The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The $22 million battle between the Czech authorities and Viktor Kozeny continues to heat up, the former alleging that returning the funds to the Lyford Cay-based financier will enable him to “complete his fraud”.

Harvard Holdings, the entity Mr Kozeny allegedly defrauded of a multi-million dollar sum in the 1990s, said in New York court filings that a company the financier supposedly controls had made “several false assertions” in its bid to claim the funds that are currently frozen in Wells Fargo bank accounts.

That company, Landlocked Shipping, had previously alleged the $22 million belonged to it, not Mr Kozeny, and that the financier neither controlled, nor had a financial interest, in it. Instead, it was alleged that Mr Kozeny’s mother, Dr Jitka Chvatik, was the “sole beneficial owner” of Landlocked Shipping.

But, in response, Harvard alleged: “These false assertions are designed to mislead this court so that Kožený can complete his fraud and transfer the Wells Fargo funds to his offshore accounts.”

The disputed $22 million was generated by the sale of Peak House, a property in Aspen, Colorado. Harvard is alleging that the monies to initially purchase the property came from Daventree, a Cyprus-registered entity allegedly used by Mr Kozeny to plunder its own assets more than a decade ago.

“The money to purchase Peak House came from Daventree, an entity to which Kožený transferred Harvard Holdings’ assets,” Harvard alleged.

“Kožený’s mother’s own testimony is that she did not know the source of the funds for the purchase of Peak House, and did not even know that Landlocked had purchased Peak House until after the fact.”

Setting out its case more fully, Harvard further alleged: “Landlocked asserts that it is ‘undisputed’ that the funds held by Wells Fargo ‘belong solely to defendant Landlocked’.

“This is certainly a disputed issue, and the evidence shows that Landlocked is a shell entity controlled by Kožený. For example, the funds used to purchase Peak House came from an entity called Daventree.

“Daventree was the primary entity to which Koženy transferred assets from Harvard Holdings. Kožený transferred hundreds of millions of dollars in assets to Daventree from Harvard Holdings in exchange for worthless shares of offshore companies.

“Contrary to providing evidence that Kožený’s mother controlled Landlocked, her affidavit shows that she did not even know that the Peak House had been purchased by Landlocked until after the sale had been completed, and that she did not know where the money came from to purchase the house.”

Analysing Dr Chvatik’s affidavit, Harvard added: “Landlocked admits that the money used to purchase Peak House came from Daventree, but asserts that Kožený’s mother directed that the funds come from Daventree.

“But the affidavit of Kožený’s mother that is cited is to the contrary. In her affidavit, Kožený’s mother states that to ‘her best current memory . . . Dr. Bodmer indicated that he could fund it from a trust in which Daventree Ltd was involved’. Bodmer is a Swiss lawyer who pled guilty in 2004 to moving money for Kožený that was to be used for bribes.”

Harvard then also rejected claims that Mr Kozeny had no knowledge of the Czech legal proceedings against him, which resulted in a $410 million judgment being issued against the financier.

Arguing that Mr Kozeny “participated full in defending himself.... and co-ordinated legal strategies with his lawyer”, Harvard also insisted that the New York courts had jurisdiction over Mr Kozeny.

“The judgment shows (and Landlocked tacitly admits) that Kožený committed the acts in question in the Czech Republic before moving to the Bahamas (a country with no extradition treaty with the Czech Republic), where he continued committing the fraudulent acts,” Harvard alleged.

Harvard Holdings was allegedly founded by Mr Kozeny in 1991 to acquire the vouchers issued to Czech citizens that could be exchanged for shares in privatised state assets.

He allegedly convinced one million Czechs to hand over their vouchers to Harvard, which was supposed to invest them on their behalf.

Eventually, Mr Kozeny amassed enough vouchers to control 15 per cent of the Prague Stock Exchange.

The vouchers eventually peaked at $1.4 billion in value in December 1994, more than 30 times their original value, but Mr Kozeny then “embezzled funds” via 98 transactions - causing loss to thousands of Czechs.

The Prague courts ultimately found him guilty in July 2011, issuing the $410 million judgment. Harvard is alleging that Peak House was bought with funds taken from Czech investors.