Businessman Sergej Racman, once one of the wealthiest Slovenians, has started serving prison time for cutting off creditors in the 2014 sale of the largest cinema complex in the country.

Racman, who started off in stock trading and finance before moving to entertainment and casino business, was sentenced to two years in prison in 2022 before the Ljubljana Higher Court upheld his conviction in late 2023.

The news portal Necenzurirano reported on 17 April that he had started serving his sentence after his defence team failed in its request for him to work off his sentence by using sentencing alternatives.

They proposed he serve weekend jail only and work off the rest by performing community service but the Ljubljana District Court confirmed for the portal that the request was denied.

Racman, the former owner of the cinema chain operator Kolosej, was convicted over the transaction whereby he transferred the Kolosej cinema centre in Ljubljana to a business associate to prevent a foreclosure.

Scheme to outwit creditors

A decade ago, Kolosej's largest creditor, NLB bank, tried to sell the Ljubljana multiplex due to debt default but Racman filed an appeal at the Constitutional Court.

His appeal was upheld and the sale was suspended. NLB then filed for bankruptcy of Kolosej, but before the court could rule on the matter, Racman signed over the Ljubljana cinema complex to a real estate company called SIP Nepremičnine without the consent of creditors.

Revenue that continued to be generated by the complex prior to the bankruptcy ended up with SIP Nepremičnine instead of in the bankruptcy estate. The Ljubljana District Court ruled in 2019 that the sale to SIP had been illegal and that creditors had been defrauded.

The cinema complex was subsequently returned to the Kolosej bankruptcy estate. It was sold at public auction in 2022 to entrepreneur Ivo Boscarol for the asking price of €6.4 million. It closed down in March 2023.

Boscarol, best known as the founder and former long-serving CEO of ultra-light aircraft maker Pipistrel, is planning to revive the neglected building, which is located in the BTC shopping district.

The courts have also ordered Racman to pay €700,000 in damages, but his personal assets are now being targetted as he has failed to pay up.

Sex trafficking case

Racman is in the dock in a case involving sex trafficking and money laundering charges.

The case is known as Marina, named after the Marina Sauna Club near Nova Gorica where roughly 400 women were allegedly abused to provide sex services to an estimated 150,000 clients between 2014 and 2020.

Racman and his two associates, who are the chief defendants in the case, allegedly made at least €21 million in illegal gains by operating a prostitution ring at the club.

Canada extradited Racman to Slovenian authorities in 2020 on the basis of an international arrest warrant based on the Marina case. Racman spent almost a year in custody before being released against a bail of €800,000.

Racman joins several other once well-known businessmen who ended up in prison for corporate crime, including Bine Kordež of hardware retailer Merkur, Igor Bavčar of Istrabenz holding, Boško Šrot of brewery Pivovarna Laško, Hilda Tovšak of builder Vegrad and Robert Časar of port operator Luka Koper. They have most served out their time.