Sale of a Car for 10 Drams and a Formal Divorce: Notable Details from Gevorg Kostanyan's Trial

In the Anti-Corruption Court today, on April 5, proceedings were underway regarding the lawsuit for the confiscation of illegally acquired property from former Prosecutor General Gevorg Kostanyan, his wife Lilit Kostanyan, Arman Galstyan, his wife Tereza Gevorgyan, and Ara Kostanyan.

The Prosecutor's Office for the Confiscation of Illegally Acquired Property claims to confiscate one apartment located in Yerevan, two private houses in the communities of Tsaghkadzor and Jrvajin in Kotayk Province, and in case of impossibility, their average market value, totaling AMD 327,200,000, as well as AMD 173,947,038 as remaining illegally acquired income, and AMD 276,193,454 which cannot be justified by the person's legal income and has illegal origins, has been transferred to a diligent acquirer or cannot be identified and confiscated.

According to Iravaban.net, the court, presided over by Judge Lili Drmeian, did not allow the session to be filmed, as Gevorg Kostanyan's representative Varazdat Asatryan objected. Additionally, one of Ara Kostanyan's representatives, Smbat Minasian, was not allowed to represent him. The power of attorney presented by the lawyer stated that he could represent in all courts, including the first instance, appellate, and cassation, but the court decided that he does not have the authority to represent Ara Kostanyan's interests in this Anti-Corruption Court at this time.

The lawyer stated that he would present a new power of attorney at the next hearing, and in the meantime would sit in the courtroom. Then, Varazdat Asatryan motioned for the court session to be held behind closed doors. According to the requirements of the Civil Procedure Code, the question of considering the case or part of it in closed mode is resolved behind closed doors. About 15 minutes later, media representatives were informed that the session was still being held open, and the court's decision would be sent to the parties later.

Gevorg Kostanyan's representative referred to the protection of the private life of the participants in the proceedings, as well as the protection of commercial secrets.

Subsequently, Nelli Ter-Torosyan, the prosecutor at the Prosecutor's Office for the Confiscation of Illegally Acquired Property, briefly presented the grounds and objections of the lawsuit, indicating that they have a motion for changes regarding them. Varazdat Asatryan insisted that the prosecutor present the lawsuit in full, as he has not had access to the materials of the case. The court requested the prosecutor to present the lawsuit in full at the court, excluding information containing alleged commercial secrets.

According to the prosecutor, the department began studying Gevorg Kostanyan’s properties in October 2020. A study period was set from 1996: “The court's decision allowed the acquisition of information deemed confidential about Gevorg Kostanyan and persons associated with him.” Previous decisions made by the court had applied preliminary protective measures to the lawsuit, prohibiting Gevorg Kostanyan and persons associated with him from performing any actions with the apartment located on Komitas Avenue, and properties in Tsaghkadzor, and imposed a ban of AMD 520,055,000.

“The data obtained during the study indicates that Gevorg Kostanyan and his family members have made a minimum of AMD 368,706,000 in expenses, which already exceeds their legal income. This expense does not include expenditures made for properties acquired by Gevorg Kostanyan or with his funds, which have been separately addressed in the lawsuit,” noted the prosecutor and continued.

The total of legal income (i.e., salary, sales of real estate and vehicles, interest from invested deposits, loans) over the studied period was AMD 262,963,000. Meanwhile, the expenses amounted to AMD 631,670,000, which means that the negative difference is AMD 368,706,000, indicating a significant discrepancy in the income-expense relationship. Moreover, these expenses do not include expenditures aimed at property acquisitions.

The prosecutor announced that in 1996, Gevorg Kostanyan purchased real estate in Tsaghkadzor for AMD 60,000, on which a single-family house (308.74 sq.m) was built in 1999. In 2003, he acquired a plot of land for AMD 243,000, which was connected to the territory of the house. His income, according to the prosecution, amounted to AMD 2,324,000 from 1995 to 2003, whereas the total cost of the construction works for the house could amount to AMD 82,500,000 to AMD 100,880,000, with an average of AMD 91,690,000. “Thus, there is a clear inconsistency between the legal income and acquisitions,” added the prosecutor.

The mentioned real estate was gifted to Gevorg Kostanyan's nephew, Ara Kostanyan, in 2007.

No information about the deposits was revealed during the court session. In 2012, a Toyota Land Cruiser Prado was registered in Gevorg Kostanyan's name, with an average customs value of AMD 4,252,000 at the time of acquisition, while the legal cash assets amounted to AMD 3,833,000. “This car was sold for 10 drams that same year, clearly well below its market value. According to the expert's conclusion, as of June 2012, the average market price of the car was AMD 9,675,000. Gevorg Kostanyan sold it to Garik Petrosyan, who later alienated it. The prosecutor's office demands the confiscation of the current market value of AMD 7,800,000, with 10% representing AMD 780,000,” stated Nelli Ter-Torosyan.

Following the disclosure of this information, Varazdat Asatryan stated in court that he was unclear about which part of the information the plaintiff was withholding. “Information containing apparent commercial secrets is being presented, but there are no disclosures regarding bank deposits. What is the logic here? Both belong to the legally protected realm of confidential information. It is not that ordinary citizens can access what the essential terms of contracts are built upon.”

The lawyer also noted that the disclosure of such information can lead to a certain stance being formed among the parties and media representatives. He again proposed to hold closed sessions since, “partially presenting it, it is unclear for them.” The prosecutor countered, stating that the published information is not a commercial secret but a transaction between two individuals.

The prosecutor also noted that on October 31, 2012, Lilit Kostanyan acquired a Lexus GS300 for AMD 6,000,000, which the same day, by a gift deed, was transferred to Gevorg Kostanyan. “The car is illegal.” Additionally, in 2012, Lilit Kostanyan acquired a Land Cruiser 200, which, according to the prosecution, is entirely illegal. It was later sold for AMD 27,000,000.

“As a result of the investigation, it was found that Harutyun Manucharyan, who is a fellow student and former assistant of Gevorg Kostanyan, purchased a Mercedes-Benz G 55 AMG for AMD 18,500,000 in 2013, which he transferred to Lilit Kostanyan the next day by a gift deed. Then Lilit Kostanyan returned the car by gift deed to Harutyun Manucharyan, who then sold it to Gevorg Kostanyan's former senior assistant, Tigran Khechoyan. In 2014, this car was transferred to Gevorg Kostanyan's son, Samvel Kostanyan, who later sold it for AMD 30,000,000,” mentioned Nelli Ter-Torosyan, adding that the actual beneficiary of the transactions is Gevorg Kostanyan, who initially controlled them.

The prosecution also clarified that transfers had been made to the Republic of Greece, without disclosing further details. According to documents, Gevorg Kostanyan and Lilit Kostanyan divorced on October 9, 2018, but the data obtained by the prosecution indicates that their divorce is formal in nature. “It has become evident that Gevorg and Lilit Kostanyan have crossed the borders of the Republic of Armenia jointly and in the same direction multiple times. Furthermore, they continue to be registered at the same address. It is not coincidental that Lilit Kostanyan has made the relevant transfers abroad after the divorce. The aforementioned indicates that an attempt has been made to conceal the fact of conducting a common economy through divorce and the actual beneficiary of the monetary transfers directed toward property acquisitions. The actual beneficiary has been Gevorg Kostanyan,” emphasized the prosecutor, adding that the data obtained from the criminal case also confirm the formal nature of the divorce registration.

Nelli Ter-Torosyan presented certain movable and immovable properties considered legal in court.

Then Varazdat Asatryan presented his objections in court, stating that the lawsuit is unfounded and subject to dismissal. He claimed that the prosecutor's office is not a proper plaintiff in this case and that the study was unlawful, conducted in violation of laws. Additionally, according to the lawyer, the plaintiff’s claim that Gevorg Kostanyan's associates had no other legal income does not reflect reality: “The accompanying documents that have become accessible to us speak to the contrary. They had sufficient resources, which have not been duly valued. Furthermore, the evaluation process raises doubts. There is a differentiated approach due to the plaintiff’s status, which is unacceptable for us.”

According to the lawyer, the calculations made by the Department of Confiscation of Illegally Acquired Property lack credibility and cannot serve as the basis for the lawsuit. “...the basis of the lawsuit is entirely based on these calculations, therefore, there is a lack of evidence in this regard,” stated Varazdat Asatryan.

The lawyer informed the court that there are many issues regarding the subject and grounds of the lawsuit, proposing to postpone the session to discuss the plaintiff’s motion regarding the change of the grounds and subject of the lawsuit during the next court session. The judge granted Varazdat Asatryan's motion and postponed the court session.