Government aid demanded after real estate scams

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MOSCOW -- Thousands of Russian home buyers who lost their life savings in nationwide real estate scams are demanding compensation from the government, saying that state corruption and negligence left them open to fraud.

Home buyers claiming to represent 200,000 families across the country who fell victim to the scams released a letter to President Vladimir Putin this week demanding that the government offer them apartments or cash refunds and calling for stronger oversight of the construction industry.

"Having paid for apartments, we have no place to live, because of flawed legislation in the field of housing construction and land ownership, corruption, bureaucracy and the criminal negligence of officials and law enforcement bodies," the letter said. "We are all taxpayers and we should not have to bear these moral and financial losses because the state does not carry out its obligations to us."

The home buyers say they were defrauded by construction firms who promised customers apartments in Moscow and other cities. Russia's oil-driven economic boom has spurred demand for housing, especially in the capital, forcing many Russians to look for new, affordable homes in the suburbs.

After accepting partial or full payments in cash for the apartments -- common practice in the Russian housing market -- the firms never built the homes or they sold them to multiple buyers.

One Moscow construction company, Sotsialnaya Initsiativa, is reported to have collected more than $555 million throughout Russia in the scam. The company's former director, Nikolai Karasyov, was arrested and charged with large-scale fraud in January.

"We're being told that Russia is in a demographic crisis, that women need to have more children, but how are we supposed to do that when we haven't got anywhere to live?" asked Anastasia Antonycheva, a spokeswoman for the home buyers, referring to Mr. Putin's call during his recent state of the nation address for Russians to have more babies.

Miss Antonycheva, 20, said her mother and uncle were defrauded of $49,000 after they bought an apartment for her elderly grandparents three years ago that was never built.

Many victims of the scam have tried to sue the companies involved, she said, but to no avail.

In some cases, she said, construction firms paid off court officials to ensure that complaints were never pursued. In others, the companies involved simply declared bankruptcy and re-registered as new corporate entities.

The defrauded home buyers have organized a series of anti-government demonstrations, including one on May 19 that saw more than 1,000 protesters rally outside Moscow's White House, which houses main government offices. In a move reminiscent of Ukraine's Orange Revolution, about 50 die-hard protesters tried to set up a tent camp at the rally but were dispersed by riot police early next morning. Another protest is planned for Monday.

"We're going to continue fighting until the government stops ignoring us," Miss Antonycheva said.

Large anti-government demonstrations are rare in Russia, where Mr. Putin has strengthened Kremlin control over parliament, the media and nongovernmental organizations since coming to power in 1999.