Original Complaint in Motorola and Nokia v. Kemel Uzan, et al.
Date Filed: January 28, 2002.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

______________________________________________

MOTOROLA CREDIT CORPORATION
21440 West Lake Cook Road, 6th Floor
Deer Park, Illinois 60010, :

and

NOKIA CORPORATION
Keilalahdentie 4
Espoo, Finland

Plaintiffs,

v.

KEMAL UZAN
Serve at: 100 United Nations Plaza, #45A
New York, New York 10017,

CEM CENGIZ UZAN
Serve at: 515 Park Avenue, #19
New York, New York 10022,

MURAT HAKAN UZAN
Serve at: 100 United Nations Plaza, #46PHB
New York, New York 10017,

MELAHAT UZAN
Serve at: 100 United Nations Plaza, #23B
New York, New York 10017,

AYSEGUL AKAY
Serve at: Buyukdere Cad. Dogushan No. 42-46 Kat. 2
Mecidiyekoy, Istanbul, Turkey,

ANTONIO LUNA BETANCOURT
Serve at: 100 United Nations Plaza, #40E
New York, New York 10017,

UNIKOM ILETISM HIZMETLERI PAZARLAMA A.S.
Serve at: Dr Emin Pasa Sok., No. 20 Kat. 3,
Cagaloglu, Eminonu, Istanbul, Turkey,

STANDART PAZARLAMA A.S.
Serve at: Ikitelli Mehmet Akif Mah. Inonu Cad. Star Sok.
No. 2 Kat. 3 Kucukcekmece, Istanbul, Turkey,

STANDART TELEKOMUNIKASYON BILGISAYAR
HIZMETLERI A.S.
Serve at: Ikitelli Mehmet Akif Mah. Inonu Cad. Star Sok.
No. 2 Kat. 1 Kucukcekmece, Istanbul, Turkey,

Defendants.
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Civ. No. ____________

 

JURY TRIAL DEMANDED

 

COMPLAINT
FOR INJUNCTIVE,
DECLARATORY AND
MONETARY RELIEF

 

TABLE OF CONTENTS

JURISDICTION AND VENUE

THE PARTIES

INTRODUCTION

THE UZANS’ SCHEME TO DEFRAUD MOTOROLA AND NOKIA

THE UZANS’ PATTERN OF DEFRAUDING OTHER VICTIMS

COUNT I By Motorola and Nokia Against All Defendants for Violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(a)

COUNT II By Motorola and Nokia Against the Individual Defendants for Violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(b)

COUNT III By Motorola and Nokia Against All Defendants for Violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c)

COUNT IV By Motorola and Nokia Against All Defendants for Violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(d)

COUNT V By Motorola Against Hakan Uzan and Cem Uzan for Illinois Common-Law Fraud

COUNT VI By Motorola Against Hakan Uzan and Cem Uzan for Illinois Promissory Fraud

COUNT VII By Motorola Against All Defendants for Illinois Civil Conspiracy

Count VIII By Motorola Against Hakan Uzan and Cem Uzan For Fraud in Connection with Computers in Violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030(a)(4)

COUNT IX By Motorola Against Hakan Uzan and Cem Uzan for Interception of Electronic Communications in Violation of the Electronic Communications Privacy Act, 18 U.S.C. § 2511(1)(a)

Count X By Motorola Against Hakan Uzan and Cem Uzan For Unlawful Access to Stored Electronic Communications in Violation of the Electronic Communications Privacy Act, 18 U.S.C. § 2701(a)(2)

Count XI By Motorola Against Defendants Hakan Uzan and Cem Uzan For Violation of the Illinois Trade Secrets Act, 765 ILCS 1065

COUNT XII By Motorola and Nokia Against All Defendants for Imposition of a Constructive Trust or Equitable Lien

COUNT XIII For Declaratory and Other Relief

JURY DEMAND

Plaintiffs Motorola Credit Corporation and Nokia Corporation, for their claims against Defendants Kemal Uzan, Cem Cengiz Uzan, Murat Hakan Uzan, Melahat Uzan, Aysegul Akay, Antonio Luna Betancourt, Unikom Iletism Hizmetleri Pazarlama A.S., Standart Pazarlama A.S., and Standart Telekomunikasyon Bilgisayar Hizmetleri A.S. (collectively the "Defendants"), allege as follows:

JURISDICTION AND VENUE

1. Subject matter jurisdiction is conferred on this Court by 28 U.S.C. § 1331 in that this action arises under the laws of the United States. This Court also has pendent jurisdiction over Plaintiffs’ state law claims.

2. Venue is proper in this district pursuant to 28 U.S.C. §§ 1391 (b) and (d) because a substantial part of the events or omissions giving rise to the claims occurred in this district and because all of the Defendants are aliens. In addition, venue is proper in this district with respect to all of the individual Defendants pursuant to 18 U.S.C. § 1965(a) because all of the individual Defendants conduct their affairs in this district.

THE PARTIES

3. Plaintiff Motorola Credit Corporation ("Motorola") is a Delaware corporation with its principal place of business at 21440 West Lake Cook Road, 6th Floor, Deer Park, Illinois, 60010.

4. Plaintiff Nokia Corporation ("Nokia") is a public limited company organized under the laws of Finland, with its principal place of business at Keilalahdentie 4, Espoo, Finland. Nokia Networks Oy, which was party to various agreements described in this Complaint, was merged into Nokia effective October 1, 2001.

5. On information and belief, defendant Kemal Uzan is a citizen and domiciliary of the Republic of Turkey. Kemal Uzan owns real property in New York at 100 United Nations Plaza, #45A, New York, New York 10017. Kemal Uzan is also an officer, director and/or owner of various companies controlled by the Uzan family ("Uzan-controlled companies").

6. On information and belief, defendant Murat Hakan Uzan ("Hakan Uzan") is a citizen and domiciliary of the Republic of Turkey. Hakan Uzan owns real property in New York at the following addresses: (a) 100 United Nations Plaza, #40E, New York, New York 10017; and (b) 100 United Nations Plaza, #46PHB, New York, New York 10017. Hakan Uzan is also an officer, director and/or owner of various Uzan-controlled companies. Hakan Uzan is the son of defendant Kemal Uzan.

7. On information and belief, defendant Cem Cengiz Uzan ("Cem Uzan") is a citizen and domiciliary of the Republic of Turkey. Cem Uzan owns real property in New York at the following addresses: (a) 515 Park Avenue, #19, New York, New York 10022; (b) 515 Park Avenue, #3K, New York, New York 10022; (c) 515 Park Avenue, Storage Unit #13, New York, New York 10022 (d) 100 United Nations Plaza, #29C, New York, New York 10017; and (e) 845 United Nations Plaza, #80B, New York, New York 10017. Cem Uzan is also an officer, director and/or owner of various Uzan-controlled companies. Cem Uzan is the son of defendant Kemal Uzan and is the brother of defendant Hakan Uzan.

8. On information and belief, defendant Melahat Uzan is a citizen and domiciliary of the Republic of Turkey. Melahat Uzan owns real property in New York at the following addresses: (a) 100 United Nations Plaza, #23B, New York, New York 10017; and (b) 100 United Nations Plaza, #26A, New York, New York 10017. Melahat Uzan is a director and/or owner of various Uzan-controlled companies. Melahat Uzan is the wife of defendant Kemal Uzan.

9. On information and belief, defendant Aysegul Akay ("Akay") is a resident of Istanbul, Turkey, with her principal residence at Buyukdere Cad. Dogushan No. 42-46 Kat. 2, Mecidiyekoy, Istanbul, Turkey. Akay is a director and/or owner of various Uzan-controlled companies. Akay is the sister of defendants Hakan Uzan and Cem Uzan.

10. On information and belief, defendant Antonio Luna Betancourt ("Luna") is a citizen of Mexico. Luna’s regular dwelling place is 100 United Nations Plaza, #40E, New York, New York. Luna is a close associate of the Uzan family and has served as a director of at least one Uzan-controlled company and as an employee of another Uzan-controlled company.

11. Defendant Standart Pazarlama A.S. ("Standart Paz") is a corporation organized under the laws of the Republic of Turkey with its principal place of business at Ikitelli Mehmet Akif Mah. Inonu Cad. Star Sok. No. 2 Kat.3 Kucukcekmece, Istanbul, Turkey. Defendants Cem Uzan and Hakan Uzan each owns 39.4% of Standart Paz, for a total of 78.8% of the stock in the company.

12. Defendant Standart Telekomunikasyon Bilgisayar Hizmetleri A.S. ("Standart Telekom") is a corporation organized under the laws of the Republic of Turkey with its principal place of business at Ikitelli Mehmet Akif Mah. Inonu Cad. Star Sok. No. 2 Kat. 1 Kucukcekmece, Istanbul, Turkey. Defendants Cem Uzan and Hakan Uzan each owns 39.4% of Standart Telekom, for a total of 78.8% of the stock in the company.

13. Defendant Unikom Iletism Hizmetleri Pazarlama A.S. ("Unikom") is a corporation organized under the laws of the Republic of Turkey with its principal place of business at Dr Emin Pasa Sok., No. 20 Kat. 3, Cagaloglu, Eminonu, Istanbul, Turkey. Rumeli Telekom A.S., a Turkish company controlled by the Uzan family, owns 90% of the stock of Unikom.

INTRODUCTION

14. Through an elaborate scheme of deceit and intimidation, the Defendants committed numerous crimes and offenses against Plaintiffs Motorola and Nokia, the ultimate purpose and result of which was the theft of more than $3 billion from the companies. With no intention of repaying the money, the Defendants induced Motorola and Nokia – each through a separate, but strikingly similar, scheme – to lend significant sums of money to Telsim Mobil Telekomunikasyon Hizmetleri A.S. ("Telsim"), a Turkish cellular telecommunications company largely owned and controlled by the Uzan family. The Uzans’ true intentions were exposed in April 2001 when they stole the collateral for Motorola’s and Nokia’s loans by intentionally and illegally diluting the value of stock pledged as collateral for the loans and reaffirmed this action in a Telsim shareholders meeting on January 4, 2002. In addition, Hakan Uzan, Kemal Uzan, Cem Uzan, Melahat Uzan and Aysegul Akay (together "the Uzans") and the other Defendants fraudulently used seemingly legitimate businesses, including Telsim, to engage in transactions with Motorola and Nokia, through which Motorola and Nokia provided cash and other assets to Telsim. The Defendants then employed a number of illicit devices to defraud Motorola and Nokia, to drain money and other assets from Telsim, and to launder the money. The Uzans also manufactured transactions that allowed the Uzans to shift assets from Telsim, in which Motorola and Nokia have a pledged stock interest, to other Uzan entities in which Motorola and Nokia have no interest. Indeed, the Uzans are believed to be diverting millions of dollars from Telsim every month. The Uzans hid these diversion activities from Motorola and Nokia by, among other things, refusing to provide required financial statements and other information. Finally, on January 4, 2002, in an act designed to further ensure that the money the Uzans stole from Motorola and Nokia would never be recovered, the Uzans staged a meeting of the Telsim shareholders in which they eliminated the control rights of the shares pledged as collateral for the loans and took actions that would permit the transfer of Telsim’s illegally obtained assets to a Turkish foundation, seemingly beyond the reach of Motorola, Nokia and the other creditors of Telsim.

15. The Uzans have also engaged in extortion and intimidation to avoid their obligations – including issuing threats, filing baseless criminal charges in Turkey against several executives of Motorola, Motorola’s parent company (Motorola Inc.), a Motorola affiliate (Motorola Turkey), and of Nokia, and hacking into Motorola’s computer system. Motorola and Nokia are but two of the Uzans’ many victims, however. As outlined in this Complaint, the Uzans have committed similar acts of fraud and deceit against other major domestic and international corporations, including Siemens, Ericsson, a Turkish affiliate of Saatchi & Saatchi, and many others.

16. Finally, to ensure that illegally obtained funds are never recovered by their victims, the Uzans, on information and belief, employ the largest team of in-house lawyers of any Turkish company, whose job is to make it impossible for the Uzans’ victims to seek legal redress. Specifically, the Uzans and their attorneys include provisions in contracts requiring the Uzans’ victims to seek redress in a Turkish court, where the Uzans are believed to have a distinct advantage, or to ensure that the victims have no standing to challenge the Uzans’ illegal acts. For example, the illegal dilution of the collateral for Motorola’s and Nokia’s loans, described below, was initiated by the Uzans’ lawyers and was designed to ensure that Motorola and Nokia have no standing to challenge the dilution in Turkey. Further, it was the Uzans’ lawyers who drafted a false criminal complaint against several executives of Motorola, Motorola Inc., Motorola Turkey and Nokia. Motorola and Nokia have thus been forced to file this action to seek redress for certain of the Uzans’ frauds against Motorola and Nokia. As discussed below, the Uzans have used the same devices in their schemes to defraud other victims, including Italstrade, Ericsson, and Ferda Yildiz.

17. The Defendants’ illicit scheme against Motorola and Nokia has resulted in numerous violations of federal and state law, including violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) (Counts I through IV below). Against Motorola and Nokia alone, the Defendants committed hundreds of criminal acts (i.e., "predicate acts of racketeering") that provide the basis for Motorola’s and Nokia’s four RICO claims. These criminal violations include acts of mail fraud, wire fraud, extortion, intimidation and computer hacking.

18. In addition to the RICO violations, the Defendants violated several other federal and state statutes in connection with their illegal scheme, including: (a) the federal Computer Fraud and Abuse Act (Count VIII); (b) the federal Electronic Communications Privacy Act (Counts IX and X); and (c) the Illinois Trade Secrets Act (Count XI). Certain of the Defendants’ actions constituted common-law fraud (Counts V and VI), and all of the Defendants engaged in a civil conspiracy in violation of state law (Count VII). As a result of these and other fraudulent and illegal acts by the Defendants against Motorola and Nokia, Plaintiffs are entitled to significant monetary damages – in excess of $3 billion before trebling – as well as appropriate declaratory and injunctive relief to avoid further dissipation by the Uzans of assets that rightfully belong to Motorola and Nokia.

Overview

19. This case involves multiple illegal schemes of racketeering activity engaged in by the Defendants, including a scheme hatched by the Uzan family beginning in the mid-1990s to dominate Turkey’s nascent cellular telephone industry – all without having to pay for the development of a system. The Defendants enticed Motorola and Nokia into doing business with them with false promises and by virtue of having been awarded a Global System for Mobile Telephony ("GSM") license by the Turkish government. In order to achieve their unlawful goal, the Uzans and their racketeering enterprise needed base stations, switching equipment and telephones. To obtain this equipment, the Uzans utilized a company called Telsim. Through Telsim the Uzans negotiated with Motorola to provide the bulk of the base stations necessary to get the system up and running, and the Uzans negotiated with Nokia to obtain the switching equipment. During these negotiations, the Uzans deliberately made numerous false representations to Motorola and Nokia, including misrepresentations concerning their intention to perform the contracts. Unaware of the Uzans’ fraudulent scheme, Motorola and Nokia – each through separate, but strikingly similar, patterns of misrepresentations by the Uzans – were induced to enter into agreements pursuant to which the Uzans, through Telsim, were fronted virtually all of the equipment – without having to put up any cash – via financing provided by Nokia (through an international bank) and Motorola totaling almost $3 billion.

20. The Uzans’ illegal schemes, many of which continue to this day, are devised and carried out by an enterprise, that is, an association in fact, which includes the Uzans and Luna (collectively, the "Individual Defendants") and certain entities the Uzans own and control – including Standart Paz, Standart Telekom and Unikom (collectively, the "Corporate Defendants").

21. The Defendants’ illegal scheme to defraud Motorola and Nokia is but one example of the Uzans’ longstanding practice of defrauding investors and co-venturers by obtaining goods or funds based on false assurances that their debts would be repaid, and then seeking to escape their obligations through criminal fraud and extortion.

22. The victims of these criminal schemes are numerous and widespread and include major domestic and international corporations. In addition to Motorola and Nokia, the Uzans’ victims include: the World Bank; Siemens; a Turkish affiliate of Saatchi & Saatchi; Ericsson; the Templeton Funds; Nowa Huta Cement Company, a State-owned Polish cement company; and Italstrade (now Fintecna), a State-owned Italian construction company. In addition, the Uzans and companies they own and/or control are believed to owe as much as $1 billion to the Turkish government in back taxes, license fees and other liabilities.

The Uzan Family Businesses

23. The Uzans are sophisticated conspirators who are skilled and experienced in business and whose family is prominent and politically well-connected in Turkey. The Defendants perpetrate their illegal schemes through a labyrinth of at least 134 active companies – including banks, media outlets, construction companies, and public service companies. In addition to two holding companies – Rumeli Holding A.S. ("Rumeli Holding") and Prime Holding A.S. – the Uzans own and/or control companies in the following industries, among others: banking, cement, electricity, television, radio, newspaper, printing, insurance, construction, trade, jewelry, telecommunications, the Internet, and sports. A chart summarizing some of the companies the Uzans own and/or control is included as Exhibit 1.

24. Rumeli Holding, established by Kemal Uzan, is the primary corporate entity through which the Uzans conduct their unlawful activities. By the mid-1990s, Rumeli Holding had grown into a major Turkish conglomerate, with dozens of subsidiary companies, all of which are controlled by the Uzans. Rumeli Telefon Sistemleri A.S. ("Rumeli Telefon") also is owned and controlled by the Uzans and, as further described below, was one of the vehicles through which the Defendants furthered their unlawful objectives.

25. It is believed that overall control of the Rumeli group of companies still lies with Kemal Uzan and that few significant decisions are made without his involvement or consent.

26. Kemal Uzan’s sons, Cem and Hakan, however, are now responsible for the day-to-day management of most of the family’s companies. Cem Uzan, for instance, is responsible for the family’s media interests and is closely involved in the management of the family’s telecommunications businesses. Hakan Uzan also holds many positions within the family’s telecommunications and other businesses, including serving as Chief Executive Officer of Telsim, a telecommunications company holding a license for cellular services in Turkey, and as a member of the board of directors of Rumeli Telefon. As described below, Defendants Melahat Uzan and Akay hold or have held various officer and director positions within the Uzans’ business empire as well.

The Uzans’ Modus Operandi

27. With no intention of living up to their end of the bargains, the Uzans have a long history of using this complex web of family-controlled businesses to enter into seemingly legitimate agreements with suppliers and co-venturers. The Uzans then use any number of fraudulent and criminal tactics to deprive these companies of their assets.

28. One of the Uzans’ tactics involves luring entities and individuals into making minority investments in companies in which the Uzans are majority stakeholders, then illegally siphoning assets from these companies for use by the Uzans, at the expense of the minority shareholders. Two such looted entities, Telsim and Cukurova Elektrik, are discussed below. Some of the many ways in which the Uzans drain value from companies include arranging for the companies to: (1) overpay Uzan-controlled suppliers or "managers"; (2) deposit funds in Uzan-controlled banks for no or little interest; (3) borrow money from Uzan-controlled banks at excessive rates of interest; and (4) enter into unfavorable management and other contracts with Uzan affiliates.

29. In addition, the Uzans choreograph illegal stock transactions through which they dilute the value of co-venturers’ stock holdings or collateral, to the direct benefit of other Uzan-controlled companies. Two such instances – involving Motorola and Nokia, and the minority shareholders of a company called Cukurova Elektrik – are described below.

30. The Uzans also use libel, extortion and other criminal tactics to intimidate their victims. For example, the Uzans have on several occasions allegedly published false and libelous accounts through their own media outlets in an attempt to discredit other companies or other companies’ executives. Three such instances, involving Siemens, Ericsson, and a Turkish affiliate of Saatchi & Saatchi, are described below. Recently, the Uzans’ Star TV even had its broadcasting rights suspended by the Turkish Radio and Television High Counsel after Star TV aired a broadcast that violated Turkish law. The Uzans also initiated false criminal charges in Turkey against executives of Motorola, Motorola, Inc., Motorola Turkey and Nokia and, on information and belief, at least one other individual, former business partner Ferda Yildiz, in an attempt to intimidate the individuals and companies. The Uzans use these criminal tactics as means to avoid repayment of significant debts.

31. On information and belief, after fraudulently and illegally depriving investors and suppliers of their funds, the Uzans and their associate, Luna, transfer the illegally obtained money out of Turkey from the various Uzan-controlled entities (such as Telsim), and "launder" the money. They then re-use the "clean" funds in connection with other Uzan ventures, or convert it for personal use. On information and belief, at least some of this illegally diverted money has been transferred to and used in New York, where certain of the Defendants have purchased homes and offices, conduct business, and maintain a lease on office space in a Park Avenue office building. For example, in the case of Telsim alone, millions of dollars per month in operating revenues is, on information and belief, being illegally siphoned off by the Uzans.

32. In addition, and as an integral part of their fraudulent scheme, the Uzans have repeatedly taken advantage of the Turkish judicial system, where the Uzans, for a variety of reasons, believe they have an advantage over adversaries, to avoid performance of their obligations. On numerous occasions, for example, the Uzans, through their deceptions and manipulations, have successfully kept business partners tied up in Turkish courts for years over wholly baseless claims or charges.

The Fruits of the Uzans’ Illegal Schemes

33. The Uzans have amassed a tremendous fortune through their illegal schemes and last year were ranked 312 on the Forbes Magazine Billionaires list (July 7, 2001), with identifiable assets of at least $1.6 billion. On information and belief, their assets are far in excess of this amount. The Uzans’ real estate holdings alone are enormous. In addition to the numerous apartments owned by the Uzans in upscale buildings in New York, believed to have a combined market value in excess of $30 million, the Uzans’ real estate holdings include: (a) a multi-million dollar mansion at a prestigious address in central London (Cem); (b) a ranch in Pamukova, Turkey (Hakan); (c) two shore-side mansions in Yenikoy, the most expensive stretch of the Bosphorus (Cem and Hakan); (d) Cem Uzan’s mansion in Istanbul, Malikhane; (e) an island called Zeytinli near Gocek on Turkey’s southwest coast; and (f) various other properties, including a family mansion in Istinye and a mountain retreat. A chart summarizing just some of the Uzans’ assets is included as Exhibit 2.

34. Beyond their many real-estate holdings, the family holds beneficial ownership of four airplanes, including a customized Boeing 737 jet, two helicopters and six yachts. On information and belief, these aircraft and yachts are owned by shell corporations organized in tax-haven jurisdictions for the sole benefit of the Uzans. See Exhibit 2.

35. On information and belief, the Uzans have also used illegally obtained and laundered funds to rent office space in New York for certain Uzan-controlled businesses and to purchase apartments in New York, from which the Uzans have conducted additional acts in furtherance of their fraudulent schemes. The offices, which are located at 450 Park Avenue, New York, New York, are believed to be leased by an Uzan-controlled company – Star TV USA – and to have been occupied by that company along with two other Uzan businesses, Rumeli American Investment and Star Newspaper USA. Each of these companies is incorporated in New York. Although Star TV’s lease payments are currently in arrears, at least some lease payments are believed to have been made from an account in Star TV’s name at HSBC Bank, 425 Fifth Avenue, New York, New York.

THE UZANS’ SCHEME TO DEFRAUD MOTOROLA AND NOKIA

36. The Defendants have used almost every illegal tactic in their arsenal to defraud Motorola and Nokia, including computer hacking. Most significantly, the Uzans have stolen the collateral for Motorola’s and Nokia’s investments. As a result of these numerous illegal acts, Motorola and Nokia have been defrauded out of more than $3 billion.

The Uzans Fraudulently Induce Motorola to Enter Into Agreements with Telsim with No Intention of Performing

Introduction

37. In 1993, Telsim entered into an agreement with the Turkish government under which Telsim was permitted to provide GSM cellular telephone services, and the company’s telecommunications business was launched by the Uzans in 1994. Kemal Uzan is Telsim’s Chairman, but Hakan Uzan runs the company from his position as Vice-Chairman and Chief Executive Officer. Cem Uzan serves as a director of Telsim and signed certain amendments to an agreement with Motorola as "CEO" of Telsim. At the time Telsim was formed, a significant majority of Telsim’s stock was held by Rumeli Telefon, an Uzan-controlled company.

38. Prior to negotiating and entering into the various agreements with Motorola, described below, and in furtherance of the Defendants’ scheme ultimately to defraud Motorola, Telsim entered into a smaller-scale agreement with a Motorola affiliate, Motorola Ltd., on November 29, 1994 (the "Concession Agreement"). Pursuant to this Concession Agreement, Motorola Ltd. provided cellular infrastructure equipment to Telsim that was partly paid for with a series of promissory notes.

39. The total debt under promissory notes, which were issued in several different currencies, grew to approximately $52.5 million (based on conversion rates in effect on January 18, 2002). At first, Telsim made its payments under the promissory notes in a more or less timely manner. This early experience between Telsim and Motorola Ltd. thus was designed to, and did, induce Motorola to enter into the more significant lending arrangements that followed. Indeed, Motorola eventually rolled certain outstanding promissory notes related to the Concession Agreement into the debt under the subsequent, and more significant, financing agreements between Motorola and Telsim. This was accomplished through the Sixth Amendment to the Equipment Financing Agreement between Motorola and Telsim, discussed below. As Motorola would ultimately discover, however, Telsim’s timely payments under this earlier, smaller-scale arrangement were simply part of the Uzans’ larger scheme to induce Motorola into providing Telsim with much larger sums.

40. Beginning in 1997, Motorola and Telsim began to exchange information and to engage in negotiations concerning the possibility of Motorola and its affiliates’ providing Telsim with a cellular telephone system and related services. Motorola’s affiliated entities are world leaders in the manufacture and servicing of cellular telecommunications systems. At the time the negotiations began, Motorola was interested in increasing its presence in the growing Turkish cellular market, and Motorola’s products and skills were essential to the success of Telsim’s business.

41. In the negotiations between Motorola and Telsim concerning the parties’ agreements and subsequent amendments, Hakan Uzan served as Telsim’s principal negotiator and Luna was typically present. Although Cem Uzan was not physically present at the negotiations, Hakan Uzan made frequent and lengthy telephone calls to Cem Uzan to discuss substantive issues that arose during the negotiations, and Cem provided input that significantly influenced Hakan. Fatih Azami and Sema Sanigok of Telsim also attended meetings.

42. During the negotiations, Motorola informed Hakan Uzan, Luna, and other Telsim representatives that a pledge of Telsim shares as collateral was an absolute prerequisite to Motorola’s agreeing to provide financing and equipment to Telsim, and that without such a pledge, Motorola would walk away from the negotiations.

43. Although the Uzans had no intention of honoring any pledge or of repaying the loans they hoped to obtain from Motorola, they sent various letters, electronic mail messages, and other communications with the fraudulent intent of convincing Motorola that Telsim was interested in negotiating and entering into binding commitments under these conditions.

44. For example, in February or March 1998, Hakan Uzan, in an act of wire fraud, sent a letter by facsimile to Paul Strzelecki of a European Motorola affiliate, which letter Hakan Uzan knew would be further sent by facsimile to Motorola in the United States. This letter was forwarded by facsimile to Stacy Powell-Bennett of Motorola Inc. in Illinois on or before April 2, 1998. In the letter, Hakan Uzan, in an attempt to induce Motorola to enter into various loan agreements described below, described the opportunity for equipment sales revenue and interest income that Motorola would receive as a result of the deal that was under discussion:

45. Various other letters, electronic mail messages, and communications sent to Motorola and Motorola affiliates during the negotiations – each of which constitutes a distinct violation of the mail fraud statute or the wire fraud statute – include, but are not limited to, those communications described with particularity in Attachment A to this Complaint. In addition, during the course of the parties’ relationship, numerous other fraudulent letters, electronic mail messages, and other communications were sent to Motorola or Motorola affiliates – each of which constitutes a distinct violation of the mail fraud statute or the wire fraud statute – including, but not limited to, those communications described with particularity in Attachment B to this Complaint. These communications were fraudulent because the Individual Defendants never intended to honor their commitments to Motorola, and the communications were designed to induce action by Motorola or to hide the Defendants’ illegal acts.

Defendants Fraudulently Induce Motorola to Loan Telsim Nearly $2 Billion

46. On April 24, 1998, as a result of the negotiations during which the Uzans made numerous fraudulent representations to Motorola, Telsim and Motorola entered into an Equipment Financing and Security Agreement ("Equipment Financing Agreement") to enable Telsim to purchase certain cellular infrastructure and equipment from an affiliate of Motorola – Motorola Ltd. Under the original terms of the Equipment Financing Agreement, Motorola loaned Telsim $360 million. The agreement subsequently was amended numerous times, in part to increase the amount of Motorola’s loan. As a result, by the Eighth Amendment to the agreement, dated September 29, 2000, the loan amount was increased to $1,833,161,875.57.

47. Motorola issued the loan in 17 tranches, with each tranche evidenced by one or more promissory notes in favor of Motorola. Telsim agreed to use the proceeds of each of the tranches for specifically agreed-upon purposes. Hakan Uzan, as Chief Executive Officer of Telsim, signed the Equipment Financing Agreement and each of the amendments on behalf of Telsim. Hakan Uzan also signed the amendments to the agreement on behalf of Rumeli Telefon, which pledged the majority of its shares in Telsim to Motorola as security for the loans. Cem Uzan also signed certain of the amendments to the agreement.

48. At the time the Equipment Financing Agreement and each of its amendments were executed, the Individual Defendants knew that Telsim intended to dishonor the agreements and not fully repay the loans. They further knew at that time that Telsim would not use the proceeds for the agreed-upon purposes.

49. In furtherance of the general scheme to defraud Motorola of its funds, Hakan Uzan sent a series of Draw Down Requests ("DDRs") to Motorola, allegedly in accordance with the terms of the Equipment Financing Agreement. In each such request, Hakan Uzan fraudulently certified that all conditions precedent for the respective draw had been satisfied, including certifications that: (a) such funds would be used for payment for, and installation of, equipment and services; (b) no event of default had occurred under either the Equipment Financing Agreement or License Financing Agreement; and (c) Telsim was in compliance with all terms of the Equipment Financing Agreement and License Financing Agreement. In each such request, Hakan Uzan also restated the "representations, warranties, and covenants" set forth in the Equipment Financing Agreement as of the date of the DDR, notwithstanding the intention of the Individual Defendants not to honor such provisions. Hakan Uzan made the DDRs described with particularity in Attachment C – each of which constituted a distinct violation of the mail fraud statute or the wire fraud statute – by letter addressed to Motorola in Illinois.

50. Also on April 24, 1998, Telsim and Motorola entered into a License Financing and Security Agreement ("License Financing Agreement"), pursuant to which Motorola agreed to lend $200 million to Telsim to enable Telsim to acquire a 25-year GSM 900MHz nationwide cellular license, which was required in order to operate a GSM cellular system in the Republic of Turkey. Motorola issued the loan in a single installment. Under the terms of the agreement, Telsim is obligated to repay the loan with interest. Hakan Uzan, as Chief Executive Officer of Telsim, signed the License Financing Agreement on behalf of Telsim. At the time the License Financing Agreement and a subsequent amendment were executed, the Individual Defendants intended to dishonor the agreements and not fully repay the loans.

51. In addition to the $200 million financing provided under the License Financing Agreement, Hakan Uzan, on behalf of Telsim, asked Motorola to provide an additional $300 million required to purchase the license from the Turkish government by entering into a joint venture with Telsim. Motorola rejected the joint venture proposal. On information and belief, Telsim obtained the additional $300 million from Kemal Uzan, possibly through a loan from Union Bank of Switzerland, and/or from one of the Uzan-owned Rumeli entities.

52. Also on April 24, 1998, Telsim and Motorola entered into a Share Pledge Agreement, under which Rumeli Telefon granted Motorola a right to obtain and/or sell a majority percentage of the issued and outstanding shares of Telsim (the "Pledged Interest") to secure Telsim’s payment obligations under the Equipment Financing Agreement and the License Financing Agreement. The Share Pledge Agreement was ultimately amended to increase the Pledged Interest of Telsim shares to approximately 66% of Telsim’s outstanding shares. In addition, section 5 of the Share Pledge Agreement provides, in relevant part:

53. Hakan Uzan, the Vice Chairman and Chief Executive Officer of Rumeli Telefon and a member of Rumeli Telefon’s board of directors, signed the Share Pledge Agreement on behalf of Rumeli Telefon. At the time the Share Pledge Agreement and subsequent amendments to the agreement were executed, the Individual Defendants intended to dishonor the agreement.

54. Also on April 24, 1998, in addition to entering into the loan-related agreements described above, Telsim and two affiliates of Motorola – Motorola Ltd. and Motorola Turkey – entered into a GSM Frame Contract ("Purchase Agreement"), pursuant to which Telsim agreed to purchase the above-described GSM cellular telephone system and services from the Motorola affiliates, and the Motorola affiliates agreed to provide warranty and support services for the system. Under the Purchase Agreement, Telsim is obligated to use the funds provided by Motorola under the Equipment Financing Agreement to satisfy its obligations to Motorola Ltd. and Motorola Turkey under the Purchase Agreement and for specific working capital needs, such as marketing. Hakan Uzan, as Chief Executive Officer of Telsim, signed the Purchase Agreement on behalf of Telsim. Although the Purchase Agreement was amended on February 1, 2000, the key terms of the agreement remained unchanged. At the time the Purchase Agreement and its amendment were executed, the Individual Defendants knew that Telsim would not use the funds provided by Motorola for the required purposes or otherwise honor the agreement.

55. On July 2, 1998, Motorola, Rumeli Telefon and UBS A.G. ("UBS") entered into a Pledgeholder Agreement whereby UBS serves as escrow agent with respect to the Pledged Interest. In February 2000, the parties amended the Share Pledge Agreement to permit Motorola to foreclose unilaterally on the Pledged Interest in the event of a default under the Equipment Financing Agreement and the License Financing Agreement.

56. The Purchase Agreement did not address whether Telsim could purchase equipment through a mechanism other than financing provided by Motorola. Following the execution of the above-described agreements, the parties entered into numerous amendments to the Equipment Financing Agreement to permit the purchase of equipment without financing. In the context of negotiating these amendments, Motorola representatives frequently raised the issue of modifying the Purchase Agreement to permit Telsim to purchase equipment without financing; however, Hakan Uzan repeatedly refused to consent to such a modification. As it turned out, Hakan Uzan wanted to purchase Motorola equipment on credit because he and the other directors of Telsim knew at the time Telsim entered into the amendments that Telsim would not honor, repay or otherwise perform its obligations under these agreements.

57. Throughout Telsim’s relationship with Motorola, Hakan Uzan, Cem Uzan, Luna, and others repeatedly emphasized that the pledge of Telsim shares as collateral for Motorola’s loans eliminated virtually all the risk of extending these loans. For example, on February 24, 1999, Hakan Uzan sent an electronic mail message which copied Walter Keating of Motorola and Ed Hughes of Motorola Inc., both resident in Illinois, in which Hakan Uzan falsely stated:

58. In and around September 1999, Motorola and Telsim discussed various options for Telsim to obtain financing from sources other than Motorola. Motorola and Telsim focused in particular on ECGD, an entity affiliated with the British government which promotes exports to developing countries by providing insurance, loan guarantees, and other assistance, much like the Export-Import Bank in the United States. In meetings, including those held on September 1, 1999 (London), September 3, 1999 (Chicago) and September 7-10, 1999 (Istanbul), Hakan Uzan fraudulently represented to Ed Hughes of Motorola Inc., Walter Keating of Motorola, and others, that Telsim would cooperate in seeking ECGD-backed financing. These representations by Hakan Uzan, which turned out to be fraudulent, induced Motorola to enter into an amendment to the Equipment Financing Agreement, which for the first time provided Telsim with working capital – $35 million – as opposed to merely financing the purchase of Motorola equipment. In addition, the amendment included $180 million in additional equipment financing that was contingent upon Telsim’s obtaining ECGD financing. To assist Telsim, Motorola engaged Deutsche Bank to undertake the review and other efforts necessary to become Telsim’s primary lender, subject to an ECGD guarantee.

59. In fact, Telsim did not cooperate or make a good faith effort to obtain ECGD financing. In connection with the proposed financing, Deutsche Bank representatives visited Telsim’s offices several times over the following weeks and months to review Telsim’s financial records. During one such review in Istanbul in or around the fall of 1999, Sema Sanigok, a Telsim employee, accused a Deutsche Bank analyst of taking a Telsim financial document without permission. That evening, while Walter Keating and Ed Hughes were having dinner in an Istanbul restaurant with Deutsche Bank representatives, Hakan Uzan unexpectedly arrived and presented sworn statements of Telsim employees that allegedly documented this episode, and he adamantly refused to provide Deutsche Bank with any further access to Telsim’s offices. These allegations, however, were false. By refusing to provide Deutche Bank with access to Telsim’s offices, which severely restricted Deutsche Bank’s access to Telsim’s financial records, Hakan Uzan effectively ensured that Deutsche Bank and ECGD would not provide financing to Telsim. Indeed, on information and belief, Hakan Uzan and/or the other Individual Defendants caused the allegations to be raised by a Telsim employee in order to stop the ongoing review of Telsim’s financial records and to avert the heightened oversight of Telsim’s financial dealings that financing from ECGD, a government-affiliated entity, would have entailed. Hakan Uzan never intended to make a good faith effort to pursue or cooperate in obtaining ECGD-backed financing, for two reasons: (1) the financial disclosures that would have been required from Telsim in order to obtain ECGD approval; and (2) Hakan Uzan and the other Individual Defendants had already initiated efforts to sell Telsim. As described in more detail below, a few months later, Hakan Uzan informed Motorola of the plans to sell Telsim, which Hakan claimed made ECGD-backed financing unnecessary. Motorola subsequently learned that Hakan Uzan, and presumably the other Individual Defendants who are directors of Telsim, without Motorola’s knowledge, had been working with Merrill Lynch to sell Telsim during, and possibly before the summer of 1999. As such, they never intended to obtain ECGD-backed financing, and their apparent attempts to pursue ECGD-backed financing as requested by Motorola were merely a charade.

60. From late October 1999 forward, the Defendants, including Hakan Uzan, Cem Uzan, Luna, and others, cited the anticipated proceeds from the imminent sale of Telsim as minimizing or eliminating the risk associated with the loans extended to Telsim by Motorola and as a justification for increasing the amount of those loans. For example, on October 22, 1999, Defendant Luna sent an electronic mail message to Walter Keating of Motorola in Illinois, in which he falsely stated that "Telsim will offer the biggest return yet," even though Kemal Uzan, Hakan Uzan, and Cem Uzan knew that Telsim would not honor its commitments to Motorola. See Exhibit 5. This and other similar fraudulent communications related to the anticipated sale of Telsim and the profits that would be generated by the sale were designed to induce Motorola to enter into the Seventh Amendment to the Equipment Financing Agreement. When Hakan Uzan, Cem Uzan, and Luna made these representations, however, they and the other Uzan defendants in fact had no intention to sell Telsim or to repay Motorola.

61. At a November 1, 1999 meeting, Hakan Uzan told Walter Keating of Motorola and Ed Hughes of Motorola Inc. that he and Cem Uzan had convinced Kemal Uzan to sell Telsim in its entirety. According to Hakan Uzan, Telsim had received an unsolicited offer from France Telecom to purchase the company for several billion dollars. Hakan Uzan also told the Motorola representatives that he had convinced Kemal Uzan to consent to the sale by agreeing to a memorandum of understanding promising Kemal Uzan $1.2 billion from the proceeds of any sale of Telsim. On information and belief, this promised payment to Kemal Uzan was intended to compensate him for the $300 million Kemal Uzan is believed to have provided, either himself or through one of the Rumeli entities, to enable Telsim to purchase its GSM license from the Turkish government.

62. At a meeting on November 29, 1999, Hakan Uzan told representatives of Motorola and Motorola Inc., including Ed Hughes, that he needed an additional $450 million in financing to make Telsim a more attractive acquisition target, and represented that if Motorola would provide this additional financing, Telsim would use it to expand and improve its coverage areas and increase the subscriber base, thus increasing the value of Telsim. Hakan Uzan stated that he was willing to sell at least a 40% stake in Telsim, and perhaps a greater portion at a premium. From Motorola’s perspective, the decision by Hakan Uzan and other Telsim directors to sell all or a substantial part of the company was positive news, because Motorola representatives had repeatedly discussed with Hakan Uzan and others how Telsim would benefit from a partner with greater operational expertise to improve Telsim’s admitted operational difficulties and technical limitations.

63. On February 1, 2000, in reliance on these fraudulent representations, Motorola entered into the Seventh Amendment to the Equipment Financing Agreement, which provided an additional $450 million in financing to Telsim. One of the key provisions upon which Motorola relied in entering into this amendment was the Uzans’ false representation that they would find a strategic partner, or buyer, for Telsim:

64. In contrast to Hakan Uzan’s representations at the November 29, 1999, meeting that the Uzans intended to sell Telsim, Hakan Uzan, Cem Uzan and the other Individual Defendants subsequently insisted on onerous conditions, such as veto rights, retaining a controlling interest in Telsim, or receiving such an exorbitant premium for a majority stake, that a sale became unlikely or impossible. On information and belief, the Uzans rejected an offer to sell Telsim to Deutsche Telekom for more than $5 billion.

65. On March 9, 2000, Defendant Hakan Uzan sent an electronic mail message to Ed Hughes of Motorola Inc. and Walter Keating of Motorola, both resident in Illinois, in which he fraudulently described various purported third-party offers to buy Telsim. In the message, he stated: "So you can tell all the guys with shaky hands and who were worried, . . . well just tell them not to worry any more, according to the written offers you are presently holding as share pledge a value greater than 7.8 billion USD for a debt of 1.4 billion USD." This statement, however, was false and designed to mislead Motorola and to conceal the Defendants’ unfolding fraud, because the Uzans never intended to sell Telsim. This electronic mail communication, which was sent through the U.S. wires, constituted wire fraud. See Exhibit 6.

66. On or around August 2000, Telsim told Motorola that Telsim had been unable to consummate a sale with a strategic partner. As a result, the Uzans approached Motorola about providing an additional $700 million in financing to Telsim and, again, claimed that they intended to sell Telsim.

67. Further, on or about September 25, 2000, Merle Gilmore, who was Executive Vice President and President, Communications Enterprises, Motorola, Inc., Michael Leahy and Ed Hughes met with Hakan Uzan in Istanbul, Turkey. At this meeting, Hakan Uzan again fraudulently represented that he intended to sell Telsim and that any additional financing provided by Motorola would be used to grow and improve Telsim’s business and to make Telsim a more attractive acquisition target. At that meeting, Merle Gilmore asked Hakan Uzan, in substance, CEO to CEO, eyeball to eyeball, I need your commitment that you will do everything in your power to sell this company or raise capital from alternative sources so that Motorola gets repaid. Hakan Uzan said he agreed. Then Merle Gilmore and Hakan Uzan shook hands. In fact, Hakan Uzan and the other Uzan Defendants had no intention of selling Telsim or repaying Motorola. Nevertheless, the Eighth Amendment to the Equipment Financing Agreement, signed September 29, 2000, included the following language:

68. On December 14, 2000, Hakan Uzan participated in a series of meetings with Ed Hughes of Motorola Inc. and Walter Keating of Motorola. At those meetings, Hakan Uzan once again asked Motorola to provide additional funding, citing the earthquake in Turkey, the devaluation of the Turkish Lira, and the ensuing economic crisis, which included a run on the Turkish banks by depositors. Hakan Uzan unapologetically informed these Motorola representatives that he had improperly used the money provided by Motorola under the Eighth Amendment to cover payments required during a run on one of the Uzan-controlled banks. Motorola denied the request for additional funds. Previously, in a written notice dated December 10, 2000, and provided to Motorola pursuant to the financing agreements, the Uzans had stated that they had made substantial contributions to their own banks.

69. At a meeting on January 9, 2001, Hakan Uzan also boasted to Ed Hughes, Walter Keating, and others that he had been able to renegotiate a contract with the Turkish Football league after the earthquake by arguing that the earthquake was a "force majeure" event. Through this renegotiation, Hakan Uzan claimed to have obtained a twelve-month extension on the amounts owed under that contract. Hakan Uzan admitted that he had not intended to pay the Turkish Football League the amounts he owed if he could not renegotiate their contract and that he probably would not make payments once the twelve-month extension was up. In other words, Hakan Uzan renegotiated a contract that he had no intention of performing either before or after it was renegotiated. He has used the same excuse for nonpayment with Motorola and Nokia, again asserting a "force majeure" event (among other things) resulting from the Turkish economic "crisis" of last year and the continued devaluation of the Turkish Lira.

70. In addition to the meetings described in this section, on numerous instances one or more of the Uzans traveled in interstate and foreign commerce, and caused representatives from Motorola, Motorola affiliates, Telsim and others to do the same, in order to promote their general scheme to defraud Motorola of billions of dollars, in violation of 18 U.S.C. § 2314. Specifically, the Uzans arranged numerous meetings with representatives of Motorola and Motorola affiliates in order to convince Motorola that they would - in good faith - negotiate and enter into binding commitments under the agreements. However, Hakan Uzan and the other officers and directors of Telsim knew all along that Telsim would not honor, repay or otherwise perform its obligations under the agreements. These meetings were an integral part of the Uzans’ ongoing scheme to defraud Motorola and usually required that some or all participants undertake interstate or foreign travel. Each occasion on which a participant in such a meeting traveled across a state or national boundary of the United States in order to attend such a meeting, constitutes a violation by the Uzans of 18 U.S.C. § 2314. Attachment D to this Complaint contains a description of some, but not all, of such meetings and some, but not all, of the attendees whose travel to the meetings involved crossing a boundary of the United States or one of its member states.

71. Finally, in connection with their dealings with Motorola, the Defendants also caused numerous wire transfers by Motorola from its correspondent banks in New York, New York, and Chicago, Illinois, in order to obtain funds illegally and with intent to defraud Motorola, in violation of 18 U.S.C. § 1343. These wire transfers are described with particularity in Attachment E.

The KaR-Tel Scheme

72. In addition to the above-described agreements with Telsim, on August 19, 1998, Motorola entered into a Loan Agreement with L.L.P. KaR-Tel, a limited liability company formed under the laws of the Republic of Kazakhstan. Rumeli Telekom – another Uzan-controlled company – owns 70% of KaR-Tel, and the Kazakhstani company Investel owns 30% of KaR-Tel. Under this Loan Agreement, as amended, Motorola loaned KaR-Tel $77,331,369.25 to enable KaR-Tel to: (a) obtain a license to establish and operate a GSM 900 cellular system in the Republic of Kazakhstan; and (b) purchase certain cellular infrastructure equipment and related services from Motorola Ltd. The loan repayment date was extended several times, ultimately to April 30, 2001, which deadline was not met. The total amount KaR-Tel was obligated to pay on that date was $86,261,429.52.

73. At the time the KaR-Tel Loan Agreement was executed, Telsim agreed to guarantee KaR-Tel’s repayment obligations under the Loan Agreement up to a maximum of $69 million (the "Guaranty"). The Guaranty was amended several times to increase the amount of the guarantee, ultimately to $95 million. Hakan Uzan signed the Guaranty as Chief Executive Officer of Telsim, and Cem Uzan signed the Guaranty as Vice-Chairman of Telsim. Hakan Uzan also signed the amended and restated versions of the Guaranty on behalf of Telsim and signed the extensions to the Loan Agreement on behalf of Telsim, Rumeli Telefon and Rumeli Telekom A.S. At the time the Loan Agreement, Guaranty and related amendments were executed, the Individual Defendants knew that KaR-Tel and Telsim would not perform under the agreements. On information and belief, one reason KaR-Tel has not met its financial obligations to Motorola is that Telsim is draining approximately $5 million a year out of KaR-Tel under a "management" agreement between Telsim and KaR-Tel.

74. In furtherance of the general scheme to defraud Motorola of its funds, one or more of the Uzans sent or caused to be sent a series of letters and electronic mail messages, as well as financial and other information about KaR-Tel, Telsim and Rumeli Telekom, to Motorola with the fraudulent intent to induce Motorola to enter into the Loan Agreement and Guaranty Agreement. After the Loan Agreement and Guaranty Agreement were executed, Telsim, Rumeli Telekom and KaR-Tel (through the Uzans and employees acting at the direction of one or more of the Uzans) continued to communicate about obligations under those agreements and proposed modifications and amendments to those agreements. Much of this correspondence and other information sent to Motorola fraudulently misrepresented Telsim’s, Rumeli Telekom’s and KaR-Tel’s compliance with their obligations under these agreements as well their financial condition and their ability and intention to perform and to make payments.

75. This fraudulent correspondence and other information was sent with the intent to deceive Motorola into believing that Telsim, Rumeli Telekom and KaR-Tel would honor their obligations under these agreements – even though the Individual Defendants intended that these companies would not honor, repay or otherwise perform their obligations under those agreements – and to extract additional money from Motorola. These fraudulent letters, electronic mail messages, and other communications sent to Motorola or Motorola affiliates – each of which constitutes a distinct violation of the mail fraud statute or the wire fraud statute – include, but are not limited to those communications described with particularity in Attachment F to this Complaint.

The Uzans Fraudulently Induce Nokia to Enter into Agreements with Telsim with the Intention of Not Performing Their Obligations

Introduction

76. Defendants perpetrated a distressingly similar pattern of fraud and deceit against Nokia. Indeed, after each plaintiff’s deal collapsed, they realized that they had each been deceived and injured by a series of nearly identical misrepresentations. As described below, the parallels between the Defendants’ efforts to defraud Nokia and Motorola, coupled with the numerous other deceits by which Defendants have defrauded other victims (see ¶¶ 182-236, infra), constitute powerful proof that such frauds are part of their pattern and practice.

77. Prior to negotiating and entering into the agreements that form the basis of Nokia’s claims, Telsim entered into an agreement, much smaller in scope, to purchase radio equipment and services from Nokia. Under this arrangement, Telsim paid for the purchases, in part, with a series of promissory notes. The debt under the promissory notes grew to approximately $5 million. Telsim, however, managed to keep current on these promissory notes in large part. Thus, the Uzans established a positive track record, to make Nokia feel comfortable entering into the much larger arrangements that followed, and that are now the subject of this Complaint.

78. For Nokia, establishing a foothold in the burgeoning Turkish cellular market was an important business objective, while for Telsim, the value of its cellular license could not be maximized without a world-class supplier of switching technology and services. Nokia was, and is, a world leader in, among other things, switching technology. Switching technology, which receives the data transmitted from a cellular phone, interprets it, and routes it to its intended destination, is a crucial component of a cellular system. Eventually, the parties entered into an agreement whereby Telsim purchased a Network Switching Sub-system and related products and services from Nokia. As part of the agreement, Nokia agreed to provide financing, and, to that end, arranged for the Stockholm branch of ABN-AMRO Bank, N.V. ("the Bank") to provide Telsim with a loan facility, fully backed by Nokia, to finance Telsim’s purchases from Nokia. In reliance on the Individual Defendants’ false representations, by May 2000, Nokia had caused the amount of the loan facility to increase to $800 million.

79. Throughout the negotiations leading up to each version of the operative agreements, discussed below, Nokia made clear to Hakan Uzan, Cem Uzan, Fatih Azami, and other Telsim representatives that there were two non-negotiable prerequisites to Nokia’s providing financing to Telsim: (1) the Individual Defendants’ commitment to sell all or a controlling portion of Telsim to a strategic partner, specifically, an established player in the telecommunications industry within a reasonable amount of time; and (2) the Individual Defendants’ promise to provide Nokia with sufficient security for the financing. Indeed, throughout the negotiations, the Individual Defendants understood and agreed to fulfill these requirements, which were ultimately reduced to writing. However, as the facts alleged show, the Uzans never intended to fulfil these obligations, but instead intended only to obtain as much money for themselves as possible through the loans arranged and backed by Nokia. Thus, the defendants – fully aware of the important role that entry into the Turkish market played for Nokia’s business – willfully and fraudulently induced Nokia to enter into these agreements in order to illegally obtain goods, services and money from Nokia.

80. In the negotiations between Nokia and Telsim concerning the parties’ agreements and subsequent amendments, Hakan Uzan served as Telsim’s principal negotiator. Cem Uzan was physically present at one negotiation session in May 2000, and Hakan Uzan made frequent and lengthy telephone calls to Cem Uzan to discuss substantive issues that arose during the negotiations, and Cem provided input that significantly influenced Hakan. Furthermore, although Kemal Uzan was not present during the negotiations, it was clear that his approval was necessary for Telsim to enter into the agreements. Additionally, Aysegul Akay attended critical Telsim Board of Directors meetings, and actively participated in the dilution of the Telsim stock pledged to Nokia (and Motorola). Fatih Azami, Sema Sanigok and Enver Ibek of Telsim frequently attended meetings, either accompanying Hakan Uzan or as his representatives.

81. As a result of the Defendants’ fraudulent scheme, they have caused Nokia damages of over $700 million – $435 million in cash and more than $280 million in equipment that they never paid for – plus accrued interest.

The First Facility Agreement: Defendants Fraudulently Induce Nokia to Provide Financing of $78 Million

82. In approximately 1997, prior to entering into the agreements at issue, Nokia and Telsim began exchanging information and discussing the possibility of Nokia’s supplying Telsim with switching technology. As a result, Nokia and Telsim signed a Memorandum of Understanding ("MOU") dated May 1, 1997, concerning the supply by Nokia of a Network Switching Sub-system ("NSS") to Telsim, and a later MOU dated June 18, 1998, concerning the supply by Nokia of products and services related to the NSS. At the time these MOUs were executed, the Defendants knew and intended that Telsim would not perform under the MOUs. Moreover, the Individual Defendants furnished false information and made misrepresentations during the early stages of their dealings to convince Nokia that Telsim and the Uzans were interested in entering into a business relationship and performing their obligations in good faith.

83. As a result of these preliminary agreements, on October 9, 1998, Nokia and Telsim entered into the "NSS Frame Contract for the Supply of Products and Related Services for a Network Switching Sub-system (NSS)" (the "Supply Contract"). Defendant Hakan Uzan signed this agreement on behalf of Telsim.

84. The Supply Contract required Nokia to provide and Telsim to purchase specified products and services at prices set out in the agreement. As a condition of the Supply Contract, Telsim required Nokia to arrange financing through an international bank to fund Telsim’s purchases of Nokia’s products and services. Therefore, the Supply Contract contemplated that a "direct disbursement facility" would be established with a suitable international bank. At the time that the Supply Contract was negotiated and executed, the Individual Defendants knew and intended that Telsim would not honor its obligations to repay the yet-to-be established loan facility.

85. Nokia, according to its usual practice when engaged in a vendor financing arrangement such as this, approached a number of international banks, eventually engaging the Bank to establish the loan facility. Accordingly, the Bank granted a loan facility (the "Nokia Financing") to Telsim, which was backed by Nokia. Significantly, the Individual Defendants were aware that the Nokia Financing through the Bank was backed by Nokia.

86. Once the Nokia Financing was established with the Bank, on or about June 24, 1999, Telsim and the Bank entered into two related agreements, providing for a total loan facility in the amount of $78,059,698 (the "First Facility Agreement"). Hakan Uzan and Fatih Azami signed this agreement on behalf of Telsim. The purpose of the First Facility Agreement was to finance Telsim’s purchase of products and services from Nokia under the Supply Contract. Telsim agreed to repay the facility, in seven equal installments, by January 15, 2003. Telsim also pledged as security on a first-ranking basis all equipment delivered by Nokia under the Supply Contract until all of Telsim’s liabilities to the Bank were paid and discharged in full. By a separate Amendment Agreement dated June 24, 1999, executed by the Bank and Telsim, and agreed to and acknowledged by Nokia, Telsim agreed to provide the Bank with a secondary-ranking pledge (after Motorola’s) of 20% of Telsim’s stock, to replace the equipment pledge in the First Facility Agreement. At the time the First Facility Agreement and the Amendment were executed, the Individual Defendants knew that Telsim would not perform under the agreements, fully repay the loan facilities, or honor their pledges.

87. On October 1, 1999, the Bank and the Uzan-controlled Rumeli Telefon, which at the time owned approximately 73% of Telsim’s shares, entered into a Share Pledge Agreement. Rumeli Telefon pledged, on a secondary-ranking basis (behind Motorola’s first-ranking pledge), 20% of Rumeli Telefon’s interest in Telsim to the Bank. Defendant Hakan Uzan signed this agreement on behalf of Rumeli Telefon. The Individual Defendants were aware, as they were throughout the negotiations of the later Facility Agreements, that providing security was an essential prerequisite to the Nokia Financing. At the time the Share Pledge Agreement and subsequent amendments to the agreement were executed, however, the Individual Defendants knew and intended that Rumeli Telefon would not honor the pledge, perform under the agreement, or refrain from diluting the pledged shares. Indeed, their fraudulent intent was made plain when they illegally diluted the Telsim shares pledged to both Motorola and Nokia in April 2001, just as they had previously done to another set of victims, the public shareholders of Cukurova Elektrik (see ¶¶ 191-203, infra).

Defendants Fraudulently Induce Nokia to Dramatically Increase the Amount of the Loan Facility.

88. Beginning in or about January 2000, Individual Defendants approached Nokia about restructuring their financial relationship. Specifically, the Individual Defendants – in particular, Hakan Uzan – indicated that they needed Nokia to increase the amount of the loan facility in order both to increase the amount of equipment financing available to Telsim and to provide Telsim with an infusion of cash. The Individual Defendants threatened that without such an arrangement, Telsim would start doing business with one of Nokia’s competitors, Siemens, A.G. ("Siemens").

89. These negotiations, most of which occurred during numerous in-person meetings from January through May 2000, resulted in two rounds of revisions to the Facility Agreement, so that by May 2000, Nokia had increased the amount of the loan to $800 million. However, the Individual Defendants continued to base their negotiating position on the same series of fraudulent misrepresentations about key aspects of the deal, including:

90. As the discussions leading up to the second Facility Agreement unfolded, Nokia continued to stress the importance of Telsim’s finding a strategic partner and providing sufficient collateral to secure the dramatically larger amount of financing being discussed. Defendants promised to provide such security by pledging additional Telsim shares on a first-ranking basis, and they indicated that they already had several potential investors interested in Telsim. In addition to increased equipment financing, the Individual Defendants wanted Nokia to lend them $75 million cash for marketing activities aimed at obtaining new subscribers.

91. In addition, one of Defendants’ primary pressure points during these negotiations was their claim that they were prepared to terminate their relationship with Nokia and enter into a deal with Siemens. In fact, in or about February 2000 Siemens provided Telsim with $25 million toward the $100 million Telsim had budgeted for marketing, as a signing advance.

The Second Facility Agreement: Defendants Fraudulently Induce Nokia to Expand the Nokia Financing to $400 Million.

92. In early March 2000, the Individual Defendants, led by Hakan Uzan, and wielding the Siemens threat as a cudgel, contacted Nokia and demanded that they restructure their agreements immediately, or Telsim still would sign with Siemens. Indeed, at the eleventh hour before the new loan facility agreements were signed, the Individual Defendants insisted that the cash portion of the new loan facility be increased from $75 to $100 million, so that they could repay the $25 million Siemens had advanced to Telsim. For example, on March 3, 2000, Hakan Uzan sent an electronic message to Murat Kircuval of Nokia in which he wrote: "please believe me that I want to wrap up this issue with Nokia despite the technical capacity of Siemens…Believe me, and tell this to your friends, it is important to me that Nokia stays. Have them approve of this matter (the cash amount issue). I will personally come on Thursday and finalize this, and will do anything to prevent Siemens from coming in." A copy of the March 3, 2000 electronic message, with an English translation, is attached hereto as Exhibit 7.

93. On March 6, 2000, Kircuval received another electronic message from Hakan Uzan, stating that Hakan "received instructions from Kemal [Uzan] today…Siemens is at this point ready. We need to finalize the project with Nokia by Wednesday (8/3), the day the requests will be made by potential investors." Thus, the Individual Defendants not only used Siemens as a threat, they also willfully misled Nokia into thinking that they would use the new loan facility in their efforts to attract an investor/strategic partner. A copy of the March 6, 2000 electronic message, with an English translation, is attached hereto as Exhibit 8.

94. As a result of the pressure tactics of Individual Defendants, the parties met in Zurich on March 9 and 10, 2000 to negotiate and draft the new Facility Agreement. On March 10, 2000, Telsim, Rumeli Telefon, Nokia and the Bank entered into a series of new agreements, including: Amendment No. 1 to the Supply Contract, a revised Facility Agreement (the "Second Facility Agreement"), and a new Share Pledge Agreement (collectively, the "Phase II Agreements"). Defendant Hakan Uzan signed these Agreements on behalf of Telsim and Rumeli Telefon. At the time these Agreements were negotiated and executed, the Individual Defendants knew that Telsim would not perform its obligations, and that they had fraudulently misrepresented their intent concerning the critical aspects of the deal discussed above.

95. The Supply Contract, as amended on March 10, 2000, provided that Nokia would be Telsim’s exclusive supplier for a two-year period. Indeed, exclusivity was one of Nokia’s prerequisites to entering into the Phase II Agreements, along with security and the Individual Defendants’ commitment to secure a strategic investor.

96. Under the Second Facility Agreement, which replaced and canceled the First Facility Agreement, the amount of the loan facility, which remained fully backed by Nokia, was increased to $400 million. It provided for a facility consisting of two tranches: Tranche A, in the amount of $300 million, was intended to fund Telsim’s purchases of Nokia’s products and services; Tranche B, in the amount of $100 million, provided cash to fund Telsim’s marketing activities and to enable Telsim to repay Siemens. However, upon information and belief, the Individual Defendants never paid Siemens, forcing Siemens to commence judicial action to try to recover those funds (see ¶¶ 183-185, infra). Thus, the Individual Defendants’ insistence that Nokia meet their conditions or lose Telsim’s business to Siemens was yet another in their series of fraudulent misrepresentations, since they evidently never intended to pay Siemens.

97. On or about March 10, 2000, immediately after the deal closed, Nokia transferred $100 million to Telsim through the Bank. The Defendants caused each of the wire transfers that carried out the transfer of funds, and which were executed through the Bank of New York. The Defendants actions constitute wire fraud pursuant to 18 U.S.C. § 1343.

98. At the time that the Second Facility Agreement was executed, the Individual Defendants knew that Telsim would not perform under the agreement, fully repay the loan facilities, or honor their pledges. Furthermore, they knew that Telsim would not use the proceeds of the Second Facility Agreement for the agreed-upon purposes.

99. As described above, collateral was a major issue for Nokia during these negotiations. During the parties’ meetings, Hakan Uzan told Nokia representatives that by pledging Telsim shares, he would not only provide Nokia with more than adequate security, he would be pledging them the "heart and soul" of his family, and something very "precious" to him and his family. He also stressed how difficult it was to obtain the approval of his father, defendant Kemal Uzan, for the pledge.

100. Based on these false assurances, the new Share Pledge Agreement between the Bank and Rumeli Telefon (another company owned and controlled by the Uzans) was executed. Rumeli Telefon pledged, on a first-ranking basis, 5% of the issued and outstanding shares of Telsim to the Bank, as security for the loan facility. Defendant Hakan Uzan signed this agreement on behalf of Rumeli Telefon. Defendant Aysegul Akay signed the Board Resolutions of Rumeli Telefon authorizing the pledge. At the time this revised Share Pledge Agreement was negotiated and executed, the Individual Defendants knew that Rumeli Telefon would not perform under the agreement, honor the pledge, or refrain from diluting the pledged shares. Indeed, their true intentions were exposed in April 2001, when they illegally diluted the value of the Telsim shares pledged both to Nokia and to Motorola.

101. Hakan Uzan also insisted that the pledged shares be held in an escrow account at the Swiss bank UBS AG ("UBS") that could only be accessed by the joint written instruction of the Bank and Rumeli Telefon, or pursuant to an arbitration award obtained under the Share Pledge Agreement’s arbitration clause. These requirements were set forth in the Escrow Agreement executed by the Bank, Rumeli Telefon and UBS, which were designed to ensure that the Uzans maintained control of Telsim and had an opportunity to dispose of or manipulate Telsim’s assets while the Bank, on Nokia’s behalf, attempted to foreclose on the pledged shares, which, as the Defendants knew and acknowledged, were Nokia’s only security and an absolute precondition to the parties’ financing agreements.

The Third Facility Agreement: Defendants Fraudulently Induce Nokia to Expand the Nokia Financing to $800 Million.

102. Within a matter of weeks, in April 2000, the Individual Defendants approached Nokia seeking to increase the loan facility again, once more brandishing the threat of taking their business elsewhere. For example, in an electronic mail message to representatives of Nokia and the Bank dated April 25, 2000, Fatih Azami notified Nokia that Telsim was "contemplating the idea to pre pay" the outstanding debt under the Second Facility Agreement, and requested a meeting to discuss such a transaction. See Exhibit 9. The next day, in an electronic message to Murat Kircuval of Nokia dated April 26, 2000, Hakan Uzan stated the threat more explicitly: "We have received a lot of attractive offers from other parties. … Perhaps we can pay everything off and take back our shares, all depending on the numbers. Our goal is to pay everything off, if nothing unexpected happens. We will see after that what will happen, there are many attractive offers on the table." See Exhibit 10.

103. During the parties’ discussions, the Individual Defendants also claimed that Siemens was again prepared to offer them a better deal, including a cash advance of $450 million. Significantly, as Nokia learned through the Turkish Customs office, a Siemens switch had been delivered to Telsim in Turkey in approximately May 2000. Thus, within weeks of signing the Phase II Agreements, the Individual Defendants were already threatening to breach one of the key aspects of the deal – the exclusivity provision of the Supply Contract – further evidence of their fraudulent intent.

104. At the same time, the Individual Defendants continued to mislead Nokia into believing that they intended to find a strategic partner for Telsim. Indeed, the Individual Defendants represented to Nokia that they had been approached by various European telecommunications operators interested in purchasing an interest in Telsim, and Hakan Uzan even showed to representatives of Nokia letters of intent from European telecommunications companies that had approached Telsim during the negotiations of the Second and Third Facility Agreements. In this regard, the Individual Defendants also told Nokia that they had engaged Merrill Lynch to help them find a strategic partner, but refused to allow any communication between Nokia and Merrill Lynch. The Individual Defendants, as ever, had no intention of securing a strategic partner, since they knew full well that they could not sustain a potential investor’s due diligence without unearthing the frauds they were working on Nokia and Motorola, not to mention the others they had victimized.

105. These negotiations continued during meetings in late April and into May 2000. On May 22-24, 2000, the parties met in Zurich to negotiate and draft a new series of agreements (the "Phase III Agreements"). Defendant Hakan Uzan, who was actively involved throughout the entire negotiation process, attended the May 23 and May 24 meetings personally, and was joined by his brother Cem Uzan for the May 23 meeting. During these meetings, Nokia once again made clear to the Individual Defendants that Nokia’s agreement to increase the Nokia Financing was contingent on the Individual Defendants’ commitment to sell all or a controlling interest in Telsim to a strategic investor, which the Individual Defendants pretended to understand and eventually accepted. Indeed, in early drafts of the new facility agreement, that commitment was included as a condition precedent. The Individual Defendants also continued to tout their prospects for a strategic investor through Merrill Lynch and pretended to be at the final stage of negotiations with a selected group of interested partners, but they refused to allow Nokia any access to Merrill Lynch. At a video conference with Nokia’s CFO Olli Pekka Kallasvuo and Messrs. Mikko Heikkonen and Pertti Melamies on May 24, 2000, Defendant Hakan Uzan, in the presence of Fatih Azami, eventually refused to include a written commitment to secure a strategic investor as a condition precedent to the new Third Facility Agreement, claiming that he did not wish to disclose such a commitment to interested partners or investors. Instead, he gave his verbal commitment, insisted that it be memorialized in a Side Letter, and promised that $200 million of the facility would be repaid immediately, if, by October 1, 2000, no agreement were reached to sell a substantial part of the share capital and voting rights in Telsim to an international foreign telecom-operator which thereby would have become a strategic partner. The Individual Defendants made these representations intending to dishonor them and for the purpose of inducing Nokia to enter into the Phase III Agreements and increase the loan facility.

106. On May 30, 2000, Telsim, Rumeli Telefon, Nokia and the Bank executed the Phase III Agreements, including: Amendment No. 2 to the Supply Contract, a revised Facility Agreement (the "Third Facility Agreement"), and a new Share Pledge Agreement. Defendant Hakan Uzan signed these Agreements on behalf of Telsim and Rumeli Telefon. At the time these Agreements were negotiated and executed, the Individual Defendants knew that Telsim would not perform its obligations, and that they had fraudulently misrepresented their intent concerning the critical aspects of the deal discussed above.

107. In Amendment No. 2 to the Supply Contract, Telsim agreed, inter alia, to an "irrevocable Forecast Purchase Order" pursuant to which it was required to place orders with Nokia in the aggregate amount of $700 million by May 30, 2003. At the time the Amendment was negotiated and executed, the Individual Defendants knew that Telsim would not honor its obligations under the Supply Contract, as amended, and, specifically, intended that Telsim would not fulfill the irrevocable Forecast Purchase Order.

108. The Third Facility Agreement increased the amount of the loan facility to $800 million, also in two tranches: Tranche A, which funded the Nokia Financing in the amount of $350 million, was to be used only to pay Nokia for products and services; and Tranche B, in the amount of $450 million, provided Telsim with an additional $350 million in cash beyond the $100 million previously transferred under the Second Facility Agreement. Among other things, the Individual Defendants insisted on this cash tranche so that they could pay taxes owed to the Turkish government in connection with their GSM license. Defendant Hakan Uzan signed this agreement on behalf of Telsim.

109. On or about May 30, 2000, immediately after the deal closed, Nokia transferred $350 million to Telsim through the Bank, representing the balance of Tranche B. The Individual Defendants caused each of the wire transfers that carried out the transfer of funds, executed through the Bank of New York, and their actions constitute wire fraud pursuant to 18 U.S.C. § 1343. The Notice of Drawdown under Facility and the "Swift" wire transfer confirmations reflecting the transfer of the $350 million are annexed hereto as Exhibit 11.

110. At the time that the Third Facility Agreement was executed, the Individual Defendants knew that Telsim would not perform under the agreement, fully repay the loan facilities, or honor the pledges. Furthermore, they knew that Telsim would not use the proceeds of the Third Facility Agreement for the agreed-upon purposes. Nonetheless, over time, Telsim and the Individual Defendants have caused Telsim to draw down approximately $238 million in equipment under Tranche A, and the full $450 million in cash under Tranche B.

111. As a result of these loans, the amount of cash alone loaned to Telsim by Motorola and Nokia, collectively, totaled nearly $1 billion.

112. Based on the Individual Defendants’ continuing false assurances concerning the adequacy of the share pledge, the Phase III Share Pledge Agreement between the Bank and Rumeli Telefon increased the amount of the pledge from 5% to 7.5% of the issued and outstanding shares of Telsim to the Bank. Defendant Hakan Uzan signed this agreement on behalf of Rumeli Telefon. Defendant Aysegul Akay signed the Board Resolutions of Rumeli Telefon authorizing the pledge. At the time this revised Share Pledge Agreement was negotiated and executed, the Individual Defendants knew that Rumeli Telefon would not perform under the agreement, honor the pledge, or refrain from diluting the pledged shares. Indeed, their true intentions were exposed in April 2001, when they illegally diluted the value of the Telsim shares pledged both to Nokia and to Motorola.

113. The same escrow arrangement with UBS remained in place from the Phase II Agreements. As described above, this arrangement allowed the Uzans to maintain control of Telsim and afforded them an opportunity to dispose of or manipulate Telsim’s assets should the Bank, on Nokia’s behalf, attempt to foreclose on the pledged shares, which, as the Individual Defendants knew and acknowledged, were Nokia’s only security and an absolute precondition to the parties’ financing agreements.

114. Finally, also on May 24, 2000, the Individual Defendants agreed, via a "Side Letter" to the Third Facility Agreement, that Telsim would enter into an agreement "unconditionally regarding the sale of a substantial part of the share capital and voting rights in the Borrower [Telsim] to an international foreign telecom-operator which will then become a strategic partner." The Side Letter further provided that if Telsim failed to enter into such an agreement by October 1, 2000, it would be immediately obligated to repay $200 million of Tranche B of the loan facility. Defendant Hakan Uzan signed this Side Letter on behalf of Telsim. At the time the Side Letter was negotiated and executed, the Individual Defendants knew that Telsim would dishonor its commitment under the Side Letter, which, as the Individual Defendants knew and acknowledged, was also an absolute precondition to the parties’ financing agreements.

115. Over the entire course of these negotiations, the Individual Defendants and their representatives attended numerous meetings and telephone conferences with representatives of Nokia and others. From January 2000 through May 2000 alone, there were approximately 16 in-person meetings. Defendant Hakan Uzan attended at least 11 of those meetings, including critical meetings in Zurich on or about May 23, 2000, the day before the Third Facility Agreement and related documents were executed. Defendant Cem Uzan personally attended at least the May 23, 2000 meetings in Zurich. Fatih Azami, Sema Sanigök and Enver Ibek each accompanied Hakan Uzan at several meetings, and participated in telephone conferences as well. During these meetings and telephone conferences, the Individual Defendants continually made false representations aimed at fraudulently inducing Nokia to enter into the agreements and to provide funds through the loan facilities, as described above.

116. Almost immediately after entering into each of the above-described agreements with Nokia and Nokia’s affiliates, the Individual Defendants demonstrated that they intended to dishonor their obligations under the agreements from the beginning. For example, Telsim, through the conduct of the Uzans and the other Individual Defendants, violated a wide array of its obligations to Nokia, including, among other things: (a) failures to pay amounts due under the agreements; (b) failures to provide required information; (c) failures to maintain required financial ratios; (d) incurring indebtedness not expressly subordinated to Telsim’s debt to Nokia; and (e) the use of loan proceeds for prohibited purposes. Most significant, Telsim and Rumeli Telefon are in default of the above-described agreements, and all of the amounts owed to Nokia under such agreements remain unpaid. As of the time of this filing, Nokia is owed, and has been defrauded out of, in excess of $700 million.

117. By compounding these illegal acts with a litany of fraudulent misrepresentations designed to lull Nokia and hide their true purpose, the Individual Defendants managed to turn each incarnation of the Facility Agreement into an opportunity to pocket more of Nokia’s money, effectively bootstrapping each Facility Agreement into a successively larger one through their deliberate misrepresentations.

The Telsim-Nokia Relationship Unravels

118. As described above, the basis of the Third Facility Agreement was the Individual Defendants’ commitment in a Side Letter to secure an international foreign telecommunications operator as a strategic partner by October 1, 2000, or be required immediately to repay the Bank $200 million. In fact, while negotiating this point, Hakan Uzan and Fatih Azami falsely represented that Telsim was so close to a deal that they needed only until July, not October, as provided in the Side Letter, to fulfill their obligations. However, Hakan Uzan, and the other Individual Defendants, never intended to pursue a strategic partnership in good faith, because they knew that the level of due diligence required by a potential investor would reveal their many frauds, but they led Nokia to believe otherwise as part of their scheme to defraud Nokia out of the $800 million provided in the Third Facility Agreement.

119. In this regard, upon information and belief, the Individual Defendants did in fact refuse to cooperate with the due diligence efforts of at least two major European telecommunications companies who were considering a strategic partnership with Telsim.

120. In approximately August and September 2000, it became apparent that the Individual Defendants did not intend to find a purchaser or strategic partner for Telsim. Indeed, by October 1, 2000, they had not succeeded in finding a strategic partner; thus, $200 million became immediately due and payable under the Side Letter.

121. However, in a good faith effort to afford Telsim an opportunity to ultimately honor its commitments, Nokia discussed a restructuring of the financing arrangement and underlying Supply Contract. The parties actually negotiated amendments to the Facility Agreement and other agreements rearranging the payment schedule of amounts due from Telsim, among other things. The parties completed the amendments at a meeting in Zurich on January 18, 2001, where Telsim’s Sema Sanigök and Telsim’s legal counsel both reviewed and initialed the amendments to the Facility Agreement. However, Telsim reneged and ultimately refused to sign the amendments.

122. In further good faith efforts to salvage the business relationship, representatives of Nokia agreed to meet with representatives of Telsim, including defendant Hakan Uzan, on several occasions in March and May 2001. These meetings also proved futile, due to the unreasonable positions taken by the Uzans and Telsim.

123. The parties also exchanged written correspondence during this time period. Nokia pointed out Telsim’s many failures under the agreements, as well as Telsim’s refusal to sign the amended agreement negotiated and drafted in January 2001. The Individual Defendants responded with still more false representations in a futile attempt to explain away their many failures under the agreements, raising, among other things, purported performance failures of Nokia and the purported "force majeure" effects of changes in the Turkish economy in December 2000 and early 2001 upon Telsim’s ability to fulfill any of its financial obligations. The Individual Defendants knew that their purported justifications were false.

124. For example, in an electronic mail message sent on May 17, 2001, by Telsim’s Fatih Azami to Pertti Melamies and Murat Kircuval of Nokia, the Individual Defendants’ bad faith became glaringly apparent. See Exhibit 12. This e-mail followed meetings in Helsinki on May 11 and Zurich on May 16, which Nokia attended, in spite of the Individual Defendants’ misconduct and failure to meet their financial obligations, in an effort to negotiate a solution. In this e-mail, Telsim refused to accept a number of reasonable conditions Nokia had proposed as a basis for restructuring Telsim’s enormous debt to Nokia.

125. As a result of Defendants’ numerous acts of fraud over the various incarnations of the Facility Agreement and related other agreements, Defendants have illegally obtained more than $700 million from Nokia. The Defendants committed numerous predicate acts of racketeering, within the meaning of 18 U.S.C. § 1961(1), in furtherance of the above-described fraudulent scheme, including, but not limited to:

The Uzans Steal the Telsim Stock Pledged as Security for Motorola’s and Nokia’s Loans

126. After fraudulently inducing Motorola and Nokia to enter into the above-described agreements with Telsim, in April 2001 the Uzans fraudulently and illegally diluted the value of the Telsim shares that served as security for Motorola’s and Nokia’s loans (i.e., the "Pledged Interests"). As if this were not enough, on January 4, 2002, in an attempt to ensure that the money the Uzans stole from Motorola and Nokia would not be recovered, the Uzans staged another meeting of the Telsim board of directors in which actions were taken that further devalued the collateral for the loans and also allowed for the transfer of illegally obtained Telsim assets to a Turkish foundation, where they would be more difficult for Motorola and Nokia to reach.

127. Over the course of the parties’ dealings, the Defendants had repeatedly and fraudulently assured Motorola and Nokia that their collateral was secure. For example, on March 9, 2000, Defendant Hakan Uzan sent an electronic mail message to Ed Hughes of Motorola Inc. and Walter Keating of Motorola, both resident in Illinois, in which he fraudulently described various purported third-party offers to buy Telsim. In the message, he stated: "So you can tell all the guys with shaky hands and who were worried, . . . well just tell them not to worry any more, according to the written offers you are presently holding as share pledge a value greater than 7.8 billion USD for a debt of 1.4 billion USD." See Exhibit 6. These statements, however, were false and designed to mislead Motorola and to conceal the Defendants’ unfolding fraud, because the Uzans never intended to sell Telsim or to honor the Share Pledge Agreement and, in fact, ultimately stole much of the value of the pledge. Defendant Hakan Uzan made similar misrepresentations to Nokia representatives as well, on several occasions during the negotiations of the Second and Third Facility Agreements in March and May 2000.

128. In addition, in a letter agreement dated August 19, 1998, Hakan Uzan, the Vice Chairman and Chief Executive Officer of Rumeli Telefon and a member of Rumeli Telefon’s board of directors, separately covenanted not to reduce the shares pledged to Motorola under the Share Pledge Agreement until permitted to do so under the Equipment Financing Agreement, the License Financing Agreement and the Share Pledge Agreement. See Exhibit 13.

129. Notwithstanding the assurances regarding the security of the pledges, the Uzans stole the value of interests pledged to Motorola and to Nokia, through the Bank. Specifically, on April 24, 2001, the shareholders of Telsim held a secret and specially called meeting, without the knowledge of Motorola, Nokia or the Bank, in which they resolved that the number of outstanding shares of Telsim would be tripled, from 12,924,000 to 38,772,000. A certified English translation of the portion of Turkish Trade Register Gazette No. 5303, which reflects the proceedings at the April 24, 2001 Telsim shareholders meeting, is annexed as Exhibit 14. Prior to the meeting, the Uzan entities Rumeli Holding and Rumeli Telefon respectively owned 21.99% and 73.63% of Telsim’s shares. Rumeli Telefon, in turn, had pledged to Motorola shares that represented 66% of the outstanding shares of Telsim as collateral for Motorola’s loans; Rumeli Telefon had further pledged additional shares that represented 7.5% of the outstanding shares of Telsim to the Bank. Nevertheless, in furtherance of the Defendants’ scheme to defraud Motorola and Nokia, during the meeting Rumeli Telefon, which had pledged most of its interest in Telsim to Motorola and the Bank, waived its preemption rights to its portion of the newly issued shares, notwithstanding the fact that the additional shares were offered on advantageous terms and for a nominal price. Had Rumeli Telefon exercised its rights, it would have retained its 73.63% pro rata share of Telsim’s stock. Its failure to do so, however, resulted in the dilution of its ownership interest and, in turn, the devaluation of the pledges to Motorola and Nokia.

130. Simultaneously with Rumeli Telefon’s waiver of its preemption rights, the shareholders of Telsim voted to transfer Rumeli Telefon’s waived preemption rights to Defendant Standart Telekom, also a shareholder of Telsim and another entity owned and controlled by the Uzans. As a result of these actions, Rumeli Telefon’s interest in Telsim was intentionally reduced to 24.54% (one-third of the original 73.63%). As a direct result, Motorola’s collateral was intentionally reduced from 66% of the capital shares of Telsim to approximately 22% of such shares. Similarly, Nokia’s and the Bank’s security interest was intentionally reduced from 7.5% to 2.5%. At the same time, however, the Uzans’ Standart Telekom’s interest in Telsim increased from 0.32% to 66.48%.

131. Defendants Hakan Uzan, Cem Uzan and Aysegul Akay signed the Amendment to Telsim’s Articles of Association which increased the shares of Telsim and reflected the dramatic increase in Standart Telekom’s percentage ownership. In addition to each being directors of Telsim as of May 7, 2001, each of the above-named Defendants was a shareholder of Standart Telekom, together owning 494 of the 500 outstanding shares of Standart Telekom. A certified English translation of Standart’s List of Present Shareholders for the Ordinary Meeting of General Assembly of Shareholders held on May 7, 2001, as reflected in the Turkish Trade Register Gazette, is annexed hereto as Exhibit 15. Because Motorola and Nokia are pledgeholders of stock owned by Rumeli Telefon, and not shareholders themselves, Motorola and Nokia lack standing to bring a lawsuit in Turkey seeking to cancel the decision of Telsim’s general assembly to dilute Telsim’s stock and to transfer Rumeli Telefon’s majority control of Telsim to Standart Telekom and have no other remedy under Turkish law.

132. Following this illegal theft of Motorola’s and Nokia’s collateral, in August 2001, the Uzans, through Enver Ibek of Telsim, acknowledged the dilution by agreeing that Motorola was entitled to have its pledge restored to the pre-dilution level. Specifically, by two virtually identical letters dated August 16, 2001, and sent by facsimile and by registered mail by Ibek of Telsim and Enis Zaimoglu of Rumeli Telefon, respectively, to Keith Bane in Illinois, the Uzans, through Telsim and Rumeli Telefon, stated: "Reference is made to your letter dated August 1, 2001 referring to the Telsim shares pledged to Motorola under the Pledge Agreement. We have taken note that Motorola’s attorneys are in the process of drafting proper documentation aimed at bringing Motorola’s pledge back to the original level. Without waiving any of our rights and without admitting an obligation to do so under the Pledge Agreement we hereby confirm that we will undertake whatever is needed to ensure that Motorola will continue to benefit from a pledge over 66% of the issued and outstanding equity of Telsim." See Exhibit 16.

133. The contents of this letter, however, were false, as the Uzans knew that they had no intention of restoring Motorola’s pledge. Instead, the letter was a fraudulent reassurance to induce Motorola to delay legal action. Indeed, Motorola subsequently presented Telsim with a brief, one-page agreement concerning the restoration of the pledge, which the Uzans and Telsim refused to sign. The transmissions of the August 16, 2001 letter constituted mail fraud and wire fraud.

134. The illegal dilution in value of assets pledged to Motorola and Nokia thus resulted in a permanent transfer of value directly from Motorola and Nokia to Standart Telekom, an Uzan-controlled entity in which Motorola and Nokia do not hold an interest.

135. In the weeks preceding the filing of this Complaint, the Uzans staged yet another special and hastily called meeting of the Telsim shareholders specifically designed to advance their overall scheme to defraud Motorola and Nokia. On or about January 4, 2002, the Uzans initiated an extraordinary general assembly meeting of the Telsim shareholders. The translated agenda, minutes of the meeting and revised articles are included as Exhibits 17 and 18. Two principal actions were taken at the meeting for the sole purpose of insulating Telsim’s assets from Motorola and Nokia. These fraudulent actions were taken over the objections of one minority shareholder of Telsim – Detecon Gmbh (which owns less than one-half of one percent of Telsim and is the only non-Uzan related shareholder) – which received notice of the meeting only shortly before it occurred. Detecon had objected to the meeting on the grounds that the notice and the proposed actions were not in accordance with law or with the principles of good faith.

136. First, the Articles of Telsim were amended to authorize the formation of or participation in foundations. On information and belief, the Uzans now plan to transfer (or have already transferred) the assets of Telsim to a Turkish foundation. Because foundations in Turkey are subject to a separate legal regime under which it is significantly more difficult to dissolve or seize the entity, this sham transaction may permit the Uzans to shift the assets of Telsim irretrievably beyond the reach of creditors, including Motorola and Nokia.

137. The second fraudulent action taken at the January 4, 2002 meeting was the creation of a privileged class of Telsim shares – class A shares – the holders of which are entitled to appoint four members of the Telsim board of directors and to appoint statutory auditors. Holders of class B shares, on the other hand, are entitled to appoint only one member of the Telsim board. On information and belief, the shares pledged as security for Motorola’s and Nokia’s loans have been designated as class B shares. Thus, even if Motorola and Nokia ultimately gain control of such shares, they may not be able to exercise any degree of control over Telsim and thus will not be able to recover the assets stolen from them.

The Uzans Raise False and Unsupported Claims of System Faults to Avoid Payment of Motorola’s and Nokia’s Loans

138. To justify their intentional, planned failures to pay Motorola and Nokia pursuant to their financing agreements with Telsim, and in clear acts of extortion, the Uzans have caused Telsim to raise numerous false claims of problems with the system purchased from Motorola Ltd., Motorola Turkey and Nokia. These false complaints are flatly contradicted by Hakan Uzan’s statement in an October 31, 2000 press release, describing Motorola’s "[r]eliable, proven solutions and system dependability," and by his e-mail of August 30, 2000, to Walter Keating of Motorola (delivered to Illinois). In this e-mail, Hakan Uzan stated:

139. Conversely, by letter dated January 22, 2001, and sent by electronic mail using the U.S. wires to Ed Hughes of Motorola Inc. and Walter Keating of Motorola, both in Illinois, Hakan Uzan falsely claimed that 16 separate major faults seriously affecting call traffic or performance of the cellular system existed in the equipment supplied by Motorola Ltd. and Motorola Turkey. See Exhibit 20. The sending of this letter, which contained false information and which was designed to further the Defendants’ plan to defraud Motorola, constituted wire fraud.

140. In addition, on May 23, 2001, Hakan Uzan caused Gene Delaney, Motorola, Inc., then a member of Motorola’s Global Telecommunications Solutions Sector, to travel to Istanbul, Turkey from the United States for the purpose of discussing various defects Hakan Uzan had fraudulently alleged regarding the Motorola system. Causing Mr. Delaney to travel to this meeting, which Defendants intended to use to further their general fraudulent scheme, constitutes a violation of 18 U.S.C. § 2314. Further, during the meeting, Hakan Uzan threatened Mr. Delaney that the Uzans would not relent on certain fraudulent commercial complaints, described below, until Motorola relented on its demand for the funds owing under the financing agreements, which funds were then past due. This communication was an attempt to extort funds from Motorola by instilling fear of economic loss, and as such constitutes a violation of the Travel Act, 18 U.S.C. § 1952.

141. Similarly, in March and May of 2001, the Defendants made false representations to Nokia in an attempt to excuse their many failures to keep their promises, raising, among other things, purported performance failures of Nokia and the alleged "force majeure" effects of changes in the Turkish economy upon Telsim’s ability to fulfill any of its financial obligations. The Defendants knew that all of the purported justifications they offered for their failures to uphold their obligations were false.

142. Most recently, in furtherance and concealment of the fraud, Telsim attempted to extort and intimidate Motorola and Nokia by launching an "evidentiary findings" campaign against Motorola Ltd., Motorola Turkey and Nokia in Turkey. To this end, Telsim has so far filed at least 392 separate judicial proceedings against the entities, with each filing falsely identifying one or more alleged equipment issues, in various jurisdictions in Turkey.

143. The Uzans’ pattern and practice of manufacturing complaints about the quality and performance of products and services provided by Motorola and Nokia has been far-reaching. Their numerous unfounded complaints, conveyed by mail, facsimile, and electronic mail, were made in furtherance of the general scheme to defraud Motorola and Nokia of their funds. The Uzans used these fabricated complaints to further conceal the execution of their fraudulent scheme by justifying their failure to fulfill Telsim’s payment obligations to Motorola and Nokia.

The Uzans Also Diminish the Value of Motorola’s and Nokia’s Collateral by Illegally Diverting Assets from Telsim for Their Personal Use or for Use in Other Uzan Businesses

144. The Uzans also defrauded Motorola and Nokia (and others with minority financial interests in Telsim) by diverting Telsim’s assets for the Uzans’ personal use or for use by other entities owned and/or controlled by the Uzans.

145. The Uzans have drained and continue to drain value from and otherwise loot Telsim by diverting pre-paid subscriber revenue (and potentially other streams of revenue) away from Telsim and to at least two of Telsim’s dealer intermediaries – Defendants Standart Paz and Unikom – companies that are owned and controlled by the Uzans or other Uzan entities. Telsim is (or should be) generating millions of dollars in cash each month, much of which is unaccounted for and none of which is being used to pay Motorola or Nokia.

146. On information and belief, Standart Paz and Unikom function as proxy, or "shadow," organizations for Telsim for purposes of invoicing, marketing and distribution. Cem Uzan and Hakan Uzan each own approximately 39.4% of Standart Paz, and the Uzans’ Rumeli Telekom owns 90% of Unikom. Although Unikom’s telephone number is not registered, its registered headquarters address is at the address where Kemal Uzan’s construction firm, Yapi ve Ticaret A.S., is located. However, there recently have been no signs posted regarding the presence of Unikom at that address, in violation of Turkish law, and it is believed that Unikom has no employees at that address. Significantly, on information and belief, the Uzans have even denied the existence of Unikom to Turkish authorities and claimed that Telsim’s relationships with dealers were entirely verbal.

147. Many Telsim products and services (including pre-paid phone cards and airtime) are sold to the general public through independent dealers, or "CepShops." These dealers, in turn, are generally required to interact with an intermediary company, such as Standart Paz or Unikom, rather than directly with Telsim. Further, the dealers are required to enter into one-sided written agreements with these intermediary entities, which agreements place significant obligations on the dealers and few or no corresponding obligations on the intermediary companies or on Telsim. See sample agreement at Exhibit 21. In addition, pursuant to the agreements, the dealers are required to post significant bank guarantees and must agree to exclusivity with Telsim. On information and belief, Standart Paz and Unikom scrupulously protect these written agreements, even refusing to allow dealers to keep copies of them.

148. On information and belief, the Uzans have constructed, and take advantage of, this triangular – and to a certain extent secret – relationship involving Telsim, the intermediary companies (Standart Paz and Unikom), and the dealers to divert Telsim’s revenue streams away from Telsim and to Standart Paz and Unikom instead. The arrangement is designed so that payment for certain Telsim products and services will be made to Standart Paz and/or Unikom, rather than to Telsim, notwithstanding that Telsim provided (or at least incurred costs in connection with the provision of) the products or services. This results in a net flow of value out of Telsim, and a corresponding flow of unearned money into the Uzan-owned intermediary entities, Standart Paz and Unikom.

149. On information and belief, in one particular scam involving the diversion of assets that rightfully belong to Telsim to Standart Paz and Unikom, Telsim transfers phone cards to Standart Paz and Unikom at little or no cost, after which the cards are sold to third-party dealers at market value with the revenue going to Standart Paz and Unikom. The Uzans thereby divert assets directly from Telsim to entities wholly owned by the Uzans. This diversion is believed to involve as much as 90% of Telsim’s monthly subscriber revenue.

150. On information and belief, in yet another example of how the Uzans steal assets from Telsim for their use or use by companies they own and control, Telsim recently paid for two Mercedes automobiles purchased in Turkey. The registered owner of the cars, however, is Rumeli Telekom, an Uzan-owned company. By purchasing the Mercedes automobiles with Telsim funds but registering the cars in the name of Rumeli Telekom, the Uzans have stolen funds from Telsim, at the expense of Telsim’s minority stakeholders.

151. Through these schemes involving diversion of assets from Telsim, the Uzans take assets and opportunities that rightfully belong to Telsim. The Uzans intentionally engaged in this illegal diversion activity because a significant portion of the Uzans’ indirect ownership interests in Telsim have been pledged to third parties, namely Motorola and Nokia, and it is therefore in the Uzans’ personal financial interest to transfer value from Telsim to other Uzan companies in which their ownership interests are not encumbered.

The Uzans Withhold Promised Financial Information to Hide Fraudulent Actions

152. To cover the Defendants’ mounting frauds, the Uzans also withheld audited financial statements, information concerning financial ratios and other information that Telsim was obligated to provide under the financing agreements. Under both the Equipment Financing Agreement and License Financing Agreement with Motorola, for example, Telsim covenanted to furnish:

153. Over the course of Motorola’s relationship with Telsim, Ed Hughes of Motorola Inc., Walter Keating of Motorola, and others repeatedly requested financial statements and other records from Telsim. When asked for such information, Hakan Uzan has typically responded by promising to provide the information to Motorola, and dismissing any cause for concern by saying, in substance, What do you have to worry about, you own 66% of my company, a reference to the shares pledged as collateral for Motorola’s loans and ultimately stolen by Hakan Uzan and the other directors of Telsim.

154. Similarly, at a meeting on February 8, 2001, Hakan Uzan indicated to Keith Bane of Motorola Inc. that financial statements would be available by February 23, 2001. Because the financial statements were not provided by that date, Keith Bane sent an electronic mail message to Hakan Uzan again requesting the financial statements. In response, Hakan Uzan sent an electronic mail message dated March 13, 2001, to Mr. Bane in Illinois, in which he indicated that "the customary USD and audited accounts should be finished by end of March, at which time we will provide copies of the audit report to Motorola as well." See Exhibit 22. The Uzans, however, never provided the financial statements. The statements of Hakan Uzan contained in the electronic mail message were false and were designed to hide the Uzans’ frauds. The communication thus constituted wire fraud.

155. Further, on April 20, 2001, Hakan Uzan sent another electronic mail message to Mr. Bane in Illinois, copying Cem Uzan, in which he again promised to provide audited Telsim financial statements: "The Audited Financials should be ready early next week, and we will send you a copy of such, as soon as they become available." See Exhibit 23. The financial statements were never provided. Again, the promises made by Hakan Uzan in the electronic mail message were false, as the Uzans had no intention of providing audited financial statements to Motorola. This communication constituted wire fraud.

156. By refusing to provide promised financial information, the Uzans have shielded their self-dealing and fraud. On information and belief, this has allowed the Defendants to enter into other substantial self-dealing transactions to the detriment of Motorola and Nokia.

On Information and Belief, the Uzans and Luna Illegally Launder Money Stolen from Telsim

157. On information and belief, the Uzans and Luna have laundered money illegally obtained from Motorola and Nokia through Telsim. Luna is believed to have made at least 35 entrances and exits from Turkey over the course of the last four years using no fewer than four different passports, including passports issued by the governments of Mexico, Monaco and Italy.

158. A Turkish newspaper, Hurriyet, reported on October 1, 2001, about Turkish government investigations into potential money laundering transactions involving the Uzans’ telecommunications companies. See Exhibit 24.

159. Specifically, the Hurriyet reported that Rumeli Telekom, which is controlled by the Uzan family and is the operator of Telsim, asked the Mecediyekoy branch of Is Bank to undertake a "suspicious" transaction. Rumeli Telekom reportedly requested that $2,360,000 be transferred from its account number 527981 to account number 595708 at the same branch, which account belonged to Luna. Simultaneously, Luna requested to the same branch that $2,359,895 of the $2,360,000 being transferred into his account be further transferred to the account of the New York City law firm Marcus Rosenberg & Diamond LLP at a New York branch of Citiba