The 1990s brought several fraudulent enterprises that targeted a population eager to get rich quick and easy or otherwise get closer to the American dream. For example, by buying a house in a satellite town, which was a novelty in our region, even with an unconventional and affordable form of financing. Sometimes these ventures ended in disappointing shareholders who lost their deposits, other times in the loss of their life savings or even their homes. The saddest form was brought about by the H-System project of the Klaus governments, but its story stretches back through a longer part of Czech history.
It was a building project presented to interested parties in 1993-1997. They could buy a cheap and nice apartment or house in the villages of Horoměřice, Statenice, Lichoceves or Velké Přílepy. The bargain price was said to be achieved by a unique financing model.
In reality, however, it was a scheme reminiscent of the so-called “airplane” or “pyramid game”. The money of new customers was used to satisfy, sometimes only partially, the demands of older customers. When dissatisfied clients piled up and the company lost its growth momentum, the owner took the assets out of the company and sent it into bankruptcy.
It happened in 1997. About a thousand H-System clients were left without housing and money. About half of them filed for bankruptcy in the company’s insolvency proceedings. More than 700 other clients joined the Svatopluk Building Housing Cooperative. This housing cooperative wanted to accept the loss that the scam had made to the clients and to rebuild the houses and flats instead of recovering the money. There was also a split between the groups of clients who wanted more legal pressure on the owners of H-System and those who wanted to pay more and complete the property. Billions of crowns disappeared from the company’s coffers and clients’ coffers, with claims of about two billion crowns filed in bankruptcy.
The company was controlled by Petr Smetka, who was connected to representatives of ODS and ČSSD. In 2004, he was sentenced to 12 years for fraud, damaging a creditor and embezzlement. Two accomplices were given suspended sentences. In 2013, the court stopped prosecuting the other defendants. In the following years, some members of the management of the cooperative, which promised to complete the property, were also convicted of damaging the creditor.
During the campaigns, political leaders, especially President Zeman, repeatedly promised to remedy the situation and to complete or compensate the defrauded clients. However, no real action has ever been taken. After his release from prison in 2017, Petr Smetka and his family embarked on other development projects.
