Bakala v. Krupa

• Decision Date: 20 September 2021
• Docket Number: 9:18-cv-02590-DCN
• Parties: ZDENEK BAKALA, Plaintiff. v. PAVOL KRUPA, ADAM SWART, and CROWDS ON DEMAND LLC, Defendants.
• Court: U.S. District Court — District of South Carolina

ZDENEK BAKALA, Plaintiff. v. PAVOL KRUPA, ADAM SWART, and CROWDS ON DEMAND LLC, Defendants.

No. 9:18-cv-02590-DCN

United States District Court, D. South Carolina, Beaufort Division

September 20, 2021

ORDER OF JUDGMENT

DAVID C. NORTON UNITED STATES DISTRICT JUDGE.

This matter came before the Court for a telephonic damages hearing on September 13, 2021, following the Court's determination that default judgment should be entered against Defendant Pavol Krupa. Counsel for the Plaintiff appeared at the hearing and presented the testimony of the Plaintiff Zdenek Bakala, and the head of his management company, David Paul, as well as extensive documentary evidence, all bearing on the injury caused to Mr. Bakala by the wrongful conduct of Mr. Krupa. Despite notice of the hearing date and time being published on the Court's docket and provided to Mr. Krupa well in advance of the hearing, he failed to appear or to contest in any way the evidence introduced by Plaintiff.

Based on the testimony and evidence presented at the hearing, the Court orders that judgment be entered for Plaintiff against Defendant Krupa in the amount of $25, 906, 146.94 in actual damages, including trebled damages and attorneys' fees and costs under Plaintiff's RICO claims, plus $6, 500 000 in punitive damages, for a total judgment in the amount of $32, 406, 146.94.

The background of this dispute and the case's procedural history leading to Mr. Krupa's default are set forth in the Report and Recommendation of U.S. Magistrate Judge Baker ECF No. 197, and this Court's Order granting in part Plaintiff's motion for default judgment, ECF No 204. In short, this lawsuit arises from an international smear campaign mounted by Mr. Krupa against Mr. Bakala in an undisguised attempt to extort money from Mr. Bakala. Mr Krupa is a Slovakian national who presently lives in the Czech Republic. Mr. Bakala is a Czech native, with dual Czech and U.S. citizenship, who lives in Hilton Head Island, South Carolina. Mr. Bakala does business in Europe and the United States and has significant personal, social, and business ties to persons and organizations in both areas.

Mr. Krupa began his campaign of harassment, defamation, and malicious interference with Mr. Bakala's family and his commercial and philanthropic relationships in 2016 in Europe. In 2017, communicating through an intermediary, Mr. Krupa offered to cease the campaign if Mr. Bakala would pay him 500 million Czech crowns, equating to approximately $23 million in U.S. dollars. At the same time, Mr. Krupa threatened to intensify and escalate the campaign by bringing it to the United States if Mr. Bakala did not meet his demands. When Mr. Bakala refused to do so, Mr. Krupa made good on his threat, engaging Defendants Adam Swart and his “astroturfing” company, Crowds on Demand LLC, ^[1] to continue the smear campaign against Mr. Bakala in this country, including South Carolina.

That campaign, described further below, ceased when Mr. Bakala filed this lawsuit in October of 2018, ^[2] although its repercussions have continued and will likely cause harm to Mr. Bakala indefinitely into the future. Mr. Bakala eventually settled with Swart and Crowds on Demand, who admitted that they were hired by Mr. Krupa and acted entirely at his direction in carrying out their actions against Mr. Bakala, insisting that they were “just following Krupa's orders.” Mr. Krupa was initially represented in this action by competent U.S. counsel, but he later fired his lawyers and elected to proceed pro se.

In light of his pro se status, both this Court and U.S. Magistrate Judge Baker ensured that Mr. Krupa was informed of what was happening procedurally in this case, what he needed to do, and when he needed to do it in order to be heard. The Court entertained and considered all of Mr. Krupa's filings, even though some were not in compliance with the rules or were made after the applicable deadline had elapsed. He was given every opportunity to present a defense. Nonetheless, Mr. Krupa treated this Court and the rules of procedure with the same disdain and contempt he showed for the rights of Mr. Bakala. At some point, Mr. Krupa appears to have simply lost interest. His last submission to the Court was on March 20, 2020. ECF No. 139. After the Magistrate Judge issued her Report and Recommendation that his preliminary challenge to personal jurisdiction be rejected, ECF No. 140 (Mar. 30, 2020), he failed to respond to multiple orders and notices from the Court rejecting his preliminary challenge to personal jurisdiction, striking his Answer, and directing him to file a proper Answer to the Amended Complaint. Consequently, after default was entered by the Clerk of Court, the Court granted in part Plaintiff's motion for default judgment and scheduled an evidentiary hearing on damages.

The standards for default judgment and the parameters of the damages for which Mr. Bakala could seek recompense were outlined in this Court's Order granting in part Plaintiff's motion for default judgment, see ECF No. 204. As noted there, once the clerk has entered default against a defendant, the court accepts the well-pleaded factual allegations of the plaintiff when considering a motion for default judgment. The defendant in default, however, is not held to have admitted conclusions of law or allegations that concern only damages. Thus, a court considering default judgment must determine whether the established factual allegations constitute a legitimate cause of action and provide a sufficient basis for the relief sought. Id. Further, this Court held in its Order that an evidentiary hearing was warranted in order to determine an appropriate amount of damages, and invited Plaintiff to present evidence as to the following:

• With respect to Plaintiff's RICO claims,

o injury to his “business or property, ” including:

■ damage to his business or professional reputation, and

■ expenses incurred for professional services and attorneys' fees to respond to the defamatory communications made by the Defendants and to engage in “damage control, ” such as providing clarifications, explanations, and reassurances to his business and professional contacts; and o his attorneys' fees and costs in this action.

• With respect to Plaintiff's defamation claim,

o injury to Plaintiff's reputation, and

o mental suffering, emotional distress, humiliation, and anxiety.

See ECF No. 204, at 9-14, 18-19.

At the damages hearing, the Plaintiff presented compelling testimony by Mr. Bakala and Mr. Paul, supported and amplified by documentary exhibits, demonstrating the severe reputational harm, economic and financial loss, and emotional injury that were caused by Mr. Krupa's wrongful and malicious actions against Mr. Bakala. The extortion campaign that Mr. Krupa initiated, participated in, funded, and directed consisted of actions such as the following:

(1) Publishing numerous false allegations in Europe and the U.S. that Mr. Bakala was a criminal and a scammer that he had bribed government officials, committed financial fraud, falsified financial records, engaged in self-dealing, and bankrupted a company in which he had invested; and that his actions caused thousands of Czech coal miners to be turned out of their homes. See Plaintiff's Exhibits 1, 2, 3, 4, 5, 8, 9, 10, 11, 12, 13, 14, 24, 28, 29. There was no truth to these allegations, and Mr. Krupa knew that there was no truth to the allegations but published them anyway.

(2) Inciting threats of violence against Mr. Bakala and his family, including death threats and assertions that Mr. Bakala should be shot, hanged, decapitated, and dismembered. Threats and statements like these were promoted on a Facebook page bearing a domain name registered to Mr. Krupa's company, Arca Capital, and were encouraged and “liked” by the administrator of the page. See Plaintiff's Exhibits 1, 2.

(3) Organizing a protest in front of Mr. Bakala's home in Switzerland, where he and his wife and four young children were living at the time. Mr. Krupa offered to provide free transportation to protestors, threatened to bring in notoriously violent “soccer hooligans” from Moravia to participate in the protest, published a photograph of the home to make it easy to find, promoted the protest in the media, and warned that it could turn violent. Although Mr. Krupa's application for a permit for the protest was turned down by the Swiss authorities and the protest ultimately did not occur, his efforts succeeded in that they garnered substantial media attention and publicity of the false allegations being propagated, resulted in individuals showing up and trespassing at Mr. Bakala's home -including one instance that occurred while Mr. Bakala's young daughter was returning from school - and led Mr. Bakala to move his family away from the home to protect their safety. See Plaintiff's Exhibits 3, 4.

(4) Filing baseless criminal complaints against Mr. Bakala, including false charges made to (among others) the United Kingdom's Financial Conduct Authority and Serious Fraud Office, and orchestrating numerous civil suits against him.^[3] These proceedings were covered in the news media, and those reports led the Swiss bank where Mr. Bakala and his local business maintained their accounts to freeze their funds there for over two years, resulting in significant expense and financial difficulty for the business and for Mr. Bakala personally. Although all of the criminal proceedings were ultimately resolved in his favor, with the investigating authorities determining that the charges were baseless, they took five years to work their way through the process and were concluded only recently. See Plaintiff's Exhibits 5, 6, 7, 24, 25, 28, 29.

(5) Using the pending criminal proceedings, and

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