Crowdestor VIP client – a political businessman with a dubious reputation

Guntars Galvanovskis
Guntars Galvanovskis

The crowd financing platform Crowdestor has raised around 50 million euros since mid-2019, almost a fifth of which leads in one way or another to the same borrower, Guntars Galvanovskis, known as a failed politician, president of the already insolvent basketball club Valmiera and participant of some criminal cases of credit affairs, reports Jānis Goldbergs’ article “VIP client with a political business scope” in the newspaper Diena.

The March 19 issue of Diena has already looked at the usury scheme of Jānis Timma, the real beneficiary of Crowdestor, which includes dozens of companies accumulating money from private lenders who are beginning to doubt the return on investment. In some cases, Timma raises money in companies he owns, but the platform’s VIP client is Guntars Galvanovskis, a politician who, after the founding of Crowdestor in mid-2019, had left the management of the basketball club Valmiera with a legal address in Valmiera, Beātes Street 5, or more precisely, had led the club to insolvency.

Ridiculous interest

The house in Valmiera, Beātes Street 5, is owned by Galvanovskis’ business partner, and it is at this address that the two largest Crowdestor borrowers associated with Galvanovskis are located. Beātes Street 5 is home to SIA Dižozols office, which is 80% owned by Kate Glika, Galvanovskis’ girlfriend or spouse. Also located there is SIA Beetroot Lab, a computer game design company, which in 2017 was featured in the Apple App Store for their created game Polipong. Both companies had a normal financial flow until mid-2019.

Since the summer of 2019, when the crowd financing platform Crowdestor was established, the all-time top borrower on the platform is Galvanovskis-owned SIA Beetroot Lab, for the benefit of which several fundraising projects have been implemented, creating a contract amount of approximately six million euros. Some of the fundraising projects say that the money is needed for refinancing. The issue is that the platform promises interest on these projects, ranging from 30% or more. Namely, without creating an incredible computer game, which is played in China, the USA and Europe, the principal amount of the loan of SIA Beetroot Lab is “eaten up” in three years, returning only interest. At present, less than two years have passed since the start of the loans, and the repayment of the loans is already delayed from time to time, one of the investors confirmed.

The second borrower is SIA Dižozols Investments, which raises money to SIA Dižozols. Here, loans are promised lower interest rates. For example, 17% in one of the contracts. The total amount of loans to be received by SIA Dižozols is 2.7 million euros, of which one million has been repaid to borrowers, but the rest is guaranteed in contracts with land and forest properties.

A group of investors has already sought legal assistance regarding the possibility of recovering the loans from the projects curated by SIA Dižozols Investments.

The loan was issued to the company against a land property guarantee, and as far as investors have been able to find out, SIA Dižozols Investments does not currently own land that could guarantee the liabilities. It may be at the disposal of SIA Dižozols, but, as the investors point out, there were no contractual obligations. Co-responsibility here, of course, should be borne by Crowdestor, which is a 40% shareholder and is perceived as a guarantor in the case of SIA Dižozols Investments.

If the total amount of money raised by the Crowdestor platform in various projects approaches 50 million euros, then the total amount of loans related to Galvanovskis converges to one-fifth of it all. In the event that one of the two Galvanovskis-related companies turns out to be insolvent, the very existence of the platform is jeopardized, all the more so because investors suspect unauthorized cross-financing between different projects.

What is unclear from the outset: why are companies with normal financial flows suddenly ready for such suicidal interest rates?

The operating methods of Galvanovskis

In order to understand the motives of this business with disproportionate risk, the entrepreneur’s own experience and history should be looked at.

Immediately after obtaining a bachelor’s degree from Vidzeme University in 2009, Galvanovskis becomes the chairman of the board of BC Valmiera, the club is successful, in 2016 it wins the title of Latvian basketball league champion. Success proves to be a good reason to ask for money. Which is also successfully done. Valmiera municipality generously gives money to the club.

In the 2018/2019 season, the basketball club association led by Guntars Galvanovskis did not apply the team to participate in the Latvian basketball championship. The association had unpaid debts and filed for insolvency on April 18, 2019, in Vidzeme District Court in Valmiera with Judge Anita Grīnberga. Already on April 23, 2019, Kristaps Andersons was appointed as an insolvency administrator.

The tax debt of the BC Valmiera to the SRS at the time of insolvency exceeded 60 thousand euros, excluding the players’ salary debts and debts to suppliers. Valmiera City Council had invested 800 thousand euros in the basketball club in ten years.

The second aspect that shows how the Crowdestor VIP client works is his political career. As a member of the New Era Party, Galvanovskis ran in the 10th Saeima elections, was elected and a year later, together with party member Klāvs Olšteins, left the party to join the newly formed Valdis Zatlers Reform Party.

In October 2011, Galvanovskis was expelled from the Zatlers Reform Party for organizing uncoordinated, individual campaigns during the pre-election period and for organizational support for the activities of the so-called Olšteins Six. Commenting on the activities of these political figures at the time, the former President said: “The national attitude here is zero” and “the moral aspect is zero”, but the President’s adviser and later the Minister of Education Roberts Ķīlis was even more direct: “This is a new level of betrayal. Should be listed in some top 10.” Galvanovskis’ political career ended with such a reputation, but close ties with others remain. Thus, in future publications of the Crowdestor saga other surnames related to the political arena will inevitably show up – such as Kārlis Gudonis or Jānis Upenieks, who currently earns money also as an adviser to the Prime Minister.

Among other things, Galvanovskis managed to work as a manager at PrivatBank’s Valmiera branch in 2006 and 2007, and in 2011 the local police investigated an interesting criminal case of possible credit fraud and document forgery specifically at the time when Galvanovskis, who had witness status in the case, worked at the branch.

It should be emphasized here that Galvanovskis was the head of the branch, but the suspects were two employees of this branch.

On the other hand, the participants in the case were BC Valmiera’s basketball players, who are well known to Galvanovskis, but who did not play for the club at the time of receiving the doubtful credits.

Galvanovskis was not charged but had to quit his job at the bank. In 2014, in parallel with the activities of the association BC Valmiera at Beātes Street 5 in Valmiera, the company SIA Beatroot Lab was being established in the adjacent office. Already in 2017, the featured status in the Apple App Store was received, which means that SIA Beetroot Lab could display its products for sale in one of the most popular online application stores around the world. It’s very good advertising, but not yet a guarantee of millions in turnover or profit.

Conclusions from business and political activities are directly related to the existence of SIA Beetroot Lab. Namely, in the beginning, there is a success, a bright bait, but then insolvency can follow – just like a basketball club, which after success became insolvent and everyone else at the broken trough could only wonder where the money went. He is doing well in his own right, as in politics, but in the end, it turns out that all partners are refusing to continue working with him. Finally, the shadow of suspicion of fraud envelops the person and yet all those around him, subordinates, players or members are to blame, but Galvanovskis himself is innocent, which he also expressively explained in the Internet media in 2011 on the criminal proceedings: “I might’ve made some mistakes in my life, but I’ve never done anything illegal.”

All that remains is to add that the crowdfunding platforms are not yet regulated and there is no possibility of breaking the laws, which will only appear at the end of this year at the earliest.

Perhaps this is the motive for preaching reckless borrowing interest to borrow as quickly and as much as possible, but the truth will be revealed in time, which will inevitably run out.


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