SCHAUMBURG, Ill., July 31 /PRNewswire-FirstCall/ -- Motorola, Inc. (NYSE: MOT) today announced that the Honorable Jed S. Rakoff of the United States District Court, Southern District of New York issued a $4.26 billion judgment against the Uzan family of Turkey for perpetrating a massive fraud against Motorola. Further, Judge Rakoff found the defendants in contempt of court and ordered that: "unless and until defendants purge their contempts, the individual defendants, if found within the jurisdiction of the United States, will be immediately arrested and held in confinement until such time as they comply with the directives of the Court's" prior orders. In today's ruling, Judge Rakoff stated that the evidence presented at trial proved that the members of the Uzan family "have perpetrated a huge fraud." Specifically, Judge Rakoff ruled that "[u]nder the guise of obtaining financing for a Turkish telecommunications company, the Uzans have siphoned more than a billion dollars of plaintiffs' money into their own pockets and into the coffers of other entities they control." The Court also found that the Uzans "have sought to advance and conceal their scheme through an almost endless series of lies, threats, and chicanery, including, among much else, filing false criminal charges against high level American and Finnish executives, grossly diluting and weakening the collateral for the loans, and repeatedly disobeying the orders of this Court." Cem Uzan has consented to the validity of this judgment by his prior concession that the New York court has personal jurisdiction over him, a fact referenced by Judge Rakoff. The U.S. District Court's ruling ordered the members of the Uzan family and the companies they control to pay Motorola $2.13 billion in compensatory damages and another $2.13 in punitive damages as a result of the Uzans fraudulently inducing Motorola to loan $1.8 billion to Telsim Mobil Telekomunikasyon Hizmetleri A.S. ("Telsim"), a telecommunications entity owned and controlled by the Uzan family. The court's ruling also orders that the Uzans be arrested and imprisoned if found within the jurisdiction of the United States until such time as Uzans purge their prior contempts of court, including their defiance of a court order requiring them to deposit 73.5% of Telsim's stock into the court's registry. Judge Rakoff stated that Motorola is entitled to collect its judgment not only directly from the defendants, but also from the assets of any company (including 130 companies listed in the Court's opinion) the defendants own and/or control, directly or indirectly. Christopher B. Galvin, chairman and chief executive officer of Motorola, said, "We are extremely pleased with the Court's strong ruling and we look forward to recouping the billions of dollars that were diverted by the Uzans and returning it to the rightful owners -- Motorola's shareholders. Today's ruling is a landmark decision concerning the massive global fraud that has been perpetrated against Motorola by the Uzans, and the latest in a series of court judgments throughout the world against the Uzans." "Today's judgment confirms our belief of wrong-doing against Nokia and proves the activities against us were fraudulent and intentional," said Olli- Pekka Kallasvuo, Chief Financial Officer of Nokia. "We will now use this ruling as part of our continued effort of recovering the funds." Today's judgment against the Uzans originated from a series of financing and supply agreements that were entered into beginning April 1998 between affiliates of Motorola and Telsim. Under the agreements, Motorola provided Telsim with equipment financing, financing to purchase a GSM cellular license from the government of Turkey as well as the major supply components for a GSM cellular telephone system. Total financing under the agreements with Telsim, as amended, was approximately $2.0 billion. As collateral for the loans, the Uzans pledged to Motorola shares of Telsim stock held in another Uzan- controlled company. Motorola noted that Telsim and the Uzans entered into similar financing and supply agreements with Nokia at about the same time, which were not disclosed to Motorola. Despite repeated assurances by the Uzans that Motorola's collateral was secure and the loans would be repaid, Telsim's last payment to Motorola under the agreements occurred in June 2000. Beginning in late 2000, the Uzans requested to reschedule loan payments and initiated a campaign of fraudulent tactics in an effort to conceal from Motorola the fact that the Uzans had stolen more than $1 billion from Telsim. Motorola and Nokia (NYSE: NOK) jointly filed a complaint in the U.S. Courts against the Uzans in January 2002, seeking to recoup more than $2 billion that was owed to the companies. The court's ruling renders Nokia the equitable owner of 7.5% of Telsim's stock as a result of the Uzans' frauds. Specific Court Findings The U.S. District Court found that the Uzans had engaged in numerous acts of fraud including, among others: -- Diversion of Loan Money for Personal Use: The Uzans improperly diverted more than $1 billion that was loaned to Telsim to other Uzan- controlled companies. The Uzans used those funds to purchase luxury goods, including private planes, helicopters, yachts and apartments. -- Devaluation of Shares Pledged as Collateral for Loans: The Uzans intentionally and effectively reduced in value by two-thirds the collateral shares of Telsim stock pledged to Motorola and Nokia at a secret meeting of Telsim shareholders held on April 24, 2001 -- Defying Numerous Court Orders: The Uzans repeatedly disobeyed orders of the U.S. District Court and Courts of other jurisdictions. Among other things, the Uzans refused to comply with a U.S. District Court-ordered preliminary injunction that required the Uzans to transfer the collateral shares pledged to Motorola to the Court registry for safekeeping, prohibited the Uzans from further devaluing or affecting the collateral shares, and prohibited the Uzans from diverting assets from Telsim. The Uzans, in direct contravention of Court orders, also refused to appear for scheduled depositions and refused to make a meaningful production of documents. -- Initiating Illegal Litigation Ploy in Turkey: The Uzans initiated collusive injunction actions in Turkey that were designed to thwart the U.S. Court action and foreign collection proceedings. The Turkish Supreme Court of Appeal, Turkey's highest court, issued a final decision that the Uzans' efforts in the Turkish courts was illegal, lacked proper authority and had no legal effect. -- Filing False Criminal Charges Against Senior Motorola and Nokia Executives: The Uzans filed false criminal charges for "armed threat to kill" against senior Motorola and Nokia executives in an act of extortion. In those cases which have gone to trial, the charges were dismissed by the Turkish criminal court as without basis. Even in the face of these dismissals, the Uzans have refused to drop the charges against other executives. Motorola to Pursue Third Parties Who Assisted Uzans in Perpetrating Fraud Motorola said that it is considering pursuing third parties throughout the world, including various global financial institutions that directly or indirectly hold assets on behalf of the Uzans, who may have assisted the Uzans in perpetrating fraud or permitted a breach of Worldwide Freezing Orders against the Uzans. The Worldwide Freezing Orders, first imposed by [a UK Court], on January 30, 2002, and later expanded on May 31, 2002, effectively froze the worldwide assets of Cem Uzan, Hakan Uzan, Kemal Uzan and Aysegul Akay for up to a value of $200 million each. Motorola noted that on June 12, 2003 the Court of Appeal of England and Wales, one of the UK's highest courts, ruled to preserve up to $800 million of the Uzans' assets worldwide. The UK Court of Appeal dismissed a number of appeals brought by Cem Uzan and Aysegul Akay thereby upholding Worldwide Freezing Orders against them. The Court also stayed its decision to discharge the Worldwide Freezing Orders against Kemal and Hakan Uzan. On June 10, 2003, the U.S. District Court issued a temporary restraining order against Credit Suisse Leasing, Zurich effectively prohibiting it from transferring proceeds from the sale, transfer or lease of a $40 million aircraft allegedly beneficially owned by the Uzans. About Motorola Motorola, Inc. (NYSE: MOT) is a global leader in wireless, automotive and broadband communications. Sales in 2002 were $27.3 billion. Motorola is a global corporate citizen dedicated to ethical business practices and pioneering important technologies that make things smarter and life better for people, honored traditions that began when the company was founded 75 years ago this year. For more information, please visit: www.motorola.com .
SOURCE Motorola, Inc.