A man who alleges that he was extorted and defamed by a Slovak businessman has been awarded $32.4 million default judgment by a federal judge who found the businessman liable on two counts of violating the Racketeer Influenced and Corrupt Organization (RICO) Act and one count of defamation.
The plaintiff, Zdenek Bakala, is a dual citizen of the Czech Republic and the United States and owns a home in Hilton Head. Bakala contends that his fight against illiberalism and corruption in his home country has made him a target for harassment by reactionary forces.
In a Sept. 20 order, U.S. District Judge David Norton wrote that Pavol Krupa, a close ally of the Czech President Miloš Zeman, had perpetuated an “international smear campaign” against Bakala in an “undisguised attempt to extort money” from him.
Norton found that Krupa began his campaign of “harassment, defamation, and malicious interference” with Bakala’s family and his commercial and philanthropic relationships in 2016 in Europe. In 2017 he offered to cease the campaign if Bakala paid him the equivalent of around $23 million in U.S. dollars and threatened to intensify and escalate the campaign by bringing it to the United States if Bakala didn’t meet his demands.
When Bakala refused to pay, Krupa made good on his threats, enlisting the aid of Crowds on Demand, a California-based company that employs paid actors to stage “protests” on clients’ behalf. The actors appeared at Bakala’s home on Hilton Head Island and outside of the school attended by his children there, carrying signs and chanting slogans accusing Bakala of being a criminal, a fraud, and the “Scammer of the Decade.” Similar performances were staged near the offices of businesses with which Bakala was affiliated in New York and Nebraska.
Krupa’s campaign also included publishing numerous false allegations in Europe and the U.S. that Bakala was a criminal and a scammer, inciting threats of violence against Mr. Bakala and his family, and filing baseless criminal complaints against Bakala, Norton wrote.
The harassment stopped after Bakala filed his lawsuit. Krupa was initially represented by U.S. attorneys, but later fired his lawyers and proceeded pro se. Eventually, Krupa, who “treated this Court and the rules of procedure with the same disdain and contempt he showed for the rights of Mr. Bakala … appears to have simply lost interest,” Norton wrote, leading to the default judgment against him. The judgment included $25,906,146.94 in actual damages, including trebled damages and attorneys’ fees and costs under RICO, plus $6,500,000 in punitive damages.
Marshall Winn, Wallace Lightsey, and Rachael Anna of Wyche in Greenville, Spartanburg, and Columbia represented Bakala, along with Andrew Shapiro, Carl Hennies, and Margaret Haas of Quinn Emanuel in Chicago and Houston. Winn, Bakala’s lead counsel, said that he was pleased with the order.
“We view it as a positive step in repairing the damage inflicted by Krupa’s years-long campaign to intimidate, defame and extort our client,” Winn said.
Winn said that a lengthy investigation by Czech authorities also found that Krupa’s allegations that Bakala had bribed officials to purchase a major state-owned asset and bilking investors out of their money were “entirely baseless.”
“Collectively, these outcomes vindicate Mr. Bakala while exposing the lengths to which Krupa was willing to go,” Winn said. “Mr. Bakala can take comfort from the fact this ruling will surely prevent others from falling prey to these sorts of tactics.”
The firm said that it intends to pursue collection in both the U.S. and in Europe and believes that Krupa has assets that Bakala will be able to reach to collect on the judgment.
According to court records, Bakala reached a settlement with Crowds on Demand, which was represented by Amanda Bradley of McAngus Goudelock & Courie in Greenville and Trudy Robertson of Moore & Van Allen in Charleston. Neither attorney immediately responded to a request for comment.
VERDICT REPORT — RICO/DEFAMATION
Amount: $32.4 million
Injuries alleged: Damage to professional reputation, costs of litigation, emotional distress
Case name: Zdenek v. Pavol Krupa, Adam Stewart, and Crowds on Demand
Court: U.S. District Court for the District of South Carolina
Case No.: 9:18-cv-02590
Judge: David Norton
Date of verdict: Sept. 20
Attorneys for plaintiff: Marshall Winn, Wallace Lightsey, and Rachael Anna of Wyche in Greenville, Spartanburg, and Columbia, and Andrew Shapiro, Carl Hennies, and Margaret Haas of Quinn Emanuel in Chicago and Houston
Attorneys for defendant: None