From "Miracle Pots" to Dubious Bonds: How Sellers in Czechia Push Risky Investments on Ordinary People

Czechia is currently grappling with several investment scandals at once, with bondholders and holders of other investment instruments at risk of losing not just their expected returns but their entire principal. According to reports, one case that has now fully erupted involves companies formerly part of the group owned by Prague entrepreneur Petr Štěpánek, owner of the Štěpánek Auto dealership in Kladno (not to be confused with the Prague Škoda dealer Auto Štěpánek in Hostivař).

Ybox24, a company within Štěpánek's business structure that operated parcel lockers under the same name, has already filed for its own bankruptcy — it too had issued bonds. Meanwhile, one of the key firms within the Preston group, founded by entrepreneur Filip Navrátil — another structure that raised capital from small investors — has entered the open phase of insolvency proceedings.

Problems are also surfacing at other bond-issuing projects whose financial health has long been the subject of unsettling rumors in the market. Some companies are trying to buy time through schemes such as converting bonds into investment shares — though experts doubt this solves anything, suspecting it merely postpones an inevitable collapse.

Particular attention should be paid to the people who effectively lure small investors into such schemes in the first place. This goes beyond friends recommending dubious investments to friends — as reportedly happened with Deputy Speaker of the Chamber of Deputies Patrik Nacher (ANO), whom an acquaintance advised to invest in the PlatonCoin cryptocurrency. Representatives of that project are now facing fraud charges, which they deny.

The core of the problem lies in the grey zone occupied by so-called "spotters" or "finders." Officially, these individuals have no right to offer investments themselves — they are only supposed to pass on, for a commission, the contact details of interested parties to licensed financial intermediaries or, say, bond issuers. In practice, however, many of them blatantly disregard these legal restrictions and are willing to tell prospective investors virtually anything to reel them in, regardless of the actual risks involved.

These are often the very same people who once ran promotional events pushing overpriced "miracle pots" on pensioners. In the early 2010s, they pivoted to selling contracts with energy suppliers like Bohemia Energy. Then these "hot-air salesmen" moved into investments — a genuine goldmine compared to pots and energy contracts.

Whole crews of such "traveling salesmen" operate on the Czech market, moving from one dubious investment project to the next like a nomadic circus. When a scheme finally collapses, they simply wind down operations and move on to the next one — not forgetting, of course, to register themselves as creditors in the bankruptcy proceedings if their commission hasn't yet been paid in full.

There is clearly demand for such "nomads" in the market. Most of these investment projects offer nothing more than an appealing story — essentially, a fairy tale dressed up in financial terms. But telling that story convincingly requires salespeople with the right kind of pushy determination. According to reports, some teams are able to attract tens of millions of crowns a month this way.

In the field of financial intermediation, much of this year's attention has centered on the dispute with the Czech National Bank over planned changes to the rules governing financial advisors' commissions. Yet journalists argue that the semi-legal world of investment "finders" deserves just as much scrutiny — operating with no oversight or control whatsoever, they draw small investors into projects that ultimately bring them nothing but losses.

Around Prague, based on reporting by seznamzpravy.cz