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Boies Schiller Flexner LLP Files Amended Rico Complaint on Behalf of Kingstown Capital Against Radovan Vitek and Others


U.S.-based hedge fund Kingstown Capital Management, L.P., Investhold Ltd., and their affiliates filed a First Amended Complaint against Czech real estate mogul Radovan Vitek and others, including several new defendants. The amended complaint, filed November 22 in the U.S. District Court for the Southern District of New York, cites new facts that came to light in a report by Luxembourg’s financial regulator, among other things.

The new defendants include Martin Nemecek, the CEO of defendant CPI PG and a long-time employee of Radovan Vitek; Rothschild & Co., a financial advisor to Orco Property Group, which the plaintiffs recently learned was simultaneously working for Vitek and Jean-Francois Ott in connection with their plans to take control of Orco; and several additional companies and their beneficial owners who secretly worked with Vitek to acquire control of Orco, with funding providing by J&T Banka and J&T Finance Group.

Many of the new allegations in the amended complaint come from a previously non-public 2017 report of the Luxembourg financial regulator known as the Commission de Surveillance du Secteur Financier (“CSSF”). In this report, the CSSF made detailed findings of wrongdoing by Vitek and others, including that:

  • Vitek and Ott violated at least three European and Luxembourg laws: the Takeover Bids Act (which requires any person or entity that acquires control of more than 33.33% of a company must offer to purchase all other outstanding shares), the Transparency Law (which requires anyone acquiring in excess of 5% to make a disclosure), and the Market Abuse Law (which makes it illegal to engage in insider dealing and market manipulation).
  • Rothschild & Co. was engaged by Orco Property Group to help examine strategic ways to raise financing and later to sell company assets. At the time the board of Orco Property Group selected Rothschild to be its adviser, Vitek, Ott and Rothschild failed to disclose the fact that Rothschild was already working for Vitek and Ott, helping them secretly acquire shares of Orco Property Group through shell companies, and attending secret meetings with Vitek and Ott in advance of board meetings. (Amended Complaint, Paragraphs 92-93, 105, 121, 237-243, 277, 279, 332)
  • J&T Banka gave tens of millions of Euros in financing to an entity owned by Lumir Safranek, a close personal friend of Vitek’s attorney, from the Czech Republic. Safranek is a registered private investigator with no apparent experience in investing in real estate. Nevertheless, J&T Banka provided him tens of millions of Euros in financing while never assigning him a client relationship manager. J&T Banka advised the CSSF it has no documents regarding Safranek’s introduction to the bank. As Plaintiffs observe in their amended complaint, “These are not the hallmarks of a legitimate banking relationship,” (Amended Complaint, Paragraphs 284-289, 449).
  • J&T Banka had close ties to new defendants Egnaro Investments Limited, LCE Company Limited, and Levos Limited—Cypriot shell companies that all used to be owned by J&T Finance Group and that the CSSF found worked in concert with Vitek to take control of Orco and ultimately acquire it at a substantial discount from its fair value. Each of these entities acquired less than 2.5% equity in Orco in an effort to avoid having to disclose their ownership stake, which helped conceal Vitek’s control of Orco from Kingstown Capital. (Amended Complaint, Paragraphs 169-170, 446-447).

In addition to these new allegations, the amended complaint also contains additional information on Vitek’s contacts with the United States, including his use of and ownership of U.S. entities to perpetrate his fraud against the plaintiffs. The amended complaint alleges that Elypse Holding LLC, Mandragora Holding LLC, Axiom Holding LLC, and Justsay Holding LLC each listed Vitek as a named member, were all incorporated in Washington, D.C., and each had a registered agent located in Washington, D.C. (Amended Complaint, Paragraphs 67-72).

This contradicts Vitek’s declaration, signed under penalty of perjury and filed with the U.S. court, in which he claimed he had never done business in the United States. (See Kingstown Capital Management, L.P. v. Vitek, Case No. 19-cv-03170, Document No. 74: “I do not currently, nor have I ever, conducted any business activities in New York or anywhere in the United States.”).

Matthew L. Schwartz, a partner at Boies Schiller Flexner who represents the plaintiffs, said:

“The previously confidential report by Luxembourg’s financial regulator is a scathing indictment of Vitek and confirms his involvement in a pattern of illegal activity, which is further documented extensively throughout the amended complaint. The amended complaint contains a comprehensive picture of the defendants’ conduct, which directly injured Kingstown Capital and Investhold. While the defendants will surely make procedural arguments to try to avoid a hearing on the merits where they will have to answer some very hard questions, we look forward to presenting our evidence to a jury.”


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