site.btaUPDATED Prosecutors Report Working on Four Cases Related to High-Profile Illegal Housing Scheme near Varna

Prosecutors are investigating a high-profile illegal construction scheme near the Black Sea city of Varna, where around 100 houses cropped up on 10 hectares in a forested area. The Appellate Prosecutor’s Office in Varna said four criminal case files have been opened and are underway, involving suspected official misconduct, forged documents, false declarations, and illegal logging.

One probe, led by the Varna District Prosecutor’s Office, concerns possible crimes by public officials between July 2023 and May 2026. Prosecutors are examining whether officials failed to carry out their duties in order to secure unlawful financial benefits for others. The case began after reports from the Regional Forestry Directorate found that some buildings were missing from cadastral records, while others lacked construction permits.

Three additional pre-trial proceedings are also ongoing. One focuses on forged “certificates of tolerance” used to present illegal buildings as lawful structures. Another concerns false declarations claiming some buildings had existed before March 2001, potentially protecting them from demolition. A fourth case concerns the illegal cutting of 41 trees on state forest land in July 2024. Prosecutors stressed that all investigations remain active and none have been suspended or terminated.

Regional Development Minister Ivan Shishkov said it is a case of "illegal construction of astounding magnitude. At a news conference in Sofia, he pointed a finger at a single official: the head of the Varna Cadaster Service, who entered the buildings in the cadaster. When confronted, this official said he was shown by the investor all necessary documents, Shishkov said and argued that all that person had to do was look up the orthophoto maps as Shishkov had done.

The Baba Alino case

The Baba Alino case first came to public attention following investigations by the anti-corruption platform BIRD and reports from local activists, who raised concerns about extensive construction activity on forest land near the Golden Sands resort area. The controversy centers on some 100 residential buildings erected across approximately 10 hectares in the Baba Alino locality, allegedly without valid permits and with the apparent failure - or possible complicity - of several institutions responsible for oversight.

According to information later confirmed by local and national authorities, the first signs of irregularities emerged in 2023, when the Regional Forestry Directorate detected illegal logging in the area. Around the same period, so-called “certificates of tolerance” were issued for a number of buildings, declaring them to have existed before March 31, 2001 - a key legal threshold in the case, as unauthorized buildings constructed before that date may qualify for protection from demolition. Former Regional Development Minister Ivan Shishkov later stated that the documents contained false information, citing satellite imagery and official records showing that as recently as 2019 the site contained only two old structures and no evidence of large-scale development.

Throughout 2024 and 2025, inspections by Varna Municipality, the National Construction Control Directorate, forestry authorities, and police uncovered expanding construction works, illegal tree cutting, fenced-off forest land, and obstruction of inspections by private security guards. Officials reported that construction continued despite stop orders and ongoing checks. By early 2025, authorities had identified dozens of newly built or unfinished structures, including multi-storey buildings and supporting infrastructure. Media reports and political statements later linked the development to Ukrainian development group KYB.

The scandal escalated in May 2026, when a joint operation by police and municipal authorities found 104 buildings allegedly constructed - or under construction - without permits, along with unauthorized roads, sewerage systems, and transformer facilities. Twenty-nine workers from Ukraine and Moldova were detained during the raid. The Varna mayor, Blagomir Kotsev, said that the illegal construction pre-dated his election as mayor and vowed that measures will be taken to ensure the demolition of the illegal buildings.

Former Interior Minister Boyko Rashkov said that GERB and the Movement for Rights and Freedoms, in the previous Parliament, consistently prevented a hearing of the State Agency for National Security leader on the operation of the KYB group in Varna. 

What KYB said

In a statement for the press, KYB denied any wrongdoing, insist that they hold all requisite documents for their Baba Alino project, and claimed to be victims of a smear campaign.

They had a news conference scheduled for Friday but it was called off with a Facebook post by the group leader, Oleg Nevzorov, saying that they were put to consistent pressure that "impedes the work of the company offices and staff, including in the night hours". 

In the statement for the press on Friday, KYB described itself as "an investor with a long-term presence, real investments, and a professional track record not only in Bulgaria but also in several other countries". According to the information provided in the statement, the company operates in Bulgaria as a member of the Chamber of Builders for the Varna region and holds a Class I license for builders in Bulgaria [from the Central Professional Register of Builders]. The corporation added that the investment in the Forest Club complex is part of a long-term commitment to Varna and the region. "Significant funds have been invested in the project, and jobs have been created for Bulgarian and Ukrainian citizens, including people who found refuge and work in Bulgaria after the war in Ukraine began," the statement said, without specifying the amount of the investment.

Three KYB officials arrested, owner suspected gone

Later on Friday, the Interior Ministry announced the arrest of three KYB officials: the owner's assistant, the company accountant and the lawyer.

The opposition party Continue the Change suggested that the KYB owner Nevzorov may have left the country. "The question arose whether the Ukrainian construction businessman is actually in Bulgaria at the moment at all," said Boyko Rashkov, a Continue the Change MP and former Interior Minister. "We are asking ourselves whether he may have left the country late yesterday evening through one of the northern border checkpoints in Bulgaria," he added.