Financial advisor Rothschild & Co. was sued in the U.S. for allegedly helping the Czech property billionaire Radovan Vitek secretly acquire controlling shares in a real-estate development company in what a New York hedge funds says amounted to a $1 billion fraud.
Rothschild helped Vitek quietly take control of Luxembourg-based Orco Property Group so the billionaire could strip it of its most valuable assets, according to an amended suit filed Nov. 22 in Manhattan by Kingstown Capital Management LP, which says it held a “substantial” stake in Orco.
Kingstown, which sued in April, said it added Rothschild as a defendant after obtaining details from a 2017 report on the matter by Luxembourg’s financial watchdog, the Commission de Surveillance du Secteur Financier. The regulator investigated Vitek and an alleged co-conspirator, former Orco Chief Executive Officer Jean-François Ott, from 2012 to 2016, according to the new complaint.
“Rothschild participated in a conspiracy with Vitek by, among other acts, acting as a broker to both Vitek and Vitek’s agents, proxies, and nominees,” Kingstown said in its new complaint. The Luxembourg regulator “uncovered evidence of secret meetings and correspondence between Vitek, Ott, and their advisors, in furtherance of their illegal agreement and scheme,” the suit alleges.
A message sent to Rothschild’s press office wasn’t immediately returned.
A spokesman for the Luxembourg regulator said he is looking into the matter but could not immediately confirm the report.
Vitek has previously denied Kingstown’s claim that he used a web of shell companies and “straw owners,” including Ott, to gain control of Orco and then sell its most valuable assets at “distressed prices” to entities he secretly controlled. Vitek’s company, CPI Property Group SA, which was also named in the suit, has also previously denied the allegations.
CPI Chief Financial Officer David Greenbaum said on Monday that the addition of Rothschild as a defendant is an attempt to embellish the original complaint, which the company has moved to dismiss.
“The plaintiffs are throwing spaghetti at the wall to see what sticks,” Greenbaum said. They “are trying to buy time and attention before our motion is heard,” he said.
The case is Kingstown Capital Management LP v. Vitek, 1:19-cv-03170, U.S. District Court, Southern District of New York (Manhattan).
This article was provided by Bloomberg News.
