(FORTUNE Magazine) – When a guy called the Pirate of Prague asks you to partner up with him again--you lost your shirt the first time--it's easy to be dismissive. Nonetheless, in the kind of audacious ploy only he could dream up, 36-year-old Czech promoter Viktor Kozeny is asking the very investors who are suing him for fraud to join him in a "major lawsuit" against the party he claims really bilked them: the government of Azerbaijan.

In a "Dear Lee" letter, Kozeny urges Leon Cooperman, chairman of the $4 billion Omega Advisors hedge fund--the biggest investor in the soured scheme--to join in litigation that he says would seek an award of at least $1 billion. The Azeri government, he writes, "must not be allowed to escape its full responsibility for [its] disingenuous representation and promises...." Kozeny told FORTUNE he expects to file the suit in about a month in U.S. and overseas courts.

Understandably, most of Kozeny's investors, several of whom received similar invitations, want no part of it. "This is posturing horseshit," says one. Lawsuits already filed by Cooperman and insurance giant AIG allege that Kozeny skimmed more than $100 million by charging them $25 for Azeri "privatization options" he bought for less than a buck apiece. (See "The Incredible Half-Billion-Dollar Azerbaijani Oil Swindle" in the fortune.com archive.)

The options were part of a scheme Kozeny used to attract hundreds of millions of dollars from prominent Western investors--including Columbia University and former U.S. Senate Majority Leader George Mitchell. The investors expected to make up to 100 times their money in just a year or two by using the options and privatization vouchers to win control of SOCAR, Azerbaijan's state oil company. But as deadlines passed for privatizing SOCAR, nothing happened, and the Westerners concluded that they'd been scammed--by Kozeny, the Azeris, or both.

For his part, Kozeny has told FORTUNE it was the Azeris who pocketed the $100 million markup on the options, through a deal he says he struck at the personal direction of 77-year-old Azeri President Heydar Aliyev. Kozeny says he made the arrangement to ensure his venture's success, but that the Azeris "double-crossed" him. Private dealings notwithstanding, he says his suit will be based on Azeri laws and public statements that "fraudulently induced" his group--Kozeny claims to have sunk "hundreds of millions" of his own into the deal--to invest in Azerbaijan.

Azeri officials have distanced themselves from Kozeny, especially after two Western investors flew to Azerbaijan early last year to brief Aliyev on their suspicions. Elin Suleymanov, press officer for the Azeri ambassador to the U.S., calls Kozeny's declared intention to sue the former Soviet Republic "a distracting maneuver." "There's never been a statement from the government that SOCAR would be privatized," he insists. "The investors were misled by Mr. Kozeny, not by our government."

Kozeny says that he has enlisted just three small investors to join his suit so far. He hopes that "fiduciary duty" will persuade others, even Cooperman (who declined to comment on the matter), to sign on. Suing a foreign government--not to mention recovering damages--involves considerable hurdles. Nonetheless, Kozeny says that this is one dispute in which the rule of law must prevail. "It gives me no great pleasure to do this," says the Pirate of Prague, "but it's the only way to persuade them to behave more honorably."

--Peter Elkind