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HomeLithuaniaStepukonis embezzled EUR 40.4 mln from BaltCap fund companies, investigation shows

Stepukonis embezzled EUR 40.4 mln from BaltCap fund companies, investigation shows

Sarunas Stepukonis embezzled 40.4 million euros from BaltCap Infrastructure Fund’s portfolio companies, BaltCap said on Tuesday, citing the results of an internal investigation conducted jointly with a team of external experts.

The investigation into Stepukonis’ misconduct found no evidence “indicating any collusion with other BaltCap team members”, BaltCap said in a statement.

“The investigation reveals that the embezzlement was facilitated by the creation and submission of an extensive number of falsified and fictitious documents, and possibly other criminal acts and violations of fiduciary duties by Sarunas Stepukonis,” it said.

The embezzled amounts were transferred to Olympic Casino Group’s gambling platforms and the Hungarian-registered securities trading platform Interactive Brokers, according to the statement.

“Most activities related to the outflow of funds were executed in 2021–2023. No irregular activities were detected in the Fund itself. The transactions took place in portfolio companies, including their subsidiaries, in Lithuania and Poland,” it said.

BaltCap’s managing partners Dagnis Dreimanis, Simonas Gustainis, Martin Kodar and Peeter Saks admitted that “the safeguards put in place in BaltCap did not fully render the protection they were meant to provide, especially in the portfolio companies and on their subsidiary levels”.

“We did not envision all the specifics entailed with developing greenfield projects compared to a more traditional buyout strategy,” the four managing partners said in the statement.

“We are very aware of and deeply regret the damage this incident has caused to the trust we have built over the years as well as the negative impact it might have on the whole Baltic PE and VC ecosystem. We can assure that we are addressing the current situation with the utmost seriousness, and BaltCap is fully committed to rebuilding the trust and solving the situation in a responsible manner,” they said.

According to the partners, additional control measures were introduced in the companies immediately after suspicious transactions by Stepukonis came to light, and further steps will be taken to reinforce BaltCap’s risk management and financial controls.

“Since its inception, investors have invested 663 million euros across BaltCap funds, and the total value of these investments, including distributions already made to investors, has grown to 951 million euros. The average annual return of realized investments stands at 18 percent,” the statement said.

BaltCap, the largest private equity fund manager in the region, has already made more than 110 investments since its establishment in 1995. The company employs 40 people across its offices in Tallinn, Riga, Vilnius, Helsinki, Stockholm and Warsaw.

Stepukonis in custody as pre-trial investigation continues 

The court on February 23 extended the arrest warrant for Stepukonis until March 24.

Law-enforcement officials are conducting a pre-trial investigation in which the man is suspected of having embezzled more than 27 million euros.

A second investigation is looking into a transfer of 3.9 million euros into his account from a Polish company, purportedly as part of a share sale transaction.

Prosecutors say that Stepukonis gambled away most of the funds, over 20 million euros. He may have transferred another part of the money to Interactive Brokers Central Europe.

European Delegated Prosecutor Darius Karcinskas, who oversees the investigation, said last week that Stepukonis “does not fully deny his guilt”, but gives “his own version of events”, which will be checked.

The Vilnius Regional Court last week imposed a temporary freeze on 5.485 million euros’ worth of cash or other assets of Stepukonis and blocked accounts opened in his name, including on the Interactive Brokers Central Europe platform.

Also, the court last December temporarily froze Stepukonis’ assets worth around 26 million euros, including those held in Olympic Casino Group Baltija and Estonia’s OB Holding 1. The latter has appealed the decision to the Court of Appeal.

Gustainis has said that the amount of claims against the former BaltCap Infrastructure Fund partner will exceed 30 million euros.

Source: BNS

(Reproduction of BNS information in mass media and other websites without written consent of BNS is prohibited.)

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