awareness of place and the passing
of time. [see for referance: Convention Against Torture and Other Cruel,
Inhuman or Degrading Treatment or Punishment, G.A. res. 39/46,
[annex, 39 U.N. GAOR Supp. (No. 51) at 197, U.N. Doc. A/39/51
(1984)], entered into force June 26, 1987 as follows:
[16] · "PART I
[17] · "Article I
[18] "1. For the purposes of this Convention, the term "torture" means any act by
inflicted on a person for such purposes as obtaining from him or a third person
him or a third person, or for any reason based on discrimination of any kind,
capacity. It does not include pain or suffering arising only from, inherent in or
[1] See for further reference as well: The Declaration on the Protection of
All Persons from Being Subjected to Torture and Other Cruel, Inhuman
or Degrading Treatment or Punishment, G.A. res. 3452 (XXX), annex,
30 U.N. GAOR Supp. (No. 34) at 91, U.N. Doc. A/10034 (1975) as
follows:
[19] · "Article 1
[20] "1. For the purpose of this Declaration, torture means any act by which severe
from him or a third person information or confession, punishing him for an act
other persons. It does not include pain or suffering arising only from, inherent
in or incidental to, lawful sanctions to the extent consistent with the Standard
[22] "Article 2
of the purposes of the Charter of the United Nations and as a violation of the
Relevance.
[2] International comity, and the foreign law of Bulgaria, as naturally flows
from the applicable principles of international law, play key roles in
determining the issue of what limitations can reasonably be placed on
the rights of incarcerated and indigent citizens before a court of law.
[3] This Honourable Court is asked to recall that the claims of the plaintiffs
Nicholas, Tatiana, Tracy and Robert are connected to the "cruel,
inhuman or degrading treatment or punishment" they suffered in the
province as third parties. On other occasions the plaintiffs in the
province were the principle targets in the attempts by officials of the
defendant Bulgaria at coercing money or information as to money in the
province from them, the defendant Bulgaria relying on threats of
violence against the Speaker or promises to end his torture to coerce
the plaintiffs to co-operate.
69. On 27 March 2000 Prosecutor Bakalov, SCaPO ruled in answer to the Applicant's
appeal :
…[sic]…
on 14 January 1998 SCPO has submitted to SCC - Criminal
College an Act of Indictment against you for an offence under
Article 203, para 1, in conj. With Article 202 para (1), item 1,
in conj. With Article 201, in conj. With Article 26 para (1), in
conj. With Article 211, hypothesis 1, in conj. With Article 210,
para (1), item 3, hypothesis 1, in conj. Article 209, para (1),
CC. A criminal of common character case has been instituted
No 1404/98 [wrong - No 1403]. Several judicial sittings have
been held (heard?) and the latter is in the phase of judicial
investigation. You have defence counsel secured.
162. On 25 May 2000 the Applicant received from the Registrar, Legal Secretary J.
Dimitrieva – Najdanova, a deficiency letter, wherein upon the subject matter of the
aforestated claims [see before § …] the letter reads:
the Convention which provides that the Court may only deal
You have not substantiated your last complaint that you are
unlawfully deprived your freedom. You have neither furnished
further detail nor sent any documents or judicial decisions in
this respect.
164. On 20 July 2000, in reply to the 25 May 2000 deficiency letter of the
Registrar, the Applicant by electronic mail and registered post as an
interim measure and signal of Government hindrance he wrote as
follows:
“Dear Ms. Najdanova,
1. … [sic]
2. … [sic]
3. As to the unlawful deprivation of my liberty, prolonged and
unreasonable detention on remand, I refer to the case law
embodied in Lukanov v. Bulgaria judgement of 20 March
1997, Assenov and others v. Bulgaria, judgement of 28
October 1998 and Nikolova v. Bulgaria judgement of 25
March 1999. In each instance violation of Article 5 §1 or
alternatively §3 and §4 in conjunction with Article 13 of the
Convention have been unanimously upheld. I respectfully
remind you that I have been under remand since February 6,
1996 upto the present and have no sentence yet passed by any
court. I have appealed for release on remand on 22 separate
occasions before every authority available to me. Respectfully
I remind the Section that I have been in arrest during the
period that the above mentioned case law was established and
the circumstances of my 5 year detention far exceed the
periods in remand of Lukanov, Assenov or Nikolova.
5. … [sic]
167. On 6 December 1999 the Applicant petitioned the Court (see Exhibit No …) to
seize under Articles 116 item 5 and 133, Criminal Procedure Code [Bulgaria]
documents and material evidence previously subpoenaed by and for the defence
but never having been delivered. The Applicant’s grounds, inter alia, read:
2. The Court has been unable for the most part to produce or
secure for examination by the Defense the demanded and
requested by order of the presiding judge documental
evidence. The failure of the Court to fulfil its obligation to the
Defense to collect evidence essential to it is indicative of a
judicial process biased in favor of the prosecution.
[2]
Further to your enquiry about VAT paid for selling of ODR by Life Choice Int. AD for the
period Sept.7th, 1994 – Dec. 31st, 1994 we’d like to advise the following:
1. In Taxation Statement #808-VAT dated July, 10th, 1995 issued by Tax Department
“Sredetz” an 18% VAT-liability over the total value of the ODR sold by Life Choice
Int. AD for the said period has been determined. Being a person registered under VAT
Law Life Choice Int. AD had to accrue and pay in favour of the State Budget 18%
over their taxable transactions such as selling ODR. In their nature ODR are private
documents different from the securities regulated by law. It is stated on them that
funds gathered through them are part of company’s capital. Such assertion presumes
observing the rules for accumulation of capital determined by Commercial Law
which in this case does not belong to a person (?- perhaps physical person). The only
provisions of law refer to issuing of either temporary receipts or shares after the initial
accumulation of the capital of a company. These ODR have been printed in
contradiction with the Instructions for the Terms and Order of Printing and Control
over Securities. Paying of dividends to the owners of ODR is in breach of art.184 of
Commercial Law where it is stated that dividend is annual payment to share holders
calculated on the basis of the net profit of the company and the number of shares
owned. Contracts of the kind of ODR at the time of their concluding(?) are not
considered to be “securities” according to law. Transactions like selling and buying of
ODR and other financial documents of this kind without the permission of Bulgarian
People’s Bank (BNB) are considered to be transactions ruled by VAT Law and are to
be levied with 18% VAT.
2. Buying back of the ODR and the interest (dividends) paid on them should not be
charged with 18% VAT over the amounts paid to their owners. Most of the persons
who have received the sums for investing in ODR with Life Choice Int. AD are not
registered persons under VAT Law. They do not exercise economic activity taxable
with VAT. They should not be levied with 36% on the sums paid to them.
3. For the reason of the Taxation Statement issued the bank accounts of Life Choice Int.
AD have been blocked but no amounts have been received to redeem the VAT
liabilities of the company.
Translation M. Radoulova
Aug. 22nd,1999
Page 1 of the original document
TO:
THE HEAD OF SECTOR 2ND
“ECONOMIC POLICE” DIRECTION
SOFIA DIRECTION OF THE MINISTRY
OF INTERIOR
REPORT
RE: Preliminary verification under file with incoming Ref. No. 5200r/1995
SIR,
[4] On June 28, 1995 a signal was received at the Sofia Direction of the
Ministry of Interior (SDMI) from the Chief of Tax Department “Sredetz” in
the city of Sofia, in which data were revealed for a crime of general
character committed by the person Mihail Kapoustin – an executive
member of the Board of Directors of “Lifechoice International” AD, Sofia.
In that signal facts were specified in detail and motivated, which
[ulichavat] Mrr. Kapoustin as an offender under Article 313, paragraph 2
of the CC. Later identical materials came in the SDMI from SUDA [Sofia
Tax Administration] and from the SCPO (Sofia City Prosecutor’s Office).
At the same time with reference to the actions of Mr. Kapoustin in his
capacity of an executive member of the Board of Directors of “Lifechoice
International” AD, complaints started being filed by depositors of funds
with the company, in which it was alleged that Kapoustin defrauded
them by unlawfully not giving back amounts deposited by them with the
company despite the fact that the contracts for submitting of these funds
have expired.
In connection with the signals thus received and with the directions given by the SCPO
materials and information [svedenia] were additionally collected by
the competent State authorities with reference to the activities of the company and those
of its major shareholder Mihail Kapoustin and the following factual background was
established:
Mihail Kapoustin, except for being a major shareholder pursuant to the Articles of
Association and other documents of incorporation of the company, is constituted also as
an executive member of the Board of Directors, thus appropriating [obsebva –
engrossing, taking hold of] all the activities carried out by the company and has the right
for veto upon all the decisions taken by the other members of the Board of Directors,
personally [ednolichno] determining the directions of development of the company. It is a
fact that no one except for Kapoustin has the opportunity to operate the corporate funds.
This is confirmed by the explanations taken from Mr. Paroushev – a director in the
company and Mrs. Bogdanova – Popova – a shareholder and legal counsel of the
company and also from the complaints of “Lifechoice International” AD depositors.
II. For the period of time from its incorporation until the end of May 1995 the
company, in the person of its executive member of the Board of Directors,
using the gaps [prazninite] in the Bulgarian legislation and the extremely
generally formulated subject of its activities develops intense activities for
collection of funds in leva and foreign currency from the population, the funds
alleged to be invested in branches of Bulgarian economy.
The collecting of funds from the population is effected through the so-called
“financial instruments” of the company – Redeemable Depositary Receipt /RDR/ and
American Depositary Receipt /ADR/. Mr. Kapoustin and the employees of the
company alleged before the depositors that these are securities of special type but as a
result from inquiries made with the competent authorities in the Republic of Bulgaria
it was established that the so-called “trust receipts” [Depositary Receipts] are printed
contrary to the requirements of the Ordinance for
the Conditions and Order for Printing and Control upon Securities. At the same time
these receipts can be made equal (reduced - note of translator) to a temporary contract
for money deposit, which in its essence represents effecting of banking activities, for
which the company is not licensed by BNB pursuant to the requirements of the Law
on Banking and Crediting Activities. On the other part the “Trust Receipts”
themselves contain false allegations, which in practice mislead and delude the citizens
willing to buy them. For instance, in ADR in item 2 of part “Guarantees” it reads that:
“All ADR are secured by deposits and fully insured by the Federal Deposit Insurance
Corporation of the USA, which is a Government organization, up to the invested
amount /the nominal value of ADR/”. This allegation is completely absurd, since the
purpose of this Service is not this and from the complaints it can be seen that when
submitting the ADR for buying back, there are no funds to cover the face value of the
ADR.
As far as investing of the funds collected is concerned, real investments there are only
and solely in the pharmaceutical industry, which can be seen from the contracts for
mutual activities between the company and NCIPD, Sofia attached to the
correspondence [prepiskata]. The amount of investment in these activities is
insignificant in comparison to the funds collected. At the same time these activities of
the company are used for legal transfer of considerable amounts of foreign currency
abroad in the form of purchasing of different types of medicines and components for
them, which, as it can be seen from the custom's reference attached, have neither been
exported, nor imported in the Republic of Bulgaria.
The other investment projects of the company are still in the phase of investigation
[prouchvane - might be research as well - note of translator] and approval by the
competent State authorities in the Republic of Bulgaria and practically they can not
be seen and evaluated.
III. It was also established that only statistics is being kept in LifeChoice
International - AD and there is no accountancy for the fiscal year 1994, in
particular for RDR and ADR. This obstructs establishing the exact number of
depositors [vlojiteli] and of the amount of their deposits [vlojenia] with the
company. The absence of such information leads in practice to full lack of
control over spending of the funds and to concealing their origin.
Page 4 of the original document
IV. Until present in the Sofia Direction of the Ministry of Interior (SDMI) through
the SCPO and from other places complaints have been filed by some 500 /five
hundred/ depositors [vlojiteli] of the company who complain that they have
been defrauded and also 200 /two hundred/ complaints from depositors of the
company, who determine the acts of the tax department with reference to
collecting of VAT as being unlawful.
1. In connection with the complaints of the defrauded depositors it should be noted that
the principal motives they specify in support of the thesis that they have been
defrauded can be grouped as follows:
A/ Breach of the contract concluded between the depositor and the company
- no payment of interests upon the amounts deposited;
- no payment of the capital amounts deposited;
B/ Fraudulent allegations with reference to the guarantees for the amounts deposited
as specified by the company;
2. With reference to the complaints from depositors of the company directed against the
actions of the tax employees, it can be stated that they have no legal grounds, since
the actions of the tax authorities are in compliance with the normative regulations. At
the same time for a part of these motions there are statements filed for their
withdrawal. It is also impressive that these motions have the same text and only the
names of the persons who filed them are different, which supposes they have been
prepared at one and the same place by the same persons - employees of LifeChoice
International - AD or its consultants.
In connection with the facts and circumstances so laid out and from the materials
collected during the inspection carried out, I consider there is enough data for initiating of
a preliminary proceeding against the executive member of the Board of Directors and
major shareholder - Mihail Kapoustin under Article 203, Article 211 and Article 313 of
the CC. As far as the complaints - motions from depositors of the company with reference
to the unlawful actions of the tax employees are concerned, I offer the latter to be
separated from the correspondence and to be attached to case due to the absence of
enough data for an offence committed.
RULING
Investigation case under No 195/95 as per the schedule of NIS has been brought up by
the Sofia City Prosecutor’s Office on Oct. 26, 1995 against the Canadian citizen Michael
Kapoustin for an offence as per art. 203, par. 1 and art. 26, par. 1 of CC effected by him
in his capacity of an executive director of Life Choice Int. AD. The company received
deposits amounting to millions of USD from more than 15 000 citizens.
At his arrest in Germany the accused Kapoustin went on a hunger strike, which brought
to worsening his state of health and this was the reason to delay his surrender to
Bulgarian authorities. After his arrival to Sofia he was put into the Central Hospital of the
Ministry of Home Affairs (MHA) for treatment and examinations and after his state of
health was improved, on Sept. 16, 1996 he was transferred to the lock-up of NIS, where
he stays at present.
As a result of the hunger strike Kapoustin lost considerable weight, he complains that his
health is poor, he’s lapsed into depression and insists to give him the chance to continue
with his activity as an executive director of Life Choice Int. AD with the purpose to
redeem the money of the depositors with the company.
The Sofia City Prosecutor’s Office (SCPO) has issued a ruling dated Oct.1, 1996 under
correspondence No 3097/95 as per the schedule of SCPO referring claims of attorney
Stoilov having rejected with the respective arguments (motives) the claims for changing
the presence securing measure “Detention under Custody” taken against Kapoustin.
Under this case has been ordered and is present a triple medical expertise No 4775 dated
Sept. 16, 1996 prepared by medical experts from the Central Hospital of MHA.
According to this expertise the weight of Kapoustin when discharged from hospital was
95 kg and he does not need medication at present. A triple judicial psychiatric and
psychological expertise has been ordered as well and its conclusion from Dec. 2 nd, 1996
made by experts - medical doctors and a psychologist from the Lunatic Asylum “St.
Naum”– IV Kilometer in Sofia, says that there is no data for mental derangement of the
person examined (certified).
By a ruling dated Oct. 7, 1996 of the investigator of the case a task has been assigned to
the medical department of NIS to carry out constant supervision over the accused
Kapoustin in the lock-up. A doctor visits him every day in the cell and the guards watch
him over with the purpose not to allow any extraordinary accidents and to safeguard the
health and life of the prisoner.
The medical reference submitted by SCPO under ref. No 13585 dated Oct. 30, 1996
CERTIFIES THAT KAPOUSTIN has well preserved state of health with stabilized
clinical and paraclinical scores. Reanimation and a special diet have been recommended
to him to compensate the consequences of the hunger strike.
Consular surveillance has been established over the accused KAPOUSTIN by the
Canadian embassy in Bucarest, Romania for he is a Canadian citizen as well as by the
German Embassy in Sofia in compliance with the Vienna Convention.
Under these circumstances it cannot be accepted that all the necessary health and humane
measures permissible by law have not be applied to the accused KAPOUSTIN.
The standpoint of SCPO on the question for changing the presence securing measure
against the accused KAPOUSTIN was set out in reference No 3097/95.
The standpoint of SCPO on the question for changing the presence securing measure
against the accused KAPOUSTIN set out in reference No 3097/95, dated dec. 6, 1996 is
negative taking into consideration the grounds as per Art. 152, para 1, PPC i.e. the high
degree of public (social) danger of this deed - embezzlement of especially large amounts
which consists an extremely grave case.
Under these circumstances there is no reason for hanging the presence securing measure
“detention under custody” taken against the accused Kapoustin.
We do not discuss because of the impossible execution the demand of Michael Kapoustin
to be released from arrest to continue his work as an executive director of Life Choice
Int. AD thus enabling him to give back the money to the depositors.
[7] I reject the claim of the defence of the accused Michael Kapoustin to change
the presence securing measure “detention under custody” under investigation
case No 195/95 as per the schedule (register) of NIS as being ungrounded,
unlawful and unjustified.
I confirm the ruling of Oct. 1st, 1996 under correspondence No 3097/95 of SCPO as being
motivated, grounded and lawful.
A copy of the present ruling to be sent for information and execution to NIS – 03, to
SCPO and to the defence of the accused Kapoustin – attorney Plamen Stoilov.
PROSECUTOR:
(signature and seal)
(Pl. Tzankov)
REPUBLIC OF BULGARIA
MINISTRY OF FINANCE
In the “credence receipt” (DR) it is set out that the amount collected through it is a
part of the company’s capital. Similar statement presupposes compliance with the due
order for collecting of capital as per the Law on Commerce, which in this instance is
not present. The Law provides only for issuing of temporary receipts (certificates) or
shares – after collecting of the primary capital of the company.
In the meaning of the aforesaid it could be assumed that Life Choice Int. AD carries
out banking activities in contradiction to the requirements (rules) of Instruction No 2
concerning the licenses issued by the Bulgarian People’s Bank. The “credence
(depositary) receipts” were issued in contradiction to the special Acts and as being
such they may be considered private documents, which differ from the determined by
the time of their issuing securities. Furthermore they were printed in contradiction to
the requirements of the Instruction for the Conditions and Order for Printing and
Control over Securities.
Taking into consideration the aforesaid we consider that the Tax Statement drafted against
Life Choice International AD is grounded and lawful.
CHIEF:
(signature)
(signed on behalf of the chief - note of translator)
2. By an Order for Seizure of the National Investigative Service (NIS) dated December
29, 1995 [see Exhibit No. 2], signed by Stefcho Georgiev, a Defendant under the
above captioned actions, all movable and immovable property of LifeChoice
1
In the Bulgarian translation of the depositary receipts the word "trust" is used in stead of "depositary" -
note of translator
2
BNB - Bulgarian National Bank - note of translator
International - AD is seized, although the penal case is brought against Mr. Kapoustin
personally and not against the company itself. The assets of the company are still
seized thus obstructing and completely ending its activities. For instance, in the free
trade area of Dragoman there are 69,984 bottles of Blender's Pride whisky of the
Canadian company Seagrams; 66,260 bottles of Vodka Nikolay of the same company
for the total value of not less than 1,000,000,000 (one billion) old undenominated
BGL.
3. The attitude of the Prosecution towards the investors became clear when we, four
investors decided to go to Mr. Mario Stoyanov, a supervising prosecutor in the penal
proceeding against Mr. Kapoustin in Bulgaria and a Defendant under the above
captioned actions, to give us a permission to visit Mr. Kapoustin.3 The purpose of out
visit was to seek a way out of this situation created by the rulers at that time, by their
agencies and instrumentalities, including the police, investigative service and
prosecution and later - the court. It did not sound well when prosecutor Stoyanov
stated before us: "I am not going to let anyone visit that Ukrainian gypsy… And what
will Interpol say if Kapoustin is not convicted to 30 years of imprisonment, when
Interpol will fulfil another request like this one?…"
4. Despite this, the installation did not start working because the investigative service
and prosecution seized it (Seizure Order No. 7171 dated March 20, 1996 of NIS),
after that it intentionally left it without guard. According to a letter of notification Ref.
No 6600328 dated August 26, 1997 of MDB - Tzarimir, the funds for security of the
site were withheld and the installation was left to the mercy of fate. It was depleted
and completely destroyed, an excellent, so needed and useful for our country
economic investment worth millions of dollars, for which it was projected to return
within 6 months only and to bring us millions of dollars net profit, almost at the
directions of investogator Georgiev and prosecutor Stoyanov was depleted and
completely ruined just to prove that we have made no investments in anything and to
make us out a financial pyramid.
5. It is worth to let you know Your Honours the following as well. How did it happen
that after we spent almost $ 1,000,000 (one million) USD to construct and to equip
our OFFICE - CENTRE of the company at 3, "Krakra" St. (only the Simulator
installed there is worth $ 300,000 USD) and after we, the investors and the
shareholders of LifeChoice International - AD, i.e. - the owners themselves of this
centre were thrown out from it like dogs in the street by the omnipresent prosecution
and investigation and by their vanguard the red police. The premises were given to be
used by a political party ruling at that time - the Social - Democratic Party, a satellite
of the ruling coalition United Democratic Forces by virtue of an Order No. RD - 04-
003 dated April 15, 1999 of the District Governor of Sofia eng. V. Marinchev. A copy
of the Order and of documents in connection with this act I submit in the Bulgarian
and in the English languages [see Exhibit No. 5].
6. Mr. Michael Kapoustin, was never subpoenaed at the official addresses of his offices
in Sofia, at addresses in Greece known, such as Kavala, 14-V, "Plio" Str. and Kavala,
16, "Yadras" Str. Neither at his address in Canada, Vancouver, Alberni Str. 1166 and
phone numbers 662-37-71 and 669-98-28. Although addresses and telephone numbers
3
This is during the time when Mr. Kapoustin is under arrest - note of translator
in Austin, Texas and St. John, Antigua were known, Mr. Kapoustin was never
subpoenaed there either. There is a Treaty for Legal Assistance on Civil and Criminal
Matters between Bulgaria and Greece promulgated in State Gazette No 49/80. There
is no duly formed and served to Mr. Kapoustin subpoena in compliance with this
treaty.
7. In support of this statement I have available a copy of a letter from the Ministry of
Justice (at that time Ministry of Justice and Legal Eurointegration) to Attorney
Lukanov with outgoing Ref. No. 99-H-111/96 dated December 15,1999, which on
page 2, paragraph 2 reads: "In the Ministry of Justice and Legal Eurointegration there
is no correspondence for subpoenaing of Mr. Michael Kapoustin within the period of
time October 26, 1995 - September 2, 1996. [see Exhibit No. 7]
8. The allegation that Mr. Michael Kapoustin created a pyramidal structure in Bulgaria
is not true, because at the SCC there are 61 files available with bank documents and
statements from bank accounts certifying unequivocally that the sums invested by
different Bulgarian citizens do not cover the expenses made by the company for
consumables, electricity, water, rents, etc. These files have been intentionally kept by
the investigative authorities and were submitted to the court only in February 2000,
after the defence had finished examining the materials under the case. In a judicial
hearing in February 2001 Attorney Lukanov found them out only by chance between
all the files, which were on the table of the justices. The reason to withhold them can
be only one - they prove Mr. Kapoustin completely innocent. According to data from
these files, for the period of time June 1993 - April 1994 in the bank account of
LifeChoice International - AD for BGL with IBID4, not taking into consideration the
funds in foreign currency, there were 16,900,566.85 BGL before the initiation of
collecting investments from Bulgarian citizens through distribution of RDR. To say
nothing about the numerous profitable projects of the company mentioned above.
9. There is a complaint filed with the European Court of Human Rights wit Reg. No. PN
6650. It refers to the Plaintiff's rights for defence having been violated by investigator
Stefcho Georgiev. Concerning this violation there is an official opinion from the
Supreme Cassation Prosecutor's Office (SCaPO) [see Exhibit No. 8], which on p. 1,
paragraph 3 reads: "From the reference required from the Sofia City Prosecutor's
Office it is made clear that it is true that the supervising prosecutor M. Stoynaov has
not given a permission to disclose information under the case. If it is accepted that a
perpetration has been really committed under Article 284, §1 of the CC5, in this
instance according to the provisions of Article 80, § 1, item 3, CC the statutory period
provided for by law has expired, and except for this, it is a light offence and the
immunity the investigator has according to Article 70 of the Constitution of RB and
the Law on Judicial Authority, does not allow seeking liability for such a
perpetration…"
10. The lawsuits filed by us were broadly discussed in the Bulgarian press, any comments
were made - all newspapers on December6 24, 2000; also articles in newspaper
4
IBID - International Bank for Investment and Development - note of translator
5
CC - Criminal Code - note of translator
6
Error - should be October - note of translator
"Novinar" on December 6, 2000; newspaper "Banker" - January 6-12, 2001; "Capita;"
- January 13-19, 2001; "Trud" - January 14, 2001; "Cash" - March 16, 2001; "24
Hours" - March 16, 2001, "Sega" - March 14, 2001; "Trud" - March 14, 2001. And in
newspaper "Standart" from January 18, 20012 a short announcement was published
under the heading: "They Are Organising a Joint Committee against Michael
Kapoustin". It reads that this is an anouncement made by the Spokesman of the
Foreign Ministry Mr. Radko Vlaikov. "The joint commission will be guided by a
representative of the Finance Ministry…" [see Exhibit No. 10].
Gaganiska7
7
Article 69 § (1), Criminal Procedure Code states a defence counsel shall be appointed by an accused [the
Applicant]. Further Article 72 § (2) of the Code specifically expresses that defense counsel may only be
replaced "at the request or with the consent of the accused". At no time had the Applicant requested the
replacement of his attorneys retained by LCIAD [Mila Popova Bogdanova, Plamen Yalnasov, et al] and
acting as well on the Applicant's direct behalf in all matters in Bulgaria, neither can an attorney voluntarily
withdraw or be removed from acting on the Applicant's behalf, Article 71 of the Code reads: "The defence
counsel may not renounce the accepted defence, except where it becomes impossible to carry out his or her
obligations for reasons beyond his or her control. In the latter case the defence counsel shall be obliged to
notify the accused in due time." Alternatively Article 70 § (3) of the Code considers where a "respective
authority shall be obliged to appoint" a defense counsel, such an occasion arising when, inter alia, a
possible punishment of not less than 10 years; an accused does not speak Bulgarian; the accused has
physical or mental disabilities or the case [investigation or inquiry] is to be conducted in his absence. It is
obligatory under Article 21 of the Law on Advocacy (Zakon za Advokaturata) in such an instance that the
attorney be appointed not by the investigation, police officer (sledovatel) Georgiev, as is the case under the
Applicant's instance, but rather by the respective [Sofia] Bar Assocoation (Sofiiska Advokatska Kolegia -
SAK). Upon the foregoing facts, and others, the Applicant did subsequently on 22 December 1999 lodge a
complaint of criminal misconduct and malfeasance against Advocate Stoycheva - Gaganishka, which reads:
"I formally lodge this protest with you and plead to you as the competent
review body responsible to investigate and rule upon the procedural,
professional and ethical conduct of its members. I request an investigation
of Ms. Villiana Stoycheva - Gaganishka, attorney at law with last known
address 5 Trapezitza St., and home address 14, Sava Mihailov St., who had
accepted inappropriately and outside of her professional competence an
appointment as my "official defence counsel" in November of 1995.
Attorney Gaganishka clearly assumed a responsibility to act on my behalf,
without my knowledge or consent and did so with a clear intention only to
facilitate my arrest and not to fulfill her ethical obligations to me. The
general details of her professional misconduct are cited in the attached
letter as forwarded to her by registered post.
I am sure there is no need to remind the respected body of the Sofia Bar
Association of the professional conduct expected of its members as setout
in Article 74 of the Criminal Procedure Code of Bulgaria. And the Basic
Principles on the Role of Lawyers adopted by the Attorney Act [law on
Advocacy - Zakon za advokaturata] of Bulgaria and cited in the Eight
United Nations Congress on the Prevention of Crime and the Treatment of
Offenders on 7 September 1990. Subsequently endorsed by the General
Assembly in Resolution 45/121 of 14 December 1990. Most particularly I
draw your attention to Article 6, 9, 13 and 15 and the disciplinary
proceedings cited in Articles 26 through 29 of that resolution which are
directly applicable to the protest filed.