Scandalous businessman Marko Lastik facing new criminal case

Scandalous businessman Marko Lastik facing new criminal case. Photo: Erakogu

Marko Lastik, the founder of the startup Eurora Solutions who is currently on trial for defrauding Enterprise Estonia and squandering tens of millions of euros of investors' money, now faces another criminal case, this time for allegedly defrauding support funds by the Archimedes Foundation.

Postimees reported as early as January last year that Lastik had targeted millions of euros from the Archimedes Foundation, which were intended for projects where the foundation wanted to see national research institutions play a key role. To secure this, Lastik needed a research institution and a reliable IT company willing to participate in his scheme. Lastik had his IT company, Almic OÜ, with which he had already practiced manipulating support funds from Enterprise Estonia. However, Almic's main drawback was that it did not resemble a public research institution in any way.

Thus, Lastik involved the software technology development center STACC, which brought together reputable and unsuspecting researchers, as the main contractor. STACC's role fully met the criteria of the Archimedes support measure. The researchers did not suspect any potential foul play, assuming that the project's reliability would be checked by the foundation.

In the contract with Archimedes, STACC appeared as a main contractor, though at the time the company lacked the capacity to perform the necessary IT development. Meanwhile, Lastik promised developments that would create a new success story, similar to Skype. To ease the scientists' concerns, Lastik proposed that most of the IT work would be handled by Almic OÜ. Most of the funds were also to be directed to Almic, but this did not raise any red flags for the scientists.

In late 2018, Lastik and his company, then known as Aurora Solutions OÜ (now the bankrupt Eurora Solutions OÜ), applied to Archimedes for over 1.39 million euros in support to conduct an applied research project to digitize VAT and customs declarations in e-commerce. Since a public research institution, STACC, was in the leading role, and the funding was requested for research and development, Archimedes did not suspect any foul play and approved the funding application. The total funding came to 1.3 million euros, with the applicant required to provide approximately 700,000 euros of co-financing in addition.

The funds flowed as expected from Archimedes to Eurora and then to STACC's account. As the amounts were substantial, Eurora created a separate ledger showing monthly financial transactions labeled «in» and «out.» According to the ledger, Eurora initially paid STACC, which kept a small portion of the funds and transferred the remainder to Almic. Almic, in turn, transferred significant amounts back to Lastik's company.

The success of the entire scheme relied on the fact that IT development was progressing, and Eurora started using it. Archimedes, whose successor is now the State Shared Service Center (RTK), considered Eurora one of its success stories. However, it has since emerged that Eurora«s »success« turned into a bankruptcy case that erased tens of millions of investments, and that Lastik diverted the funds to a company he controlled, mirroring the fraudulent manipulation of Enterprise Estonia support funds -- a case now similarly under judicial scrutiny.

The European Public Prosecutor»s Office has launched a new criminal investigation into the case. Paula Telo Alves, a spokesperson for the European Public Prosecutor«s Office, remained tight-lipped, stating that as a rule, the European Public Prosecutor»s Office does not comment on ongoing investigations or publicly confirm the cases it is handling.

«This is to avoid jeopardizing ongoing proceedings and their outcomes. If we have anything to announce about our investigation, we will do so proactively,» Telo Alves added.

In January last year, Lastik told Postimees that he had not received any money back from Almic and that the project was a success. However, with a new criminal case hanging over him and Eurora's business collapsing, he declined to comment further.

Marko Lastik and his brother Erki Lastik are accused of obtaining benefits through fraud, with FL Transport facing the same charges as a legal entity. Accusations of aiding and abetting crimes have been lodged against Freselle Customs & Logistics OU, OU Almic and its representative Alar Anton, Marko Lastik's wife Triin Lastik, the Lastik family's holding company Canderos Assets OU, OU Jan Tomson Disain, and its owner Jan Tomson.

Postimees reported last February that the European Public Prosecutor's Office was scrutinizing Lastik's dubious scheme to obtain support funds from the Business and Innovation Agency. Specifically, Lastik's company GTS Express, later known as FL Transport, applied for more than 230,000 euros in support from the agency to purportedly take their logistics business to a new global level with new product development. The application submitted in March 2018 painted a rosy picture -- the company's turnover and profits were allegedly improving, targeting markets in the European Union, China, India, the United States, the United Kingdom, and Russia, with a projected 50 percent annual increase in net profit, and so on.

However, by the end of 2017, GTS Express was in such poor condition that even the company's equity was negative. Nonetheless, the Business and Innovation Agency believed Lastik's story and awarded GTS Express 235,439.55 euros for product or service development activities and an additional 91,489.50 euros for the development of sales and marketing activities, as reported by Postimees this winter.

Ironically, it was Lastik's own company that vividly illustrated how brazenly Lastik lied to the Business and Innovation Agency when requesting money. In January 2019, a bankruptcy petition for GTS Express, by then renamed FL Transport, was filed with the Harju County Court, signed by Marko Lastik's brother Erki Lastik, who was the only remaining member of the company's management board. Marko Lastik had left FL Transport as early as in August 2018.

The bankruptcy petition acknowledged that due to the Russian market disappearing, the company had been struggling for the last couple of years, with the situation becoming particularly dire in 2018 -- the same year they applied for funds from the Business and Innovation Agency. The trustee in bankruptcy, after familiarizing themselves with the company's financial situation, did not hesitate to sign off on Lastik's story.

Deep in financial trouble, the company received 58,709 euros in support money from the Business and Innovation Agency in August 2018 and another 118,093 euros just two months before filing for bankruptcy. But before that, the agency needed to be shown that the company was vigorously developing its product. There were two subcontractors -- IT developer Almic OU and Jan Tomson Disain OU, focused on design. It was with their involvement that a vigorous game of invoicing began, which experts call a money loop, as reported by Postimees.

Specifically, a company associated with Lastik first transferred operating funds to FL Transport, which effectively passed the same amount on to subcontractors Almic and Jan Tomson Disain. Soon after, another company associated with Lastik transferred similar amounts back to FL Transport, which then returned the money to Lastik's first company that had initially provided it as a revolving credit. This money loop was repeated, all within the same day. As a result, FL Transport had incurred payments to supposed subcontractors, which could be shown to the Business and Innovation Agency as eligible expenses.

However, when bankruptcy proceedings began against FL Transport, Lastik did not even bother to inform the agency, which learned of the proceedings from a notice published in the Riigi Teataja gazette.

Once the agency learned of the bankruptcy proceedings against FL Transport, it decided to demand the partial return of the support. Specifically, the agency found that FL Transport had indeed begun the promised activities and required the company to return only 25 percent of the disbursed support funds, amounting to 44,200 euros. However, the agency was unable to retrieve even this sum, as Lastik settled the bankruptcy with a compromise, under which his company only had to compensate creditors 2.5 percent of the claims. Thus, all the Business and Innovation Agency received was 1,105 euros.

When Postimees published the article in February 2023, the parties involved in the case insisted they had not broken the law. However, recent developments in court indicate that Lastik is now seeking to resolve the case through a plea bargain. The Harju County Court is scheduled to hold the next hearing in this case on Monday.