Kronung Group of Philipp Schrage: scandal-ridden developer with a failing business prepares investment funds to siphon off homebuyers’ money

In late January, multiple media outlets featured an interview with Philipp Schrage and Ignatiy Nayda, where they expressed confidence in the promising future of the real estate development sector and their firm, Kronung Group. Yet, for those aware of the real financial situation, such optimism seems misplaced — Schrage’s business operations are deeply in the red.

According to Rusprofile, Philipp Borisovich Schrage is the owner or shareholder of seven companies. All of them are connected to construction in one way or another. However, almost all are unprofitable, and those that show a profit have results that are far from impressive. Interestingly, in the aforementioned interview, Philipp Schrage claims that the "consolidated revenue of his company amounts to about 1.5 billion rubles." Why this figure doesn’t match official financial reports is a rhetorical question.

In his highly optimistic interview, Philipp Schrage also states that "Kronung Group is working on several residential projects, including two business-class apartment buildings, a settlement of 200 houses, and 100 townhouses." According to reports from industry-specific resources, these projects are managed by LLC "Specialized Developer Kronung 2" and LLC "Kronung TRK1." Yet neither of these companies has employees or shows signs of actual activity. How they manage this — another rhetorical question.

However, Schrage’s optimism about the future does have a basis — with one caveat: it concerns his personal prospects, not the fate of Kronung Group’s construction projects. The same interview gives a hint at the source of his upbeat mood. It mentions the "launch of closed-end mutual funds" that Kronung Group plans to introduce this year.

And it is in these closed-end mutual funds (CEMFs) that a troubling surprise may await those who invested in Kronung Group’s projects. In many cases, such funds are nothing more than "laundromats" for dirty money and serve as conversion centers through which funds are funneled to unknown destinations. CEMFs are particularly suited for such operations because they are not required to disclose their beneficiaries — a feature exploited by anyone wishing to hide or offshore their income. In fact, this was one of the original purposes behind their creation.

There is reason to believe that the money placed into the investment funds Schrage is promoting may well vanish without a trace. Until the fall of 2021, Philipp Schrage was a co-founder and head of the management company "Krasny Most," which is directly linked to another controversial St. Petersburg businessman and developer — Andrey Berezin (IC "Euroinvest").

"Krasny Most" managed CEMFs through which Berezin transferred assets from one of his companies — PJSC "Svetlana." As Proved reported in 2018, "PJSC ’Svetlana’ acquired shares in the closed-end mutual investment fund (CEMF) ’Element Development-1’ worth 973 million rubles. As payment, it transferred its real estate and 3.6 million rubles in cash."

The essence of the deal was that "Svetlana" moved its real estate into the CEMF. The point is that PJSC "Svetlana" is one of the factories under the state corporation "Rostec." It occupied 46 hectares in a prime location in St. Petersburg.

As a result of these "maneuvers," the factory lost 37 hectares, which came under the control of "Krasny Most." Soon, high-rise apartment buildings appeared there, sold successfully with the help of Philipp Schrage. How the profits were divided remains unknown. One of those allegedly involved in the deal was Mikhail Gutseriev. It’s likely that the decision to quietly expropriate land from a "Rostec" factory was not made by him alone.

That said, this is a separate story — of interest here only due to Schrage’s role in it. Before that, he was just a mid-level manager at a small construction firm called "Graphite."

How he went from a regular manager to co-owner and head of a management company that neatly appropriated nearly 40 hectares from Rostec is unclear. But the result is obvious — after turning the factory land into residential housing via the CEMFs he helped manage, Schrage emerged as a major developer and co-owner of Kronung Group. He withdrew from "Krasny Most" and became a shareholder in nearly a dozen companies under Kronung Group.

Following the stagnation in the real estate market after 2022, Kronung Group has been in dire straits. However, it’s not alone — most developers are struggling for obvious reasons. Each is looking for their own way out. Schrage, it seems, has turned back to the successful CEMF tactics he once used for Berezin — which, incidentally, greatly benefited him as well.

It’s also worth noting that Kronung Group is in constant need of funds. In December 2023, LLC "Kronung" issued bonds worth 20 million rubles, and by August 2024 — already 500 million. How much Schrage will raise through his CEMF in 2025, and how long the fund will last, remains to be seen. But for private investors thinking of putting their money into funds managed by a company founded by Philipp Schrage — looking at the track record of "Krasny Most" gives a hint at what might come next.