Judiciary
NEW York hedge fund, Kingstown Capital Management L.P, and other plaintiffs filed a lawsuit on 10 April 2019 in the Southern District of New York against Radovan Vitek, a Czech real estate mogul with business interests throughout Europe, whose fortune Forbes magazine estimates at $3.5 billion. Represented by litigation powerhouse Boies Schiller Flexner LLP, the hedge fund Kingstown Capital Management L.P and Czech investment firm Investhold Ltd allege that Vitek ran an elaborate criminal enterprise that defrauded the plaintiffs out of more than US $1 billion.
According to the complaint, Berlin’s largest commercial real estate landlord, Vitek engaged in racketeering activity including wire fraud, mail fraud, money laundering, and other crimes and amassed his wealth at the expense of the plaintiffs, according to the complaint. His commercial interests span multiple jurisdictions including the Czech Republic, Switzerland, Luxembourg, Germany, Croatia and UK.
The complaint alleges that Vitek was aided and abetted by private Czech bank J&T Banka, as well as Luxembourg-based real estate development company ORCO Property Group, S.A., and ORCO Germany, now known as CPI Property Group, which has an US $8 billion real estate portfolio across Europe and nearly 4,000 employees.
After Kingstown Capital established a substantial interest in ORCO Property Group, Vitek “secretly took control of ORCO through a series of shell companies and straw owners,” according to the complaint. Individuals that are named as “straw owners” include ORCO’s former Chief Executive Officer Jean-François Ott and Vitek’s mother, Milada Mala.
The complaint states that “Vitek stripped ORCO of its most valuable real estate assets, using his effective control over the company to cause ORCO to sell real estate at distressed prices to other entities that Vitek secretly controlled.”
The complaint adds, “Vitek’s scheme, which was carried out for nearly a decade and involved numerous investments and entities, was made possible by J&T Banka, a.s., and its affiliates. J&T Banka . . . financed nearly every one of Vitek’s fraudulent schemes, and was a willing participant in Vitek’s crimes.”
Matthew L. Schwartz, a partner at Boies Schiller Flexner and former federal prosecutor who represents the plaintiffs, said: “Today’s lawsuit painstakingly lays out the existence of a massive, decade-long fraudulent scheme perpetrated by Vitek and his co-conspirators that made him a billionaire with one of the world’s biggest property empires. We look forward to justice being done and for the opportunity to present our evidence in open court.”
The complaint states that in 2017, the Luxembourg financial regulator known as the Commission de Surveillance du Secteur Financier launched an investigation into Vitek, Ott, and CPI Property Group and found that “Vitek and Ott had ‘acted in covert concert,’ secretly controlled ORCO, and therefore violated Luxembourg and European law.”
The plaintiffs are now seeking far greater penalties against the defendants for alleged violations of several statutes including the Racketeer Influenced and Corrupt Organizations Act. The defendants “reached deliberately and repeatedly into the United States, and New York in particular, to perpetrate their crimes,” the complaint states. A link to the complaint filed on 10 April 2019 is here.
– Apr. 19, 2019 @ 12:19 GMT |
Tags: former partner out of over $1 Billion Suit alleges Czech Oligarch defrauds US Hedge Fund
