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Saturday, December 3, 2022

What To Know About a Russian Oligarch’s Bay Area Investments

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Dreams of a Russian oligarch, $28 million, an abandoned church, and a new techno-religion might sound like straight out of bad science fiction. But it’s true.

In a new investigation, the San Francisco Standard reveals how a Russian billionaire tied to Vladimir Putin invested in the Bay Area in 2015 and 2016 through a secret network of companies $28 million.

His most famous investments are in a self-driving car technology company and — among other things — an abandoned San Francisco church converted into a startup incubator.

Then, in 2018, the U.S. sanctioned the associated oligarch Suleyman Kerimov in retaliation for the Kremlin. “Malicious activity on a global scale.” His foothold in the Bay Area is starting to dissipate.

Here are five takeaways from The Standard’s new survey.

Russian billionaire businessman and Federation Council member Suleyman Klimov attends a meeting at Naryn Kala Castle in Derbent, Dagestan, Russia, April 14, 2021. | Mikhail Svetlov/Getty Images

1. Who is Suleyman Kerimov? How did he get to San Francisco?

Kerimov is a Russian oligarch who made most of his fortune investing in Russian company Polyus, the world’s largest gold producer.

In 2015 and 2016, Kerimov put some of his fortune into the Bay Area’s white-hot tech scene through a venture capital firm called GVA Capital.

GVA Capital has been described as “not your father’s typical venture capital firm,” touting its investments in early-stage startups and its international connections without citing the source of its funding.

The venture capital firm, founded by Russian businessmen Magomed Musaev and Pavel Cherkashin, counts Kerimov as a client and scouts investment opportunities for him.

2. Three investments, one big success

Kerimov has made three investments through GVA Capital:

  • Invested $3 million in Vestor.In, a seed funding for startups.
  • Invested $20 million in Luminar Technologies, a company developing self-driving car technology. In 2020, the company will go public. Kerimov’s stock is now worth about $150 million.
  • Invested $5 million in Startup Temple Fund, which purchased Nuestra Señora de Guadalupe, a defunct Catholic church on Russian Hill. It turned the church into a tech incubator and event space, dubbed a sanctuary for entrepreneurship.
The exterior of the former Nuestra Señora de Guadalupe Church (Our Lady of Guadalupe Church) at 906 Broadway on November 16, 2022, which was purchased with private funds in 2016 to become the Hack Temple in San Francisco, California. The Standard’s Michaela Vatcheva

3. Wait, did you mean “Startup Temple”?

Yes, we did. The idea behind this unusual project is Cherkashin, who envisioned a place for investors and startup founders to communicate, meet and even live together in a co-living space built in the former church parish.

in a magazine column Starting in 2017, Cherkashin likened startup culture to a “religious experience” and implored readers to build an IRS-approved “hacktivist church” that would pay the fees and provide space for the event.

But Startup Temple failed as a business—and as an investment in Kerimov.

In 2020, after three or four years of struggling, the company ran out of money amid the pandemic. Cherkashin could no longer pay his U.S. creditors, and the building was foreclosed on. The church is now empty.

4. Homeless shelter plans setback

After being elected to San Francisco’s Board of Supervisors for the third time in 2015, Aaron Peskin embarked on a campaign promise to build a homeless shelter for Russian Hill. For this, he conceived of a building – the Church of Nuestra Señora de Guadalupe.

But during lease negotiations with the landlord, he got some bad news.

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“They sold it to this unknown party. We were like, ‘What the hell?'” Peskin said. “We were told, ‘These people paid us a ton of money.’ To me, that didn’t make sense.”

That party, of course, was backed by Kerimov’s money from the Temple of Entrepreneurship Fund.

The frustrated Russian Hill homeless shelter reveals the local impact of capital flight and oligarchic investment.

Had Kerimov never invested in the church, Peskin thinks the community would have gotten a homeless shelter in 2016. It took another three years to find another site in the area, delaying critical resources for the city’s growing homeless population.

5. U.S. sanctions catch up to Klimov

In 2018, the United States imposed sanctions on Kerimov. But his investments in San Francisco were not visibly affected because they were registered with an offshore company not directly owned by the oligarch.

In 2022, the U.S. blocked the Heritage Trust, a Delaware trust holding Klimov’s investments, and froze them after Russia’s full-scale invasion of Ukraine brought more sanctions.

On November 14, the United States sanctioned Kerimov’s wife, children, nephews and so-called agents. The Standard’s investigation found that the Heritage Trust would ultimately benefit the oligarch’s children, grandchildren and other potential family members.

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