Central Prague, July 1993, dawn. The newspaper delivery truck is making its rounds, throwing large bundles of newspapers outside kiosks and stores. On all the front pages, a familiar face stares out. The mop of curly ginger hair, and yes, that sensational smile. You guessed it. It's our guy, Victor. He's been up to something. Looks like Victor has been playing dirty tricks. Dirty tricks involving a rogue secret agent, top politicians, and some compromise. If you don't know what that means, you'll find out soon enough. It sounds pretty juicy, though, doesn't it? But Victor's dirty tricks have been exposed big time, and he has pissed off all the wrong people. I mean, really pissed them off. And now he's living on borrowed time. Sooner or later, he's going to have to get the hell out because Victor Kaujany, he's a marked man. This is The Pirate of Prague, an Apple original podcast, produced by Blanchard House, Am John O'Sero. Chapter

three, the Three Wachlaves. How do you say it? The Three Wachlaves. Let's rewind. Let's go back to the real beginning before all that scandal back to 1963, when Victor was born into the Czechoslovak, Socialist Republic. When he was five years old, his country had a brief fling with freedom, but it was squashed by the Soviets. And people after that, they were scared. The old men of the Czech Communist Party, they did not want citizens to cause trouble, and they hoped that Little Victor would grow up to be a good comrade. Fat chance. In fact, it's no surprise that Victor didn't become a good comrade. Because, quite frankly, life in communist Prague sounded pretty grim. Seems funny that in a country run by Reds.

Everything was brown.

Susan Greenberg should know. She was there. She was a reporter with The Guardian.

You went into people's homes, they had the same furniture: the bookcase, the chair, the lamp, everything was the same. You had no choice whatsoever. All of the flower shops had the same name, and the same with the butcher shop. It was almost like a children's toy town.

And all the time you're being eavesdroped on and watched over by the party.

You couldn't trust the phones. It could be that you would be listened to.

It was hard to speak freely. It was even hard to breathe freely. Like Susan says, in communist times, everything really was brown. Even the air made brown by the coal, the coal used to heat all those brown apartment blocks.

You could feel it scratching its way down your lungs.

Yeah, I think it's fair to say that Czechoslovakia was not carbon neutral. Anyway, you get the picture, right? It was like that for a very long time. Now let's jump forward to 1989. All across Eastern Europe, people are in revolt. They have had it with the brown sofas and the brown carpets and the brown air. And as for the Communists, they are out. First up was Poland, then came Hungary, then East Germany, and finally, Czechoslovakia.

Some students were attacked and then all kicked off.

It took just twelve days. Twelve days to sweep away the old communists who subjected the people to all that brown. Four decades of brown. In its place, a brand new regime, a brand new vibe.

And it was very cool.

And the coolest of the cool in this cool new world was a man named Havel, Watzlaw Havel, poet, playwright, rebel. Now, he's the first of three Watzlaws we'll hear in this story. See if you can spot him. First up, Wotslaw, number one, who we've already described as cool three times, but we'll do it one more time. First up, Wotslaw, number one, aka the cool guy.

Everyone around the world wanted to rub shoulders with Howl, and be there at this time.

This guy was now in charge, yes, President of the country, and he was a truth-teller. Under communism, he acknowledged to his people, We were not to believe in anything, to ignore each other, to care only for ourselves. And he made promises. One promise above all. I dream of a republic, independent, free, and Democrat. Susan Greenberg was there in Prague.

That night, people were wandering around with stars in their eyes. It was magic. It was like they were all in love. The whole city was in love.

One of those people was Victor. He was back in town. But Victor wasn't high on idealism, no. Victor could smell opportunity, the opportunity to make boatloads of cash. And boy, did he need cash. He was down to his last couple of grand, and he wasted no time turning a buck in the new Czechoslovakia.

He very quickly planted his seeds there. It just happened so fast.

And he planted his seed in more ways than one. He'd gotten his second wife, Kendo, pregnant. When Victor left Czechoslovakia in 1980, he was a teenager. His grips took advantage of the physics professor, his first wife, Diane, and, well, Harvard University, of course. Now he's a grown man, different from the boy back then, but still a griifter, just a way more ambitious one. Now, Victor may be back in his homeland, but he stands out.

They would even say that he spoke Czech like a foreigner because he had been away.

You could almost pick foreigners out on any street in Prague in those days by their shoes.

And guess what? Victor had really nice shoes.

He was obviously someone who had spent time in the West.

Rob Urban met Victor back in the day as a Bloomberg journalist.

He did have a firm handshake. He was one of those people who would touch your arm as he was talking to you. He was very personable and incredibly confident.

And good looking.

I'm not maybe the best judge of that. He was a little chubby. I think he had freckles, I remember, but well-dressed and certainly well-spoken. His English was very good and definitely charming.

I think we've heard that before. But most important of all, having lived in America and having gone to Harvard, he wasn't afraid of capitalism, not like most of his countrymen. In fact, it was quite the opposite. Victor loved capitalism, and he knew it was going to make him rich. Peter, are we ready? Peter, what was Victor up to in those early days back in Prague?

Well, what wasn't he up to? We know that he started by setting himself up as a business consultant. He was gathering intel on which companies were really worth the most.

And was that making Victor rich?

I mean, at that point, he was still living with his grandparents.

Oh, yes, the famous grandparents. Well, I got to say, business consultant? That sounds dull, really. Not very Victor-like.

Actually, it's really important, Joe, because Victor is setting the stage for what comes next, his first really big move.

Because he's getting the inside track on precisely where the big money is going to be made.

Victor's schmoozing his way in, making friends with all the right people. He's even playing squash with the country's Interior Minister. But it's not long before some of his new business pals realized Victor doesn't always play nice.

A couple of times, people came to me asking me to tell him to behave as if I could.

As if she could. Victor wasn't playing nice at home either. Not nice at all. Remember those walks Kemdell used to love? Well, no more walks. Hanging out at the library? Gone. Victor had changed. He was all work all the time, and Kindel was paying the price. One night, she found out who she'd really married. She was harassed by a stranger on a bus. She rushed home to Victor, hoping for some TLC.

At first, he was very caring and saying, Well, I'll call the police. But within an hour, he was actually turning the tables and yelling at me, What do you expect me to do? I'm working.

Remember, Candel was pregnant. She didn't know the city, she didn't know the country, and she had no one to turn to. No one except Victor.

Iphones didn't exist. Blackbaries didn't exist. Internet didn't exist. I was very much alone.

For Kendel, the dream was fading. She hadn't given up on Victor entirely, but she had decided to have her baby back home in America. Then she'd returned to Prague to see if the kid might rekindle their marriage. When she arrived at the airport a few weeks later with her sister and her new baby-.

Victor wasn't there to meet us, as you might think a father of his firstborn might be, but he sent his secretary.

Hold on here. His secretary?

I don't remember this. My sister tells me. I said, Wouldn't it be funny if that was his mistress?

Oh, yeah, that would be hilarious. Kemdal spends the next three days cooped up in a Prague hotel with very little money. Where is her husband? She has to do something.

I went across town to his grandparents, and I just shoved the door open.

Shocker.

There was Victor in bed with his secretary.

Well, that's what Kemdall says she saw. And sleeping with your secretary in your grandparents' bed? Really, Victor. But Victor's fooling around was the least of Kendo's worries.

At that point, my priority wasn't what he was doing at bed. I just looked at him and I said, I need money. I need money to feed my child.

Victor handed her a wad of cash. But clearly, this was not a good situation. Kemda went back to her hotel. Next morning.

My sister said to me, Are you okay? Because you were sobbing all night.

Now, if Candel hoped that naming Victor's daughter Victoria might bring them back together, well, she had another thing coming.

I remember putting her in his lap and absolutely no connection. No connection.

It was the final straw.

I just needed to get out. A little.

History lesson, if you'll indulge me. In the old Czechoslovakia, everything, and I mean everything, had been owned and run by the state. That's what communism was, after all. I'm not just talking about the electricity or the gas or the railways. I'm talking about the butcher, the baker, the candlestick maker, plus the steel plant, the farms, the factories, the whole kit and kibbetel. But with the communists tossed out, the state flunkies weren't going to run these companies anymore. After all, the cool guy, Watzlaw number one, he'd promised change.

They had to come up with a plan. They were starting from scratch, and they're reinventing everything.

The butcher, the baker, yada, yada, yada. It's all up for grabs. All these companies waiting to be sold off. That leads us to a beautiful word, a magical word, one of capitalism's all-time favorite words, privatization. All the big companies in Czechoslovakia would no longer be run by the state. Private individuals, they would run the show. Now, I promised you three Wotslaves. Enter Wotslav number two, Wotslaw Klaus, the mastermind of privatization. Wotslav two, he had a few problems. First, he and Vatslav I, the President, didn't get along.

The two of them represented very different, very opposite types of politics.

Vatslav I was an idealist. Vatslav II, he was a buccaneer, a flag-waving lover of free markets. And that was his second problem. How is he going to convince people to think like he did? Because let's face it, hardly anyone in Czechoslovakia believed in the free market. They barely understood it. And why would they?

People had been told for years, capitalism is all bad. There's nothing good about it. And that was the relentless message for decades.

Watzlaw, number two, had a massive job on his hands. The most massive job of all, changing people's minds. Peter, how on earth was are you going to do that?

In a word? Vouchers.

Vouchers?

Yeah. The Czech government was offering every citizen a book of these vouchers. The idea was that you could swap them for a small steak and some Czech companies.

Well, that sounds like a pretty good deal. Why were they doing this?

They wanted to create this new free market economy really fast, almost overnight. They thought vouchers were the quickest and easiest way to do that.

I suppose that was also a way that people could see that capitalism wasn't this horrible, terrible, awful Western thing. The vouchers could make you a little money.

Absolutely right.

Were the vouchers free?

Not exactly. They cost one or two weeks wages for a book of these things.

Yikes. I mean, that's not exactly peanuts.

Well, it's not, and there was risk involved. But the appeal was that their value would skyrocket and make people money.

There was a problem, however, a big problem. People just weren't buying those vouchers.

Private company ownership, stock exchanges, or financial markets, all of those concepts were just really alien and frankly, went over most people's heads.

For most Czechs, the language of capitalism, it was Greek. They just didn't get it. And who can blame them? They were new to this game. Watzlaw, number two, he had screwed it up. The voucher thing was an unmitigated disaster. There were no takers. It was a huge flop. With billions at stake, with an entire economy at stake, but who could possibly turn things around? Who would have the guile, the hoodspa, the balls? Take one guess.

Suddenly out of nowhere, everywhere you looked, there's Victor.

Cummeth the hour.

He was everywhere.

Cometh the man.

Billboards cropped up overnight.

His face, close up.

And this is a country that didn't even really have advertising before.

Victor to the rescue, his pitch to his countrymen. If you really want to make some money, buy those vouchers and give them to me. And Victor was promoting it like crazy.

His message was very simple.

There were these ads with Victor sitting on top of a giant stack of thousands and thousands of vouchers.

He personally... I recognized it. With his life story. I managed to do well for myself. And if you trust me, you can do well for yourself.

I remember seeing it on TV. That's his Harvard buddy, Amir. Ding-dang. Dong-dong. Harvard Capital. Harvard Capital. I mean, it almost goes without saying that Victor named his new venture after his beloved, Amamada. And of course, it was all done with the expressed approval of Harvard University, right?

Harvard University has no affiliation or involvement with Harvard Capital.

And Consulting and was unaware.

Of its existence until recently. The university has not authorized use of.

The Harvard name in connection with this company.

But.

The name was here to stay, and it was working wonders. All the prestige of America's most famous school with none of the legitimacy. Genius. And that wasn't the only stroke of genius. Harvard Capital sponsored the biggest TV show of the era, a story of Texas Oilwells, Cowboys, and Double Dealing. Not to mention Sue Ellen, Pam, Bobby, and the whole Ewing gang.

Oh, Dallas was incredibly popular.

Yes, Victor attached his name to the iconic TV soap, dubbed into Czech. A soap starring that other lovable rogue, the Stetson-wearing bad guy people just couldn't resist, J. R. Ewing. The irresistible lure of American capitalism beamed into Czech living rooms, courtesy of Victor Kaujany.

It's all about wealthy people, and this is how you're going to be a wealthy person like, J. R.

J. R. Ewing and Victor. Now there's a pair. I can see the similarity. Were you a Dallas fan? Peter?

Who wasn't? Do you remember who shot J. R?

I do. I do. Of course I do. It was Kristen, J. R. 'S Scheming mistress.

Good.

Memory. Anyway, me. Enough about that. Victor's Harvard Capital outfit, what did it actually do?

Well, here's how it worked. You'd hand your vouchers over to Victor's fund, and Victor would invest them for you. Here's the crucial part. Here, Victor made a promise. He promised that if you gave your vouchers to him, in a year's time, he would give you back 10 times your money.

Wow, that's a hell of a return.

10 times. And people really understood that, the simplicity of the message. That was his huge sales pitch. Joe, get this, he guaranteed it.

Oh, come on.

That's what he promised, and the most genius bit of all. People were giving their vouchers to Victor, vouchers they had bought with their own savings. Apart from the ad campaign, Victor didn't have to spend a penny of his own money.

Yeah, that sounds like genius to me. Okay, here's something you need to know. You got to understand the scale of all this. Czechoslovakia was a country of 16 million people, and Victor wanted their vouchers, all of their vouchers. This is the early '90s, no internet. The only way you get those vouchers is by persuading people to hand them over one booklet at a time. That takes manpower, serious manpower. Victor hires 20,000 people, an army of 20,000, making his pitch, inviting, cajoling every citizen to give their vouchers to Harvard Capital, the fund with the American name. Victor had brought the government's privatization plan back from the dead and made himself a phenomenon. They called him a genius, a whiz kid, a wundikind. Vouchers were now sexy. Victor's wall-to-wall ad campaign made sure of that.

It got people's attention in a way that the government never did.

It was very effective.

It worked.

Victor and his team were dedicated to the cause.

We were very young. We were full of optimism and hopes.

Petra Vendilova was at Harvard Capital from the start. She was tight with Victor, part of his inner circle.

He was full of so much zeal and enthusiasm about what could be done, what could be achieved.

He would talk about how capitalism would inject new energy into the Czech economy and bring about a better life for everyone. Yada, yada, yada.

I suddenly didn't have the impression his primary goal was to get personally rich.

Really, Petra? I mean, if he hoovered up enough vouchers, Victor would own big stakes in some of the country's biggest companies. And some of those old companies were massively underpriced.

Incredibly valuable stuff was being sold very cheaply. That was the secret that Victor understood.

So it all makes sense, that 10 times promise. Victor wasn't about to offer that return unless he was absolutely certain that he was going to make far more than that for himself. But this was a long game. Victor was sitting on all those vouchers for at least a year, and there were a lot of vouchers to sit on. Close to a million people had turned their booklets over to Harvard Capital. Now all those vouchers were stacked up in his warehouse. Victor's plan was to swap them for stakes in his favorite companies and then let capitalism do its thing. He just had to wait for the government to fling open the doors of the Prague Stock Exchange, which had been closed since World War II. And when those doors did open in the spring of 1993, oh, boy, the value of Victor's companies went through the roof. And before long, get this, at one point, Victor owned 15 %, that's one-five %, of the entire value of the Prague Stock Exchange. Peter, what was Victor's secret?

Well, Joe, he clearly was good at picking winners.

And that, I'm assuming, is because he had some really good intel from his old business consultant days.

You bet you. He knew exactly where the bargaining were.

And I might add, 15 % of the stock exchange? Man, that is a huge number.

Yeah, it's unbelievable that just one person could control that much.

Victor now had money, serious money. He'd come a long way from sleeping at his grandparents' place. Now he had a chauffeur-driven Mercedes and a team of bodyguards, and, of course, as many Angora sweaters as he liked. So Victor had status. Victor had celebrity. The tabloids, they loved him.

They had Victor about town, Victor at a party, Victor spotted with some model. I would occasionally actually see him walking across the square with a little entourage. I saw him at the, I think it was the US Ambassador's residence, which made a stir. When he arrived, everybody was like, Oh, it's that guy. It's the tenfold return guy. It's the Harvard guy.

But with celebrity comes scrutiny. Uh-oh, that was something Victor didn't need. Meanwhile, back in London, Victor's old Harvard pal, Amir, is having a power lunch in a Ritzy restaurant. Czech privatization comes up like it does. And one of the guys asks Amir if he's heard of a fund. A fund called Harvard Capital, run by a fella named Kozany, Victor Kozany. At which point, I almost regurgitated the soup I had in my mouth because my view of Victor as this eccentric, brainy, poor, nerd, refugee was not really compatible with this tycoon in Czechoslovakia. It seems Amir had underestimated his old college buddy. He hurried back to the office and placed an international call. About 10 minutes later, Victor called me back and invited me to go. By now, Victor was feeling the heat because not everyone shared the love for Harvard Capital, starting with the Czech government. Victor may have gotten those guys out of a hole. He saved their voucher scheme, remember? But maybe he'd gone too far. Maybe Harvard Capital was just too successful. So yeah, Victor is happy to hear from his old friend, Amir, because Amir has connections. And Victor wants Amir to make a few calls, a few calls to some of his friends in America, and not just any old friends, friends like the Kennedy family, and get them involved.

They were involved in Harvard Capital so that the local Czech politicians wouldn't dare make a move against him. So that was my mandate from Victor. And if Amir could just place those calls, Victor would make it all worthwhile. He said he'd give me one % of the shares in Harvard capital. Supposedly worth two million bucks, give or take. Not a bad return for just a few phone calls. So Amir drew up a contract. It's a shame Victor never signed it. Suddenly, everyone wanted to know more about the man behind the smile. The sensational smile that beamed out from those billboards and all those TV ads. The man who brought them J. R, Bobby, and Sue Ellen. And most of all, they wanted to know more about his big promise, the 10 times return. For some, it just didn't add up.

Having him say, Guaranteed, we will pay you tenfold what you give us, it's questionable.

Peter, a guaranteed return. I mean, you can't make that promise.

You really can't, Joe. Not in the investment game. In the United States, that would be flat out illegal.

Of course, because there's risk involved. If the market goes down instead of up, how are you going to deliver on your promise?

Precisely. There were plenty of people who doubted Victor's 10 times promise right from the start.

My first reaction was, That sounds like a Ponzi scheme.

Ponzi scheme. Peter, keep it snappy.

Surely you remember Bernie Madoff?

Oh, yeah, I sure do.

It's where you use the cash from your newest investors to pay off your old investors. It's fraud.

That's very good, Peter. Very snappy. But Victor said, No, no, no, no, no, no, no, this wasn't a Ponzi scheme.

He would not allow it to be questioned. The numbers worked and it was going to be great.

In her time in the Czech Republic, journalist Susan Greenberg wrote for Reuters, The Economist, and The Guardian. She knew her way around.

I felt it was so obvious this man was a bullshitter. You didn't even need to hear the words coming out of his mouth.

Susan went on a press trip to Victor's warehouse and came away with a clear impression of her host. It was instinctive.

A cook, a bullshitter and a cook.

Okay, tell us how you really feel, Susan.

It seemed obvious to me. I couldn't understand why it wasn't obvious to everybody else.

Well, there's a simple answer to that, Susan. Denial.

The whole country was so keen to see a success of this scheme that a lot of people who might have thought that they didn't want to ask questions.

But if there's one thing I know about bullshiters...

Eventually, the bullshit will become known.

Here was Victor's second problem. He was getting too powerful. To put it simply, he owned way too much of the Czech economy, and that was ringing alarm bells at the highest levels of government. Peter, what did the authorities do?

Well, they rushed through laws basically aimed at stopping any one individual, any one person from taking over the economy.

It sounds like that was specifically aimed at Victor.

Yeah, it sure does. Victor, actually, seemed proud of it. He boasted that the government was trying to slow him down because otherwise, he would own the whole country.

But did those anti-victor laws, did they do the trick?

Not even close. Victor outsmarted the regulators at every turn.

Why am I not surprised? What else did the government try to do?

Well, a few years later, it was reported that Vostov, number two, who by then is the Prime Minister, that he commissioned a crack team of private detectives from Wall Street to dig into Victor's past to see if they could rake up anything embarrassing.

Well, did they? I mean, one would assume there was material.

Well, nothing you didn't hear about in episode two, and certainly nothing that was going to destroy Victor.

Anything about Angora sweaters?

Oddly, no.

I promised you three Wotslaves, and I'm a man of my word. So if you're wondering where the hell is Wotslave number three, here he is. Wotslave Wallace and a cloud of cigarette smoke and a nicely nicotine stained mustache. He's former secret police, KGB trained. This guy, he's the real deal. Now, remember, Victor is feeling the heat big time from the other two Wotslaves. So how does Victor plan to deal with this? Well, what if he could dig up a little dirt on Wotslaw One andVatslav, too. Maybe that would take some of the heat off him, right? And that's where Vatslav number three comes in. He's a spy, and compromising material is his thing. It's what they call in the trade, compromise. Sexy, huh? Here's what happened. Victor got caught and later admitted paying thousands of dollars to Vatslav Three. According to the government, these secret payments were for inside dope on Watzlaw One and Watzlaw Two. Can you picture the scene? The furtive Rendezvous, the secret file, the stuffed envelope, the tip of Watzlaw's cigarette, glowing in the gloom of a Prague night. Victor claims that he paid Watzlaw three because he was being blackmailed, but nobody believes him.

Now Victor finds himself in the middle of a scandal a big scandal. A government investigation is underway. Reporters are circling. Victor's in a whole lot of trouble, deep, deep trouble and sinking deeper. And if he's not careful, he could end up behind bars. Victor needs to find an escape route and fast. Financially genius. Millione. Cash. O'cody. Capitalizmos, investica, millionaire s braj. You've been listening to The Pirate of Prague, an Apple original podcast, produced by Blanchard House and hosted by me, Joe Nosira. The producer is Ben Cryton. The associate producer is Peter Elkind. The writers are Lawrence Grisele, Ben Cryton, and me, Joe Nosira. Music is by Daniel Lloyd Evans, Louis Nankmanell, and Toby Matamong. Sound design and engineering by Vulkin Kizeltug. Our managing producer is Amika Shortino-Nola. The creative director of Blanchard House is Rosie Pai. The executive producer and head of content at Blanchard House is Lawrence Grisele.