PARTNERS SAY THEY WERE CUT OUT
By the summer of 2016, Radovan Vítek had completed what might be called the dismantling and capture of ORCO Property Group.
The Luxembourg regulator had issued its findings in 2017.
Vítek paid the fine.
When everybody finished filling out the paperwork, he had the buildings, the shares, and the money.
That was not the end of the story.
It was merely the point at which another part of the story became easier to see.
Before there was ORCO, there were partners. They say they put up the money. They say he later cut them out and kept what the money bought.
Marek Čmejla and Jiří Diviš, two Czech businessmen, sued Vítek in Cyprus through companies including Investhold and Verali. The case is No. 2792/22 in the Nicosia District Court.
They say they provided Vítek with more than €320 million under a partnership in which the parties were supposed to be equals.
Vítek denies that any partnership existed.
The denial is complicated by the fact that he made one payment before stopping — conduct that, at the very least, raises the question of why one repays money that was supposedly never owed.
People do not usually start repaying a €320 million Christmas present.
On December 27, 2022, the Nicosia District Court issued an interim order freezing roughly half a billion euros in assets associated with Vítek, his mother, Milada Malá, and CPI Property Group.
Vítek challenged the order. On July 31, 2024, the court confirmed it.
THE BANK THAT WAS TOLD
In March 2023, Goldman Sachs Bank USA received formal notice that a Cyprus court had frozen roughly half a billion euros in assets connected to Vítek, his mother and CPI Property Group.
Goldman was one of 19 banks placed on notice.
An American bank is not permitted the luxury of perfect incuriosity when handed credible information that a customer's assets have been frozen abroad.
The Bank Secrecy Act and anti-money-laundering rules require banks to assess customer risk and suspicious activity.
This should not be overstated. No American court ordered Goldman Sachs to freeze Vítek's assets.
The Cyprus order had no binding force in the United States.
Nothing in the record establishes that Goldman held any of the frozen assets. What is established is that a major New York bank was handed official documentation of the freeze.
Whether Goldman investigated the matter, or continues to do so, is not publicly known.
No U.S. criminal case against Vítek is public. A sealed case, if one exists, would not be public.
Some of the core events are now more than a decade old, raising obvious statute-of-limitations questions.
Later acts could still be within the statute of limitations if prosecutors can prove they were part of the same conduct.
If related conduct continued, prosecutors could consider whether it formed part of a racketeering enterprise.
A U.S. prosecution would also require prosecutors to address extradition from Switzerland or the Czech Republic.
And then, again, if it got too hot for Vítek in Europe, and extradition seemed likely, Vítek could head for the cooler breezes of one or more of the seven seas.
TWO BOATS, BUILT TO GO FAR
Here the story acquires a nautical footnote.
If Europe became uncomfortable, Vítek owns another way to put miles behind him.
Vítek owns two near-identical expedition yachts, both built by the Italian yard Eurocraft Cantieri Navali.
The first, Baron Trenck, Hull 507, was delivered in 2011.
The second, Baron Trenck II, Hull 607, followed in 2022.
Each is 43.5 meters (about 143 feet), steel-hulled, with an 8.2-meter beam. They are true long-range explorers.
Published specifications for the class describe ranges of roughly 7,000 to more than 11,000 nautical miles at economical speed.
That is enough to cross oceans and stay at sea for extended periods without needing to call at a friendly port. Each vessel accommodates 12 guests and nine crew.
Nine crew members make sure the owner does not have to do much.
These are not harbor-hopping party boats. They are vessels designed to remain independent of any single jurisdiction for weeks or months at a time.
These boats are built to leave and stay gone.
A long-range yacht is, among its other advantages, an efficient instrument for placing geography between its owner and whatever authorities happen to be asking questions.
Distance can sometimes be useful even for a billionaire.
AMERICAN MONEY
When ORCO converted debt into equity in 2012, several American institutions became shareholders. Among them was New York-based Kingstown Capital.
Thus the American connection is not hypothetical. American capital was already invested in the company before Vítek began acting in concert through shell companies to strip ORCO of an estimated one billion euros.
Other holders with American money included Capstone Equities Capital Management, Tricadia Capital Management and a J.P. Morgan entity that received equity through the restructuring.
The European transactions the Luxembourg regulator found unlawful occurred while U.S. investors remained shareholders.
Those shareholders lost their money, and if what the Luxembourg regulator says is true, they lost it through fraud.
An American prosecutor could ask whether any alleged scheme involving U.S. investors used interstate or international wires, mails, or other jurisdictional channels sufficient to support federal charges.
Kingstown, Capstone, Tricadia and J.P. Morgan are documented U.S. links to ORCO during the period of concealed control and dilution.
Pension systems in New York, New Jersey, Pennsylvania, Michigan, Rhode Island, Ohio, West Virginia and Tennessee may have claims arising from being defrauded.
Whether any public official chooses to examine those claims is, as ever, a different question.
Someone still has to act.
THE SHORT SELLER'S NUMBERS
On another investigative track, Muddy Waters, the short seller, accused Radovan Vítek of inflating the value of CPI's buildings while the company borrowed against those inflated numbers and sold bonds to investors who took the figures at face value.
The short seller's report, published November 21, 2023, examined four transactions worth roughly €441 million and identified about €151.6 million it characterized as problematic.
If the short seller is right, if the reported values were materially false, if occupancy was overstated, if the books were cooked to support more debt than the assets could carry — then the question is no longer academic. Some of that debt and some of those bonds impacted American investors.
This is within the statute of limitations. The report came out in 2023.
Vítek's CPI may be teetering on the edge of bankruptcy. But even if it survives, wire fraud does not require a bankruptcy.
The company does not have to collapse before prosecutors can indict.
The relevant question is whether materially false representations were used in a scheme to obtain money through interstate or foreign communications, or to obtain credit from institutions within the reach of U.S. banking law. If inflated valuations were knowingly used to raise American-connected capital, prosecutors would have something to investigate.
Prosecutors look at the numbers, the appraisals, the occupancy data, and the representations made to lenders and bondholders.
CHALLENGE WITH THE OLDER ORCO CONDUCT
The Kingstown allegations are old. They concern secret control, shell companies, cheap asset sales and dilution from 2012 through 2016.
The Luxembourg regulator found that Vítek and Ott acted unlawfully together to gain control and then strip ORCO of its assets, essentially swindling stockholders out of equity.
Most U.S. fraud crimes are subject to a five-year statute of limitations.
Exceptions exist, but they are limited.
If Vítek's ORCO conduct ended in 2016, much of it is likely too old for a standalone U.S. criminal case. Prosecutors would need later conduct.
TYING IT TO CPI BOND OFFERINGS
A case becomes plausible if CPI raised money from U.S. investors and misstated or omitted important facts in bond documents, presentations, or disclosures.
Muddy Waters' 2023 reports argue that the older ORCO conduct continued in CPI, including related-party transactions, overstated valuations, and corporate governance failures that affect lenders, bondholders, and shareholders.
U.S. CRIMINAL THEORIES
WIRE FRAUD — 18 U.S.C. § 1343
A wire-fraud question could be simple: what did Vítek tell bond buyers, what did he omit, and did the message travel through an email or perhaps the phone before an American wrote a check?
SECURITIES FRAUD — 18 U.S.C. § 1348
If the bonds were sold to American investors under rules meant for big institutional buyers, then U.S. securities law applies to the bond sales. Material lies or omissions in those sales could support a securities-fraud charge.
Calling an offering offshore does not remove every U.S. connection. The actual sales, communications, and investors would matter if they are American.
CONSPIRACY OR RICO — 18 U.S.C. §§ 371, 1962
A more ambitious prosecution might describe the ORCO conduct and CPI investor disclosures as one continuing enterprise, with wire fraud or other offenses supplying the alleged racketeering pattern.
MONEY LAUNDERING — 18 U.S.C. §§ 1956 and 1957
Prosecutors would need identifiable proceeds of qualifying criminal activity and a transaction falling within the reach of the federal laundering statutes.
At the end of the day, the real question is whether, when CPI sought money from investors, including Americans, it misstated or concealed facts about the history, related-party transactions, valuations, and corporate governance practices that would have mattered to a reasonable investor in its debt.
The public record contains starting points for an inquiry: allegations of serious valuation inflation and documented American capital in the ORCO-CPI story.
THE STATE OPTION
A state case is another question.
A state prosecutor would face the same proof challenges, but with jurisdiction limited to the state.
Most state fraud statutes require proof of a scheme to defraud, material false statements, and intent.
The state has to prove that Vítek, or someone acting at his direction or as part of his alleged scheme, lied, the lie mattered, and it was intentional.
The conduct — secret concert, dilutive share issues, and a dubious money trail — occurred mainly in Luxembourg, Cyprus, and the Czech Republic.
A state attorney general would need somebody who lost money in his state and some part of the scheme that crossed into the state's borders. That could be a call, a wire, a sales pitch, or a statement.
The strongest state candidates, with their respective attorneys general, would be those with large public plans that historically allocated to event-driven or special-situations hedge funds: New York (Letitia James), California (Rob Bonta), Texas (Ken Paxton), Florida (James Uthmeier), Pennsylvania (Dave Sunday).
Other potentially relevant jurisdictions include Oklahoma (Gentner Drummond), South Carolina (Alan Wilson), South Dakota (Marty J. Jackley), Tennessee (Jonathan Skrmetti), West Virginia (John B. McCuskey), Ohio (Andy Wilson) and Iowa (Brenna Bird).
Before any attorney general can indict, two things should be established. The state's money was there. And the alleged Vítek lie made it across the seas to the state in question.
WHAT COLLAPSE WOULD CHANGE
Everything depends on CPI continuing to pay its debts, now calculated at around €12 billion.
That is what protects Vítek.
As long as Vítek's CPI continues to pay interest and his refinancing succeeds, the losses remain theoretical. Investors rarely complain about a bond that keeps paying them.
But if the properties are worth less than CPI says, if the debt was based on those inflated values, and if lenders demand higher and higher interest to keep financing the company, eventually a collapse will come.
Highly leveraged companies do not decline slowly. Once financing fails, the collapse is abrupt.
Then everything changes.
Insolvency makes the losses real.
Administrators take control. They examine the books. The buildings are sold. Then everyone learns what they were worth.
The investors become creditors. They get lawyers.
If Americans bought the debt and the numbers were false, collapse gives U.S. prosecutors victims and losses.
This is where bankruptcy can become very inconvenient. The prosecutors don't have to invent the loss. The bankruptcy accountants do it for them.
Here is the investor. Here is the bond. Here is what he paid. Here is what he got back.
The injured people are standing there, each holding a piece of paper with the amount written on it.
For a man who has spent a career leaving other people holding the paper, that would be something new.
For once, the paper might come back across the table, when the paper finds its way back to the man who first passed it on.
Not merely another corporate failure from which the controlling figure emerges intact.
Not merely a bankruptcy he survives.
Not another company left behind.
Not simply another insolvency from which the principal departs.
Not another wreck left for somebody else to clean.
An indictment is different. It follows the individual.
An indictment has his name on it. Not one of his shells.
A company can disappear. A man's name cannot disappear quite so easily.
A WORD OF UNSOLICITED ADVICE
There is, of course, another course available. Vítek may wish to contemplate it before events make the decision without him.
Čmejla and Diviš are not government officials. They are two former partners who say they gave him €320 million under a partnership, and (that) Vítek later excluded them from what the money bought.
They have a court order freezing about €500 million in assets. They have already waited a decade.
A man who has waited ten years can usually wait another day.
More importantly, Čmejla and Diviš have discovery rights.
They have the thing rich men tend to dislike most: somebody else's right to open the files.
A lawsuit is not merely a demand for money. It is an instrument for producing documents. Every month the Nicosia case proceeds, more of the Vítek method becomes part of a public record: who owned what, who signed for whom, whose mother held the shares, where the money went on the afternoon it left.
Paper remembers things people prefer to forget. It remembers signatures. It remembers dates. It remembers whose name stood where and where the money went afterward.
Vítek is reportedly selling assets. Whatever interpretation one places upon that activity, abundance of time is not the obvious one.
A billionaire selling things is not necessarily in trouble. But he usually is not doing it because he has nothing else to think about.
Settlement would stop discovery, lift the asset freeze and remove an active lawsuit alleging that Vítek treated his partners much as ORCO shareholders say he treated them.
Pay them and the drawers stop opening.
And compared with a collapse, it might be the cheapest check he ever writes.
Sometimes returning something costs less than keeping it.
A LITTLE SERMON
There is something else - the non-financial consideration.
There are the things a ledger cannot carry.
A man who repeatedly takes what others say belongs to them accumulates more than money.
Thirty years of taking leaves something behind. Call it what you want.
But a man gathers more than money as he goes through life. He gathers every choice he made to get it.
And a man may put something on the other side of the scale while he is alive.
He could start by paying it back.
Restitution would make a surprisingly respectable opening move.
Give back what was taken. It would not undo the years. But it would be a beginning.
A Manhattan fund predicted exactly how Radovan Vítek would strip ORCO. All three predictions came true within 30 months. The regulator later agreed.
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