Paid protesters? They're real — and a Beverly Hills firm that hires them stands accused of extortion in a lawsuit - Los Angeles Times

Paid protesters are a real thing.

Crowds on Demand, a Beverly Hills firm that’s an outspoken player in the business of hiring protesters, boasts on its website that it provides its clients with “protests, rallies, flash-mobs, paparazzi events and other inventive PR stunts.… We provide everything including the people, the materials and even the ideas.”

But according to a lawsuit filed by a Czech investor, Crowds on Demand also takes on more sordid assignments. Zdenek Bakala claims the firm has been used to run an extortion campaign against him.

Bakala has accused Prague investment manager Pavol Krupa of hiring Crowds on Demand to pay protesters to march near his home in Hilton Head, S.C., and to call and send emails to the Aspen Institute and Dartmouth College, where Bakala serves on advisory boards, urging them to cut ties to him. Bakala alleges that Krupa has threatened to continue and expand the campaign unless Bakala pays him $23 million.

Crowds on Demand founder Adam Swart, center, briefs a group of actors before a demonstration in Beverly Hills in 2013. (Frederic J. Brown / AFP/Getty Images)

Crowds on Demand founder Adam Swart and Krupa neither confirmed nor denied that they are working together. They declined to answer specific questions about Bakala’s allegations, though Swart, in an emailed statement, called the claims meritless.

“Not only will I vigorously defend myself against the allegations in the complaint but I am also evaluating whether to bring my own claims against Mr. Bakala,” Swart said.

The lawsuit comes amid growing interest in the business of paid protesting and other forms of so-called “astroturfing,” the practice of manufacturing the appearance of grass-roots support.

President Trump, whose campaign reportedly hired actors to cheer at a 2015 rally, has repeatedly claimed that protesters — most recently those fighting the Senate confirmation of Supreme Court Justice Brett M. Kavanaugh — are being paid by liberal billionaire George Soros and other monied interests.

Just had a very open and successful presidential election. Now professional protesters, incited by the media, are protesting. Very unfair!

— Donald J. Trump (@realDonaldTrump) November 11, 2016

The very rude elevator screamers are paid professionals only looking to make Senators look bad. Don’t fall for it! Also, look at all of the professionally made identical signs. Paid for by Soros and others. These are not signs made in the basement from love! #Troublemakers

— Donald J. Trump (@realDonaldTrump) October 5, 2018

Interest in paid protesters peaked after the 2016 election, based on the popularity of the subject in Google searches. The number of searches for “paid protesters” surged again around the time of the January 2017 women’s march, the August 2017 white nationalist rally in Charlottesville, Va., and early this month amid the debate over Kavanaugh.

(Los Angeles Times)

Crowds on Demand isn’t the only outfit that hires paid protesters, though it is perhaps the most open about what it does, said Edward Walker, a UCLA sociology professor who wrote a book on astroturfing, “Grassroots for Hire: Public Affairs Consultants in American Democracy.”

“There are hundreds of lobbying firms and public affairs firms that do this work, though not all in the same way,” he said. “Some only do a little bit of this grassroots-for-hire, but things adjacent to this are not uncommon today.”

For instance, the ABC News program “Nightline” reported in 2014 that a beverage-industry-backed group was hiring people to protest a soda tax measure and posted an ad on Craigslist offering to pay $13 an hour.

Longtime California political consultant Garry South, a former campaign strategist for Gov. Gray Davis, said it’s long been common for campaigns and political parties to pay people a few bucks or perhaps provide a meal in exchange for attending a rally. He recalled a 2002 rally in San Francisco where he said that tactic was used.

“It turns out, the San Francisco Democratic Party, to bolster the crowd, had basically gone down to skid row and paid people $5 or something to tromp up to Union Square,” South said.

But he sees a big difference between that kind of activity and the paid protests allegedly organized by Crowds on Demand.

“What’s different is the commercialization of the process,” he said. “It just contributes to the air of unreality that exists in this day and age with essentially not being able to believe your own eyes or ears. I don’t think it’s particularly healthy. But it probably inevitably was going to come to this.”

Even if the tactic is increasingly common, Walker said Crowds on Demand seems to stand out for how open it is about its line of work.

On the company’s website, it boasts that it staged a rally supporting an unnamed foreign leader visiting the United Nations. “The concern was ensuring that the leader was well received by a U.S. audience and confident for his work at the U.N. We created demonstrations of support with diverse crowds.”

Another “case study” on Crowds on Demand’s website says the company was hired to “cripple the operations” of a manufacturing business owned by a convicted child molester. In that case, Crowds on Demand says it was hired by a competing manufacturing business — one that ultimately bought the molester-owned rival “for 5% of its previous value.”

“A lot of times, companies don’t want to be known for using this kind of strategy,” Walker said. “Crowds on Demand, they’re more out about it.… It is strikingly brazen.”

Pavol Krupa in the Czech Republic in 2016. (Michal Dolezal / Associated Press)

In the Bakala case, Crowds on Demand is accused of spreading misinformation through a website, putting on protests and organizing a phone and email campaign targeting several U.S. institutions with ties to Bakala, who got an MBA from Dartmouth’s Tuck School of Business and had an estimated net worth topping $1 billion earlier this decade, according to Forbes.

It’s all part of a years-long dispute, one that’s been the subject of inquiries by the Czech government and the European Commission, involving a formerly state-owned coal mining company called OKD that Bakala took over in 2004.

The website StopBakala.org, which Bakala alleges was set up by Krupa, Swart and Crowds on Demand, accuses Bakala of bribing officials to buy the government’s stake in the mining company for a lowball price, breaking a promise to sell company-owned apartments to employees and then taking excessive profits out of the company, which filed for bankruptcy in 2016. A Krupa investment fund is a shareholder in the company.

Bakala, who holds dual U.S. and Czech citizenship, says in his lawsuit that all of those allegations are false and are part of Krupa’s extortion campaign. He alleges that Krupa offered to cease his campaign if Bakala paid $23 million for OKD shares owned by Krupa’s investment fund.

“Defendants are pursuing a campaign of harassment, defamation, and interference in the business affairs of Zdenek Bakala, which they have expressly vowed to expand unless he pays them millions of dollars,” Bakala’s attorneys wrote in the suit, which names Krupa, Crowds on Demand and Swart as defendants.

In a statement, Krupa Global Investments spokeswoman Barbora Hanáková called Bakala “an untrustworthy person” and implied the U.S. protests against Bakala have been “inconvenient for him” and have ruined “his attempts to whitewash his reputation.”

So far, it’s not clear the alleged campaign has had much effect. Elliot Gerson, an executive vice president at the Aspen Institute, said in an emailed statement that the institute has received calls and emails from “individuals associated with Crowds on Demand” and that the nonprofit’s general counsel has spoken with Swart “about this campaign of harassment.”

“From the beginning, we assumed that these manufactured communications were linked to political issues in the Czech Republic and Mr. Bakala’s high profile in that country,” Gerson said. “Nothing we received has altered our views about Mr. Bakala.”

Peter Baldwin, a former federal prosecutor who’s now a partner at the law firm Drinker Biddle, said the case raises interesting questions about the business of paid protesting, in particular what due diligence a company like Crowds on Demand must do to make sure it is not defaming its targets.

In other campaigns, Crowds on Demand appears to have been hired to advocate for or against policy matters — a practice that many might find distasteful but that probably isn’t legally actionable. In this case, though, the company is accused of making false accusations against an individual, leading to the lawsuit’s allegation of defamation.

“If you’re presented with information that your message may be false or defamatory, do you have an obligation to not be the messenger?” Baldwin said. “That’s a key question for someone in this business. At what point do you have an obligation to verify the truth or veracity of the claims?”

Swart declined to comment about what type of due diligence his company performs before getting involved in a campaign.

Zdenek Bakala in 2011. (Tim de Waele / Corbis)

Bakala’s lawsuit, filed in federal court in South Carolina, also alleges violations of the federal Racketeer Influenced and Corrupt Organizations Act, or RICO, a law originally intended to target organized crime syndicates. Bakala alleges Krupa, Swart and Crowds on Demand have violated that law by participating in an extortion scheme against him.

Baldwin, the former federal prosecutor, said RICO cases — which allow plaintiffs to recover three times their actual damages — are complicated and often hard to prove. He also said RICO cases can be damaging to defendants, essentially labeling them as organized criminals.

“If you’re a defendant facing racketeering charges, there is a reputational element,” Baldwin said. “That’s pretty serious. When people think of racketeering, they think of the mob.”

Baldwin, who reviewed Bakala’s complaint, said he couldn’t speculate on the case’s chance of proceeding but said Bakala’s lawyers “have pled their case carefully.”

“I’ve seen less compelling RICO complaints,” he said.