# Motorola Credit Corp. v. Uzan

> District Court, S.D. New York · August 8, 2003 · 274 F. Supp. 2d 481

URL: https://www.frixlaw.com/law-library/cases/2493622

## Case

- **Full name:** MOTOROLA CREDIT CORPORATION and Nokia Corporation, Plaintiffs, v. Kemal UZAN, Et Al., Defendants
- **Court:** District Court, S.D. New York
- **Decided:** August 8, 2003
- **Citations:** 274 F. Supp. 2d 481; 2003 WL 21757706
- **Precedential status:** Published
- **Opinion:** Opinion by Rakoff
- **Judges:** Rakoff
- **Cited by:** 30 later opinions in the Frix Law Library

## Citator (automated)

- **Red flag:** Vacated in part by Motorola Credit Corp. v. Uzan, 388 F.3d 39 (2004).
- Negative treatments: 1
- Distinguished by: 0
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/2493622

## How later opinions describe it (automated extraction)

- applying the doctrine of "unclean hands" to bar defendants from equitable relief

## Opinion text

OPINION and ORDER
RAKOFF, District Judge.
As the Court of Appeals has noted, “[t]his case raises a host of unusual [legal] questions.... ”
Motorola Credit Corporation v. Uzan,
322 F.3d 130, 134 (2d Cir.2003). Part I of this Opinion and Order resolves such of those questions as are presently ripe for decision. No legal
*490
thicket, however, can hide the fact that all the credible evidence before the Court proves that the defendants — in particular, the members of the Uzan family — have perpetrated a huge fraud. Under 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. Having fraudulently induced the loans, they 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. Part II of this Opinion and Order details the overwhelming evidence of this misconduct and the legal consequences that flow therefrom, including, among much else, an award of damages in excess of $4 billion and an order for the arrest and confinement of the individual defendants should they be brought within the jurisdiction of the Court.
Before turning to any of this, however, a brief background is in order. Plaintiff Motorola Credit Corporation (“MCC”) is the financing affiliate of Motorola, Inc., a major provider of telecommunications equipment and services. Co-plaintiff Nokia Corporation (“Nokia”) is another major telecommunications manufacturer. Nokia’s financial arrangements, so far as here relevant, were handled through the Stockholm Branch of ABN-AMRO Bank N.V. (“ABN-AMRO Bank”).
The defendants are the five leading members of the Uzan family, namely Kemal Uzan, Cem Cengiz Uzan, Murat Hakan Uzan, Melahat Uzan, and Aysegul Akay (collectively, the “Uzans”), their associate Antonio Luna Betancourt, and three Uzan-controlled companies, namely, Unikom Ile-tism Hizmetleri Pazarlama A.S., Standart Pazarlama A.S., and Standart Telekomuni-kasyon Bilgisayar Hizmetleri A.S. (“Stan-dart Telekom”). Directly or indirectly, the Uzans — reputedly among the richest families in the world,
see e.g.,
L. Kroll,
The World’s Billionaires,
Forbes, Feb. 28, 2002—also control more than 130 other companies, including, of particular relevance here, a telecommunications company named Telsim Mobil Telekomunikayson Hizmetleri A.S. (“Telsim”).
Between April 1998 and September 2000, the Uzans fraudulently induced MCC and Nokia to transfer to Telsim approximately $2.7 billion, supposedly to finance a major expansion of Telsim’s operations. Actually, however, the Uzans intended to divert a large part of these funds to other entities they controlled and to their own pockets, so as to fund their economic empire and to pay for such personal items as private airplanes, yachts, helicopters, and multimillion dollar apartments in New York and elsewhere. Although defendants’ refusal to provide much of the Court-ordered discovery leaves uncertain the full extent of the fraudulent diversion, it amounts at least to $1 billion, involving the direct transfer of $450 million from Telsim to other Uzan-controlled entities in Turkey, a separate diversion of $133 million from Telsim to certain Uzan-controlled entities in the Netherlands Antilles, and still another $552 million diversion through the device of inflated “Telsim” expenses payable to Uzan-controlled entities. Ultimately, it appears that as much as $300 million found its way into the Uzans’ personal bank accounts.
Plaintiffs were slower to uncover this fraud than they otherwise might have been because the defendants provided them with false financial information about Tel-sim, because the defendants falsely repre
*491
sented that further financing from third parties was imminent, and, most especially, because the plaintiffs thought they were protected by substantial collateral. Specifically, the Uzans had arranged for still another of their companies, Rumeli Telefon Sistemleri A.S. (“Rumeli Telefon”), which at that time owned about three-quarters of Telsim’s outstanding shares, to pledge virtually all those shares to the plaintiffs as collateral for the plaintiffs’ loans to Telsim. But in April 2001, the Uzans, knowing that they could no longer stave off default, convened a secret meeting of Telsim’s shareholders at which they diluted the economic value of Rumeli Tele-fon’s shares in Telsim to a third of what it had previously been and transferred majority control of Telsim from Rumeli Tele-fon to Standart Telekom. A few months later, at another secret meeting, they stripped the remaining collateral of its voting rights and took other steps to further dimmish its value.
Meanwhile, plaintiffs, having finally declared Telsim in default, sent financial investigators to Turkey to try to uncover the truth. The Uzans retaliated by filing criminal complaints against high ranking executives of Nokia, Motorola, Inc., and Motorola Turkey (Motorola, Inc.’s local affiliate), falsely charging the executives with threatening to kill the Uzans. But, despite these and other impediments, plaintiffs eventually uncovered enough evidence of the fraud to commence the instant lawsuit.
The complaint, filed in January, 2002, charged the defendants with federal acts of racketeering, state claims of fraud, and other serious misconduct. Early in the case, the Court issued injunctive relief for the purpose of maintaining the status quo, including the preservation of what little was left of the collateral. But, the defendants contemptuously refused to obey the Court’s orders, in one case even breaking their sworn promise not to further eviscerate the collateral. The defendants also repeatedly reneged on promises to provide discovery ordered by Magistrate Judge Maas (to whom certain aspects of the pretrial preparation of the case were assigned), and instructed their counsel not to reveal to this Court or the Court of Appeals secret steps they were taking in Turkey to obtain
ex parte
orders undercutting the prior orders of this Court. Additionally, the defendants, though not themselves parties to any arbitration agreement with either of the plaintiffs, demanded that the instant disputes be submitted to Swiss arbitration pursuant to arbitration agreements between Telsim and MCC and between Telsim and ABN-AMRO Bank.
Notwithstanding these difficulties, the Court conducted two evidentiary hearings and a trial, at which the aforementioned facts, and much else, were established. Subsequent to the trial, however, the Court of Appeals, to which the defendants had appealed from the Court’s preliminary injunction order, determined that those of plaintiffs’ claims brought under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961
et seq.,
must be dismissed as unripe — without prejudice, however, to their being reinstated when they become ripe. Since several of this Court’s orders were premised, at least in part, on the viability of the RICO claims, the Court of Appeals remanded so that this Court could reconsider its prior rulings in light of this development. Thereupon, this Court, while dismissing the RICO claims (without prejudice), in accordance with the mandate of the Court of Appeals,
see
Order, dated April 3, 2003, invited motion practice on all issues implicated by the Court of Appeals’ decision or otherwise preliminary to any final determination of the underlying claims. Having received extensive submissions on these
*492
matters, the Court now adjudicates these motions in Part I of this Opinion and Order.
I.The Motions
The motions presently pending before the Court are resolved as follows:
1. Plaintiffs’ motion to preclude defendants (on grounds of waiver and the like) from further contesting any disputed matter in this case is denied as to jurisdictional matters and those legal disputes that reasonably could not have been expected to be raised except in the new posture of the case created by the Court of Appeals’ decision, but is otherwise granted.
2. Plaintiffs’ motion to supplement the Complaint to reinstate the RICO claims is denied, without prejudice to those claims being reinstated when the contractual remedies have been exhausted.
3. Defendants’ motion to dismiss for lack of standing MCC’s four claims relating to computer hacking,
viz.,
Counts VIII-XI of the Complaint, is granted.
4. Plaintiffs’ motion requesting the Court to retain supplemental jurisdiction over plaintiffs’ remaining state claims is granted.
5. Defendants’ motion to dismiss MCC’s claims under Illinois law alleging common law fraud, promissory fraud, and civil conspiracy is denied.
6. MCC’s motion to amend its complaint to assert a claim under Illinois law for impairment of collateral is denied as moot.
7. Plaintiffs’ motion to extend their constructive trust claim to apply to certain property in New York is denied.
8. Defendants’ motion to dismiss on grounds of
forum non conveniens
is denied.
9. Defendants’ renewed motion to compel arbitration is denied.
10. Defendants’ motion to dissolve the Court’s preliminary injunction and attachment orders and to void all related findings of contempt is denied.
11. Defendants’ motion to dissolve the Court’s order enjoining defendants from pursuing certain Swiss arbitrations is granted.
12. Plaintiffs’ motion for a further finding of civil contempt against defendants based on defendants’ failure to comply with the Court’s Memorandum Order dated January 6, 2003 is granted.
13. Plaintiffs’ motion for attorneys’ fees and expenses as prevailing plaintiffs under RICO, 18 U.S.C. § 1964 (c), is denied without prejudice, and MCC’s motion for attorneys’ fees and expenses as prevailing party on its computer hacking claims,
see
18 U.S.C. §§ 2520 , 2711, is denied with prejudice.
14. The motion of non-party HSBC Mortgage Corporation (USA) to modify certain aspects of the Court’s prior orders of attachment is granted.
The reasons for the Court’s deciding these motions as indicated above are as follows:
As
to the first motion,
plaintiffs move to preclude defendant from further contesting any disputed matters in this case (including those matters implicated by the Court of Appeals’ decision), on the ground that defendants, by expressly refusing to attend or participate in the trial of this case that commenced on February 19, 2003, waived, forfeited, or otherwise irretrievably lost their right to participate further in the case or to contest any issue therein. To some extent, this issue is addressed to the sound discretion of the Court, albeit informed by such considerations as whether defendants’ alleged waiver was intentional, whether plaintiffs’
*493
would suffer prejudice if defendants were allowed to belatedly raise otherwise waived issues, etc. Here, the duplicitous “gamesmanship” practiced by defendants in this case makes it an appropriate situation for the application of doctrines of waiver and the like.
For example, while conceding at the outset that the Court had personal jurisdiction over Cem Uzan, his counsel refused to make him available to testify for his deposition, at the preliminary injunction hearing, or at trial, invoking different, but equally frivolous, excuses on each occasion. Or, to give another example (of many), after the Uzans brought in their own separate counsel and, through him, unequivocally represented to Magistrate Judge Maas that they intended to provide previously-ordered discovery and litigate the case on the merits,
see Motorola Credit Corp. v. Uzan,
02 Civ. 666(JSR)(FM), 2003 WL 203011 , at *2 (S.D.N.Y. Jan. 29, 2003), they then secretly procured
ex parte
Turkish injunctions that purported to prohibit them from fulfilling these very promises,
see
Order, dated January 6, 2003, 2003 WL 56998 at *2-3.
In such circumstances, when defendants, invoking the same specious self-procured injunctions, refused to participate in the long-scheduled trial of this case,
see
Defendants’ Statement of Intention Regarding the Trial Scheduled for February 10, 2003, dated January 24, 2003, the Court would have been well within its rights to have simply issued a default judgment in plaintiffs’ favor. Instead, taking account of such factors as the size and significance of the case, plaintiffs’ expensive preparations for trial, the availability of the proof developed at the six-day evidentiary hearing and the two-day contempt hearing that the defendants
had
contested, and the benefit to any reviewing court of detailed findings of fact and conclusions of law, the Court proceeded with the trial. The findings and conclusions resulting therefrom, so far as they relate to remaining claims, appear in Part II of this Opinion and Order.
Under the circumstances, defendants are plainly precluded by the most elementary principles of waiver from further litigating any factual disputes they could reasonably have raised at trial, as well as any waivable legal issues not otherwise preserved that could have been raised at trial or earlier. On the other hand, there are certain issues that can never be waived, such as subject matter jurisdiction and standing.
See FW/PBS, Inc. v. City of Dallas,
493 U.S. 215, 231 , 110 S.Ct. 596 , 107 L.Ed.2d 603 (1990) (“The federal courts are under an independent obligation to examine their own jurisdiction.”). Also, if there are legal issues that, though waivable in principle, have previously been fully preserved or that could not reasonably have been expected to be raised until after the trial (notably, those issues that only became salient as a result of the Court of Appeals’ decision), those issues may still be litigated and are considered below.
As
to the second motion,
plaintiffs’ move, pursuant to Fed.R.Civ.P. 15(d), to file a supplemental complaint reinstating their RICO claims.
In dismissing plaintiffs’ RICO claims, the Court of Appeals found here applicable the holding of
First Nationwide Bank v. Gelt Funding Corp.,
27 F.3d 763 (2d Cir.1994), that “ ‘a plaintiff who claims that a debt is uncollectible because of the defendant’s conduct can only pursue the RICO treble damages remedy after his contractual rights to payment have been frustrated.’ ”
Motorola,
322 F.3d at 136 ,
quoting First Nationwide,
27 F.3d at 768 .
1
The
*494
Court found that because plaintiffs, though declaring Telsim in default, had not yet pursued all their contractual remedies against Telsim, including foreclosing on the collateral and seeking damages from Telsim through Swiss arbitration, the extent of their RICO damages was uncertain and their RICO claims were therefore premature at this time.
See Motorola,
322 F.3d at 136 .
In now seeking to reinstate their RICO claims, plaintiffs contend that pursuing their contractual remedies any further would be futile because there is no “real possibility that the debt, and therefore the injury, may be eliminated or significantly reduced,”
Motorola,
322 F.3d at 136 , either by foreclosure on the collateral or by resort to other contractual remedies. This argument is far from frivolous. As to the collateral, defendants have not only, as noted, significantly diluted its value, but also have effectively stripped it of its voting, auditing, and management control rights. Specifically, after the defendants, in April 2001, had diluted the value of the collateral to one-third of what it had been, the defendants, on January 4, 2002, held another unannounced meeting of Telsim’s shareholders at which they caused Telsim to enact certain resolutions that, upon being registered with the Turkish government, would create a new class of Uzan-controlled shares, unencumbered by any pledge to MCC or Nokia, the holders of which would have authority to nominate four of Telsim’s five directors and all three of Telsim’s statutory auditors. The resolutions also permitted Telsim to become a member of certain Turkish “foundations,” the assets of which are largely protected from creditors. In direct defiance of this Court’s preliminary injunction order, as well as their own express promise to the Court, the defendants then registered these resolutions with the Turkish authorities on July 19, 2002.
See
Opinion, dated May 20, 2002, 202 F.Supp.2d 239 , 248 & n.4; Opinion and Order, dated August 22, 2002, 2002 WL 1963301 at *2-4.
Moreover, defendants have repeatedly resisted, and gone into contempt of, this Court’s orders to transfer the collateral (or its functional equivalent) to the registry of this Court so that it could be used to satisfy any judgment. They have also declined the proffered alternative of posting a bond in lieu of the collateral, preferring to remain in contempt.
See e.g.,
Opinion and Order, dated August 22, 2002 (holding all defendants in civil contempt for failing to deposit the collateral with the Court and the individual defendants in civil contempt for registering the January 4 Resolutions); Order, dated October 15, 2002 (enhancing contempt sanctions); Memorandum Order, dated October 15, 2002, 2002 WL 31319932 at *4 & n.l (finding that defendants commenced Swiss arbitrations “in an effort to undercut the prior orders of, and proceedings before, this Court”); Memorandum Order, dated January 7, 2003, 2003 WL 56998 (discussing defendants’ procurement of Turkish injunctions purporting to stay the instant action in contravention of this Court’s September 30 and October 15 Orders).
But the fact that the value of the collateral has been hugely diminished and made more difficult to realize does not make it worthless. Indeed, even after July 19, 2002, plaintiffs repeatedly sought to have the collateral, or some equivalent thereof,
2
*495
moved to the registry of the Court on the basis that it could be used to help materially satisfy any judgment rendered in their favor.
See
Plaintiffs’ Memorandum of Law in Support of their Motion for a Preliminary Injunction, dated January 28, 2001, at 27-28. Moreover, defendants, while contemptuously resisting transfer of the shares to this Court, have represented that they will seek permission from the Turkish courts to transfer the collateral, or its equivalent, to the Swiss arbitrations.
See
Transcript, dated June 21, 2002 at 194.
Nonetheless, if it were only a question of the collateral, the Court might well agree with plaintiffs that there is no “real possibility” that it will ever be made available to “significantly” reduce defendants’ conceded debt to plaintiffs of more than $2.7 billion. But under their contracts with Telsim, MCC and ABN-AMRO Bank (on behalf of Nokia) can seek a judgment for damages against Telsim, to which it appears that Telsim’s only defense is its claim of “economic
force majeure.”
While ABN-AMRO Bank commenced such an arbitration shortly prior to the filing of this lawsuit, it does not appear to have pursued it aggressively; and MCC has not pursued arbitration at all, so this remedy has not been put to the test.
In any event, the Court of Appeals implicitly anticipated the argument plaintiffs here make, noting that “[i]t may be that the arbitration is a forlorn hope for MCC and Nokia, and that, in any event, the collateral will yield little of value.”
Motorola,
322 F.3d at 137 . Yet even after countenancing this possibility, the Court of Appeals dismissed the RICO claims as being premature until the contractual remedies were exhausted. It follows that, this precondition being still unmet, plaintiffs’ motion to reinstate the RICO claims must be denied (though, once again, without prejudice).
As
to the third motion,
defendants move to dismiss MCC’s various claims alleging so-called “computer hacking,” specifically, Count VIII (alleging violations of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (a)(4)), Counts IX and X (alleging violation of the Electronic Communications Privacy Act, 18 U.S.C. §§ 2511 (1)(A), 2701(a)(2)), and Count XI (alleging violation of the Illinois Trade Secrets Act, 765 ILCS Ch. 1065), on the ground that the only injury, if any, that resulted from the alleged hacking was an injury to Motorola, Inc., not to MCC. While, given their affiliated status, it may be that Motorola, Inc. and MCC can be conflated or viewed as agents of one another for certain evidentiary and other purposes, when it comes to bringing a claim the corporate forms must be respected and, absent an assignment or the like (not present here), only a company that itself suffered an injury can sue on that claim.
See, e.g., Bross Utils. Serv. Corp. v. Aboubshait, 618
F.Supp. 1442, 1445 (S.D.N.Y.1985) (“[Cjourts will not allow a
parent
to pierce the corporate veil it created for its own benefit, so as to assert the claims of its subsidiary.”) (emphasis in original). Here, defendants are correct that the evidence adduced by MCC on these charges shows only that an attempt was made to gain access to a server belonging to Motorola, Inc., not MCC; that proprietary information was copied from a database belonging to Motorola, Inc., not MCC; and that only Motorola, Inc., not MCC, expended funds in investigating the aforementioned incidents.
See
Plaintiffs’ Trial Exhibit (“PT”)-458 (Allan Baxter testimony at preliminary injunction hearing) at
*496
369-373, 384-386; PT-460 (Declaration of Ian Menzies dated February 7, 2003) at 2-6. While MCC argues that it made use of Motorola, Inc.’s computer network,
see
Transcript, dated February 19, 2003 (Ian Stuart Menzies testimony at trial) at 82; Plaintiffs’ Memorandum of Law in Opposition to Defendants’ Motions of April 4, 2003, dated April 24, 2003, at 64, it has adduced no evidence that any communication to or from MCC was actually intercepted. Similarly, while MCC argues that the contact list of customers that was copied “naturally included customers of [MCC],”
id.,
it has adduced no admissible evidence to sustain this inference.
MCC’s strongest response, however, is that defendants waived the instant objection by not raising it at or before trial. Thus, for example, if defendants were asserting that MCC was not the real party in interest,
see
Fed.R.Civ.P. 17(a), failure to raise this defense before trial would normally constitute waiver of the defense.
See, e.g., United HealthCare Corp. v. Am. Trade Ins. Co.,
88 F.3d 563, 569 (8th Cir.1996) (“Because the requirements in Rule 17(a) are for the benefit of the defendant, we have held that an objection on real party in interest grounds should be raised with reasonable promptness in the trial court proceedings. If not raised in a timely or seasonable fashion, the general rule is that the objection is deemed waived.”) (internal quotation marks omitted);
Whelan v. Abell,
953 F.2d 663 , 672 (D.C.Cir.1992) (“[W]here a
Rule 17(a)
defense is made, judges abuse their discretion in allowing the plea as late as the start of the trial if the real party has been prejudiced by the defendant’s laxness.”);
see also Gogolin & Stelter v. Karn’s Auto Imports, Inc.,
886 F.2d 100, 102 (5th Cir.1989);
K-B Trucking Co. v. Riss Int’l Corp.,
763 F.2d 1148 , 1153 n. 2 (10th Cir.1985);
Rosenblum v. Dingfelder,
111 F.2d 406, 407 (2d Cir.1940).
3
But here the objection is more in the nature of an objection to MCC’s standing. It is not as if MCC believed it stood in the shoes of Motorola, Inc., but was mistaken in this belief, a classic situation for the application of Rule 17(a).
4
See, e.g., Del Re v. Prudential Lines, Inc.,
669 F.2d 93, 96-97 (2d Cir.1982) (declining to allow Rule 17(a) ratification where “no difficulty, confusion or mistake ever existed ... regarding the identify of the party in whose name the suit must be brought”). Rather, MCC has at all times asserted that it is suing on its own behalf, but it has proven unable to adduce anywhere that, as such, it suffered any injury frojn the alleged computer hacking. It therefore lacks standing to bring these claims, a failure that is jurisdictional in nature and therefore un-waivable.
See Thompson v. County of Franklin,
15 F.3d 245, 248 (2d Cir.1994).
5
*497
Accordingly, Counts VIII through XI are hereby dismissed.
As
to the fourth motion,
given that all federal claims have now been dismissed (albeit without prejudice in the case of the RICO claims), plaintiffs move for the Court to retain supplemental jurisdiction over the remaining state claims,
ie.,
MCC’s claims under Illinois law for common law fraud, promissory fraud, and civil conspiracy, and MCC’s and Nokia’s joint claim (under New York law,
see infra)
for imposition of a constructive trust.
As a threshold matter, a district court can retain supplemental jurisdiction over state claims following dismissal of all federal claims only if it had original jurisdiction over some or all of the now-dismissed federal claims. Since the federal claims (ie., the RICO claims and three of the computer hacking claims) were dismissed for lack of standing, defendants argue that the Court never had original jurisdiction over those claims. But in the case of the RICO claims, dismissal was without prejudice precisely because what was lacking was not original jurisdiction but rather a failure to satisfy a further, judicially-created requirement that a plaintiff not bring a RICO suit until he has exhausted his contractual remedies and thereby clearly and definitely ascertained his RICO damages.
Motorola,
322 F.3d at 135 . As the Court of Appeals, in contrasting the higher RICO standard of causation with the lower constitutional standard, recently held in
Lerner v. Fleet Bank, N.A.,
318 F.3d 113, 117 (2d Cir.2003), “RICO standing is not a jurisdictional prerequisite the absence of which would divest the district court of the original jurisdiction required to support supplemental jurisdiction.” Similarly here, although plaintiffs have not satisfied the prerequisite of RICO standing that their injuries be “clear and definite,” they have met the lower constitutional standing threshold of alleging injuries that are “ ‘distinct and palpable,’ ”
see Matter of Appointment of Indep. Counsel,
766 F.2d 70, 73 (2d Cir.1985),
citing Gladstone Realtors v. Vill. of Bellwood,
441 U.S. 91, 100 , 99 S.Ct. 1601 , 60 L.Ed.2d 66 , (1979). That is all that is required for original jurisdiction.
Since, therefore, the Court had original jurisdiction over the RICO claims that it has now dismissed, it may, but is not required to, continue to exercise supplemental jurisdiction over the state claims. 28 U.S.C. § 1367 (c). Apart from the dismissal of the federal claims, none of the statutory reasons for declining supplemental jurisdiction in such circumstances is present here: the state claims do not raise novel or complex issues of state law; the state claims do not substantially predominate over the now-dismissed but potentially-reinstatable federal claims; and no exceptional circumstances compel the Court to decline to exercise supplemental jurisdiction.
Id.
Numerous factors, however, weigh in favor of the Court’s retaining supplemental jurisdiction here, including such classic factors as “considerations of judicial economy, convenience, and fairness to litigants,”
see Purgess v. Sharrock,
33 F.3d 134, 138 (2d Cir.1994). Indeed, with respect to judicial economy, this is a particularly strong case for retaining supplemental jurisdiction, since the Court has not only spent considerable time dealing with the legal issues and becoming fully conversant with the facts but also has conducted a trial on the merits, so that it is in the position to promptly enter final judgment on the supplemental claims (see Part II
infra).
Moreover, if the Court were to decline
*498
supplemental jurisdiction, plaintiffs might be deprived of the previously-granted in-junctive relief, without which they would suffer irreparable injury.
See
Orders, dated May 9 and May 10, 2002 (granting plaintiffs’ preliminary relief); Opinion, dated May 21, 2002 (setting forth the reasons for the May 9 and May 10 Orders);
see also
Supplemental Order of Attachment, dated January 3, 2003; Supplemental Order of Attachment, dated November 14, 2002; Order, dated August 29, 2002.
Accordingly, plaintiffs’ motion to have the Court retain supplemental jurisdiction over the remaining state claims is hereby granted.
As
to the fifth motion,
defendants move to dismiss MCC’s state law claims for common law fraud, promissory fraud, and civil conspiracy. Defendants argue that, as in the case of the RICO claims, these Illinois claims are unripe for adjudication because, until the contractual remedies are exhausted, the extent of damages remains uncertain.
But the Illinois law of fraud recognizes no equivalent of the Second Circuit’s stringent rule that denies RICO standing unless contractual remedies are exhausted and the calculation of the remaining damages is clear and definite. Rather, as in most states, Illinois allows fraudulent inducement and extrinsic fraud claims to proceed even where contractual remedies may be available and requires only that the damages not be so speculative as to leave in doubt whether plaintiff has been materially harmed at all.
The case on which defendants here primarily rely,
City of Chicago v. Mich. Beach Hous. Coop.,
297 Ill.App.3d 317 , 231 Ill.Dec. 508 , 696 N.E.2d 804 (1998), is simply an example of such extreme specula-tiveness that easts even the fact of injury in substantial doubt. In that case, the court rejected the City of Chicago’s argument that it had been damaged by defendant’s misrepresentation that a loan from the city to defendant would be used to transform low-income rental housing into a cooperative when instead defendant simply intended to use the funds to subsidize the low-income housing. The Court explained:
The city argues that even though the loan is not yet in default, it has been injured by defendants’ inability to pay and the increased risk to the city’s investment. But we can only speculate about whether the loan will be repaid when it becomes due after 42 years, or whether the building’s use as rental housing makes the investment “riskier.”
Id.
231 Ill.Dec. 508 , 696 N.E.2d at 810 . In other words, the action was dismissed because it was unclear whether plaintiff had been placed at greater risk than it had bargained for or that it had suffered any economic injury at all.
Here, by contrast, MCC has clearly been placed at greater risk by, among other thing, the fraudulent diversion of no less than $1 billion of the loaned monies away from the company they were lent to and into the hands of the defendants and by the huge (and measurable) decline in the value of the fraudulently impaired collateral. Thus, so far as the Illinois fraud claims are concerned, the case is governed by decisions like
Application of Busse,
124 Ill.App.3d 433 , 79 Ill.Dec. 747 , 464 N.E.2d 651 (1984). There, the court held that defendants’ impairment of the value of plaintiffs bargained-for collateral constituted “sufficient proof of actual damages to sustain an action for fraud,” even though the debtor had not yet defaulted on the underlying loan.
Id.
79 Ill.Dec. 747 , 464 N.E.2d at 658.
6
As the
*499
Court there stated, “while damages may not be predicated on mere speculation, hypothesis, conjecture or whim, absolute certainty concerning the amount of damage is not necessary to justify a recovery where the existence of damage is established; the evidence need only tend to show a basis for computation of damages with a fair degree of probability.”
Id.
79 Ill.Dec. 747 , 464 N.E.2d at 655.
See also Mich. Beach Hous. Coop.,
231 Ill.Dec. 508 , 696 N.E.2d at 809 .
In the instant case, where, as a result of the defendants’ fraudulent looting of Tel-sim, that company has defaulted on its loan repayments and proven unable to repay more than a tiny fraction of the loans, and where, as a result of the defendants’ fraudulent diluting of the collateral, the collateral’s value is at best, a small fraction of what is owed on the loan, plaintiffs have more than made out a basis for bringing suit under Illinois law. The fact that Tel-sim may have quasi-contractual defenses to the default (“economic
force majeure
”) or that the collateral, though of ascertainable value, has not yet been foreclosed upon are matters that the defendants may raise as affirmative defenses or in mitigation of damages, but they do not, under Illinois law, preclude plaintiffs from bringing suit.
Where, moreover, the loan was fraudulently induced, Illinois law, in a principle established as early as 1886 permits (though does not require) recovery of the full amount of the loan, plus interest,
see Horne v. Walton,
117 Ill. 141 , 7 N.E. 103, 104 (1886);
see also Busse,
79 Ill.Dec. 747 , 464 N.E.2d at 658-59 , putting the burden on the borrower to prove any reductions, set off, or mitigation,
see Commercial Nat'l Bank of Peoria v. Fed. Deposit Ins. Corp.,
131 Ill.App.3d 977 , 87 Ill.Dec. 107 , 476 N.E.2d 809, 813 (1985).
More generally, while the Second Circuit in
First Nationwide,
27 F.3d at 768 , suggested that “[t]he general rule of fraud damages is that the defrauded plaintiff may recover out-of-pocket losses caused by the fraud,”
id.
7
Illinois law is both broader and more flexible. As surveyed at some length in
Giammanco v. Giammanco,
253 Ill.App.3d 750 , 192 Ill.Dec. 835 , 625 N.E.2d 990 (1993), fraud damages in Illinois are most commonly calculated by a benefit-of-a-bargain approach, occasionally by an out-of-pocket approach, and sometimes by still other approaches.
Id.
192 Ill.Dec. 835 , 625 N.E.2d at 998-1001 . The common denominator is to try to fashion, if at all possible, a remedy in damages for a victim of an intentional fraud,
id.,
especially where (as here) the defendant’s wrongful conduct has made it difficult to establish the measure of the plaintiffs injury,
Fed. Deposit Ins.
*500
Corp. v. W.R. Grace & Co.,
877 F.2d 614, 624 (7th Cir.1989) (applying Illinois law).
Furthermore, regardless of the measure of compensatory damages, a defrauded plaintiff may also be entitled to punitive damages under Illinois law.
See Busse,
79 Ill.Dec. 747 , 464 N.E.2d at 655 ;
Fed. Deposit Ins. Corp.,
877 F.2d at 623 .
A few examples will illustrate how courts have applied these flexible principles of Illinois fraud law to situations similar to the present case:
In
Horne,
7 N.E. at 103-04 ,—the seminal Illinois decision in this area—where a loan was induced by fraudulent misrepresentations regarding the value of the collateral, the Supreme Court of Illinois rejected the lower court’s conclusion that the plaintiff was only entitled to recover the difference between the value of the collateral as represented and its actual worth, and held instead that she was entitled to recover the full amount of her loan plus interest.
Id.
In
Fed. Deposit Ins. Corp.,
877 F.2d at 623 , applying Illinois law to a case where defendant fraudulently induced plaintiff to lend it $75 million allegedly to develop natural-gas fields that the defendant knew were worthless, but where no default had occurred, Judge Posner (with typical creativity) held that the measure of damages was the total amount the plaintiff could have made by investing the loaned money elsewhere minus the sum of the interest already received on the loan and the remaining value of the actual loan as determined by discounting its face value by the percentage of unlikelihood it would be repakl — a measure that, whatever its conceptual merits, obviously involved some considerable guesswork. In addition, the Court of Appeals upheld the jury’s award of $25 million dollars in punitive damages above its award of $25 million in compensatory damages, noting that “treble damages are a common form of punitive damages,” and that plaintiff in the case received only double damages.
Id.
In
Busse,
79 Ill.Dec. 747 , 464 N.E.2d at 657-58, where, as discussed, the collateral was fraudulently impaired but no default had yet occurred on repayment of the loan, the Court, though recognizing that under Illinois law it could have awarded plaintiff the full amount of the loan plus interest, limited recovery to the reduction in the value of the collateral.
Id.
Finally, in
Commercial Nat’l Bank of Peona,
87 Ill.Dec. 107 , 476 N.E.2d at 815 , a case where plaintiff was fraudulently induced to lend $90,000 to a small manufacturing corporation by false statements as to the financial viability of that corporation, the Illinois Appellate Court, citing
Horne ,
opined that the proper measure of damages was “the sum of money lent plus interest for the time that plaintiff was deprived of possession” (in that case, from the time of the loan until judgment).
Id.
From the foregoing discussion, it is clear that Illinois fraud law has no limitation of standing comparable to the Second Circuit’s RICO requirement that a plaintiff exhaust his contractual remedies and show a clear and definite measure of damages before bring suit. On the contrary, Illinois courts have allowed plaintiffs who were fraudulently induced into making loans to sue for fraud even before default occurred and to recover any of a wide variety of damages, up to and including the full amount of the loan plus interest, not to mention punitive damages. Finally, it is clear that Illinois law places on the defendant the burden of proving contractual defenses and mitigation of damages, rather than making pursuit of these aspects part of the plaintiffs burden of
*501
bringing suit.
8
Accordingly, defendants’ motion to dismiss MCC’s claims under Illinois law for common law fraud, promissory fraud, and civil conspiracy must be denied.
As
to the sixth motion,
MCC moves to amend its complaint to assert an Illinois claim for impairment of collateral. While Illinois law recognizes such a claim,
see Hummer v. R.C. Huffman Const. Co.,
68 F.2d 372 (7th Cir.1933), the measure of fraud damages available to the Court under Illinois law, as surveyed above, enables the Court, if it finds for MCC on the fraud claims (as it does, see Part II,
infra),
to fully compensate MCC for all the damages it suffered from defendants’ entire scheme. Accordingly, there is no occasion to add the impairment claim, and MCC’s motion to add a claim for impairment of collateral is therefore denied as moot.
As to the seventh motion,
plaintiffs move to extend their constructive trust claim to cover certain of defendants’ money and property located in New York.
By way of background, plaintiffs’ constructive trust claim — Count XII of the Complaint — applies on its face only to the Telsim stock presently held by defendant Standart Telekom. The theory of the claim is that when, as part of the fraudulent scheme to dilute the collateral, Rumeli Telefon waived its preemptive rights, thereby allowing Standart Telekom to acquire 49% of the outstanding shares of Telsim, it was tantamount to a conversion of a large part of the collateral and accordingly the Telsim shares so acquired should be deemed to be constructively held for plaintiffs’ benefit.
See Motorola,
322 F.3d at 138 n. 6.
See generally, Republic of Philippines v. Marcos,
806 F.2d 344, 355 (2d Cir.1986). In addition, however, after the Court learned that defendants, in violation of their sworn promise not to register the resolutions of January 4, 2003 transferring control rights from the shares held by Rumeli Telefon to those held by Standart Telekom, had gone ahead and done so — thereby completing the effective conversion of plaintiffs’ collateral — it allowed plaintiffs to broaden their constructive trust claim to apply to the collateral or its functional equivalent (so as to obviate the fraudulent conversion and restore plaintiffs’ true collateral to the
status quo
ante).
Although defendants now try to suggest, (albeit only in a footnote,
see
Defendants’ Memorandum of Law in Support of their Motions of April 4, 2003, at 60 n. 36) that this Court previously dismissed this claim, that is entirely inaccurate, as the underlying reference cited in defendants’ footnote plainly shows that, far from having decided the issue in defendants’ favor, the Court had not at that time yet focused on the constructive trust question.
See
PT-458 (oral argument at preliminary injunction hearing) at 1211-12. Indeed, the Court of Appeals recognized as much, for it directed this Court, on remand, to determine whether, even though Nokia did not join in the Illinois fraud claims (presumably because Nokia had insufficient contacts with Illinois), “Nokia’s allegation of a Constructive TrusVEquitable Lien cause of action (it is unclear whether that
*502
claim is based on Illinois or New York law) might provide an alternative basis for upholding the preliminary injunction in aid of Nokia.”
Motorola,
322 F.3d at 137 n. 4. Even now, moreover, defendants have not argued in their memorandum of law that the constructive trust claim as set forth in the Complaint should be dismissed; and any objections to it they now raise for the first time — such as the suggestion that it is governed by Turkish or Swiss law — have long since been waived.
9
As for the query put by the Court of Appeals regarding whether this claim is governed by Illinois or New York law, since there appears to be no substantive difference in the law of those two states applicable to this claim, the Court does not have to reach which law governs. Both New York and Illinois take a very broad view of constructive trust that would readily make it applicable to any form into which the original collateral was fraudulently diverted. As stated in the leading New York case of
Simonds v. Simonds,
45 N.Y.2d 233 , 408 N.Y.S.2d 359 , 380 N.E.2d 189, 194 (1978), a “constructive trust will be erected whenever necessary to satisfy the demands of justice .... [I]ts applicability is limited only by the inventiveness of men who find new ways to enrich themselves unjustly by grasping what should not belong to them,” and the court “reserves freedom to apply this remedy to whatever knavery human ingenuity can invent.” (internal quotation marks omitted).
Plaintiffs, however, have now moved to amend the Complaint to extend the constructive trust beyond the collateral to certain money and property located in New York that the plaintiffs have attached in connection with this lawsuit. So far as MCC is concerned, however, such extension of the constructive trust is unnecessary, since, for reasons set forth in Part II,
infra,
MCC is entitled to a monetary judgment against which it can directly apply the attached money and property: hence, it has an adequate remedy at law. See
Sec. Investor Prot. Corp. v. Stratton Oakmont, Inc.,
234 B.R. 293, 333 (Bankr.S.D.N.Y.1999). As for Nokia, it has failed to satisfy the tracing requirement of a constructive trust claim so far as the New York property is concerned.
See Rogers v. Rogers,
63 N.Y.2d 582 , 483 N.Y.S.2d 976 , 473 N.E.2d 226, 227 (1984).
10
Accordingly, plaintiffs’ motion to amend the complaint to extend the constructive trust claim to cover certain money and property located in New York is denied.
As to the eighth motion,
defendants renew their previously-denied motion to dismiss the case on
forum non conveniens
*503
grounds, noting that this Court’s prior denial relied,
inter alia,
on the presence of the now-dismissed RICO claims, which, in the form here pleaded, have no equivalent in the proposed alternative forum of Switzerland.
See
Order, dated September 30, 2002; Memorandum Order, dated October 16, 2002, 2002 WL 31319932 , at *3.
“To prevail on a motion to dismiss on the ground of
forum, non conveniens,
a defendant must demonstrate (1) that there exists an adequate alternative forum, and (2) that the ordinarily strong presumption favoring the plaintiffs chosen forum is overcome by a balance of the relevant factors of private and public interest weighing heavily in favor of the alternative forum.”
Aguinda v. Texaco, Inc.,
142 F.Supp.2d 534, 538 (S.D.N.Y.2001)(internal citations omitted),
aff'd,
303 F.3d 470 (2d Cir.2002).
Here, defendants do not even meet the first requirement, for they have not consented to being sued in the courts of Switzerland (their only proposed alternative forum) and are not otherwise subject to personal jurisdiction in those courts.
See Jota v. Texaco, Inc.,
157 F.3d 153, 159 (2d Cir.1998). The fact that, through their counsel, they have consented to submit these matters to arbitration before a Swiss Arbitral Tribunal sponsored by the Zurich Chamber of Commerce is irrelevant, for the doctrine of
forum non conveniens
relates to transfer between the courts of different sovereigns and has no bearing on transfer to an arbitral entity, consent to whose jurisdiction is a matter of private contract,
see
Part 1(9),
infra; see generally, AT & T Techs., Inc. v. Communications Workers of Am.,
475 U.S. 643, 648 , 106 S.Ct. 1415 , 89 L.Ed.2d 648 (1986). Moreover, an entity of such limited powers as the Swiss Arbitral Tribunal, which, for example, does not allow for either injunc-tive relief or discovery,
see
Transcript of Oral Argument Before the Court of Appeals, dated August 5, 2002, at 24, would not be an adequate forum in any case.
Moreover, even if defendants could somehow satisfy the first requirement for transfer under the doctrine of
forum non conveniens,
they could not satisfy the second requirement of showing that the balance of public and private factors
11
weighed sufficiently in their favor to overcome plaintiffs’ choice of forum. Indeed, given that the trial on the merits has already concluded, the notion that it would be more “convenient” to retry the case in another forum is absurd. Defendants’ decision not to participate in the trial should not alter this balance, since that decision was based not on any difficulty defendants faced in accessing the forum but on defendants’ own tactical choice and their collusive procurement of Turkish injunctions purportedly barring their attendance.
Accordingly, defendants’ motion to dismiss for
forum non-conveniens
is denied.
As
to the ninth motion,
defendants renew their previously-denied motion to compel arbitration of the remaining claims, arguing that the dismissal of the RICO
*504
claims undercuts part of the rationale for the Court’s prior denial.
It is true that the presence of the RICO allegations, supported not only by predicate acts of fraud but also by independently sufficient predicate acts of extortion, made this Court’s earlier denial of arbitration a relatively easy decision. But this was not because of the presence of a RICO cause of action
per
se,
12
but because of the nature of the underlying allegations, most of which were entirely extrinsic to the transactions covered by the underlying contracts that included the arbitration clauses here in issue, and also because the defendants were not in any event parties to those contracts.
Cf. Genesco, Inc. v. T. Kakiuchi & Co., Ltd.,
815 F.2d 840, 848 (2d Cir.1987) (holding the RICO claims there asserted within the scope of the contractual arbitration because “[t]he wire, mail, and transportation fraud allegations which form[ed] the predicate acts of Genesco’s RICO claim all derive[d] from the parties’ transactions under the sales agreements [that contained the arbitration clause]”). How could it be said that the Uzans, with whom the plaintiffs had no contractual privity whatever (let alone an agreement to arbitrate disputes), could compel the plaintiffs to have a private commercial tribunal determine matters so extrinsic to Telsim’s financing arrangements as whether the Uzans had falsely and for extortionate purposes, charged various Motorola, Inc., Motorola Turkey, and Nokia executives with threatening their murder and procured the arrest and prosecution of several of these executives? Such allegations- — fully supported by the evidence
(see
Part II,
infra)
— are light-years removed from anything MCC or Nokia (or ABN-AMRO Bank, acting as Nokia’s agent) could reasonably, indeed, conceivably, have understood they were agreeing to arbitrate when they entered into their contracts to lend money to Tel-sim.
The point is that, while federal policy -favors arbitration generally, and most especially in the context of international business transactions,
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614, 629-31 , 105 S.Ct. 3346 , 87 L.Ed.2d 444 (1985), the obligation to arbitrate nevertheless remains a creature of contract,
see AT & T Techs., Inc. v. Communications Workers of Am.,
475 U.S. 643, 648 , 106 S.Ct. 1415 , 89 L.Ed.2d 648 (1986) (internal quotation marks omitted).
13
“[A] party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.”
Id. Accord, e.g., First Options of Chicago, Inc. v. Kaplan,
514 U.S. 938, 945 , 115 S.Ct. 1920 , 131 L.Ed.2d 985 (1995);
Shaw Group Inc. v. Triplefine Intern. Corp.,
322 F.3d 115 , 120 (2d Cir.2003).
With this bedrock principle in mind, the Court now addresses whether, in the absence of the RICO claims, arbitration of the remaining claims
(i.e.,
common law
*505
fraud, promissory fraud, civil conspiracy, and constructive trust) must be compelled. This, in turn, is a two-part inquiry: a court must decide “whether the parties agreed to arbitrate, and, if so, whether the scope of that agreement encompasses the asserted claims.”
David L. Threlkeld & Co., Inc. v. Metallgesellschaft Ltd.,
923 F.2d 245, 249 (2d Cir.1991).
With respect to the first inquiry, it is undisputed that neither of the plaintiffs entered into any arbitration agreement with any of the defendants. Defendants, argue, however, that this is an artifice of pleading, an attempt to get around the arbitration agreements that MCC directly, and Nokia indirectly (through ABN-AMRO Bank) entered into with Telsim regarding the very loans that form the financial subject of this case. In such circumstances, defendants argue courts have “estopped [signatories] from avoiding arbitration with [ ] non-signator[ies] ‘when the issues the nonsignatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed.’”
Choctaw Generation Ltd. Parternship v. Am. Home Assur. Co.,
271 F.3d 403, 404 (2d Cir.2001),
quoting Smith/Enron Cogeneration Ltd. Partnership, Inc. v. Smith Cogeneration Int’l, Inc.,
198 F.3d 88 , 98 (2d Cir.1999).
Such estoppel, however, is inapplicable here, for several reasons. First, the very allegations of the Complaint, let alone the overwhelming evidence now adduced in their support
(see
Part II,
infra)
show that this is not a case of trying to plead-around an agreement to arbitrate but rather of directly suing the real culprits, the Uzans, who simply used Telsim as a front to commit the instant fraud. It is Telsim that, if named, would have been the artificial defendant, for the Uzans are the real parties in interest.
Second, the estoppel doctrine invoked by defendants is rooted in equity,
see Merex A.G. v. Fairchild Weston Systems, Inc.,
29 F.3d 821, 824 (2d Cir.1994), and is therefore subject to the equitable maxim that “he who comes into equity must come with clean hands,”
Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery,
324 U.S. 806, 814 , 65 S.Ct. 993 , 89 L.Ed. 1381 (1945) (internal quotation marks omitted). From the very outset of this case, plaintiffs have demonstrated that defendants have acted fraudulently, a showing they made even before defendants sought to compel arbitration.
14
Thereafter, defendants, through inconsistencies, omissions, false representations, and tactical diversions, effectively carried their fraud right into the courtroom.
See
Findings of Fact,
infra.
15
A court faced with such conduct is constrained to deny the equitable relief of estoppel that defendants here seek to invoke in aid of arbitration.
*506
See Precision Instrument Mfg Co.,
324 U.S. at 814-15 , 65 S.Ct. 993 ;
Keystone Driller Co. v. General Excavator Co.,
290 U.S. 240, 245 , 54 S.Ct. 146 , 78 L.Ed. 293 (1933).
Finally, it may be noted that in entering into the agreements with Telsim that defendants here seek to invoke, MCC and ABN-AMRO Bank (on behalf of Nokia) expressly agreed that such agreements would be governed by the law of Switzerland, which strictly enforces privity of contract and generally prohibits non-parties from seeking to invoke contractual terms on their behalf.
See
Plaintiffs’ Preliminary Injunction Exhibit (“PI”)-14 (Declaration of Professor Dr. Franz Kellerhals dated April 2, 2002) ¶¶ 14-16; PI-19 (Declaration of Dr. Peter Straub dated March 19 2002) ¶ 7; PT-458 (Rolf Weber testimony at preliminary injunction hearing) at 359. While certain caselaw, although not exactly on point, suggests that this objection would not ordinarily prevent this Court from referring the matter in the first instance to the Swiss Arbitration Panel,
see Mitsubishi,
473 U.S. at 639 , 105 S.Ct. 3346 ;
Rhone Mediterranee Compagnia Francese di Assicurazioni E Riassicurazoni v. Lauro,
712 F.2d 50 (3d Cir.1983);
Meadows Indemnity Co. Ltd. v. Baccala & Shoop Ins. Services,
760 F.Supp. 1036 (E.D.N.Y.1991);
Marchetto v. DeKalb Genetics Corp.,
711 F.Supp. 936 (N.D.Ill.1989), here the objection serves to reinforce the appropriateness in invoking equity to preclude defendants’ motion, for it illustrates how, once again, they seek to misuse doctrines that were developed to effectuate legitimate arbitration to compel a commercial arbitration of their criminal scheme.
Accordingly, since the parties to this lawsuit did not agree to arbitrate any dispute between them, and since no basis exists in law or equity for allowing them to invoke Telsim’s agreement to arbitrate, defendants’ motion to compel arbitration must be denied.
It remains only to add that, even if this were not so, defendants would still not be able to compel arbitration with MCC, because the scope of the agreement between MCC and Telsim does not, as a matter of law, encompass MCC’s remaining claims in this case. According to the Court of Appeals:
To determine whether a particular dispute falls within the scope of an agreement’s arbitration clause, a court should undertake a three-part inquiry. First, recognizing there is some range in the breadth of arbitration clauses, a court should classify the particular clause as either broad or narrow. Next, if reviewing a narrow clause, the court must determine whether the dispute is over an issue that is on its face within the purview of the clause, or over a collateral issue that is somehow connected to the main agreement that contains the arbitration clause. Where the arbitration clause is narrow, a collateral matter will generally be ruled beyond its purview. Where the arbitration clause is broad, there arises a presumption of arbitrability and arbitration of even a collateral matter will be ordered if the claim alleged implicates issues of contract construction or the parties’ rights and obligations under it.
Louis Dreyfus Negoce v. Blystad Shipping & Trading Inc.,
252 F.3d 218, 224 (2d Cir.2001) (internal quotation marks and citations omitted).
The agreements between MCC and Tel-sim most directly here relevant — the License Financing and Security Agreement, dated April 24, 1998 (“License Financing Agreement”), and the Equipment Financing and Security Agreement, dated April 24, 1998 (“Equipment Financing Agree
*507
ment”), upon which the loans were extended — each provides in pertinent part:
This Financing Agreement shall be governed by and interpreted in accordance with the internal laws (without regard to the laws of conflicts) of Switzerland. In the event a dispute
arises hereunder,
or under any document or agreement delivered in connection herewith, the parties will attempt to resolve such dispute through negotiation, mediation or another form of ADR in the first instance. Any dispute which cannot be resolved between the parties through negotiation, mediation or other form of ADR within four (4) months of the date of the initial demand for ADR by one of the parties, shall then be resolved, to the exclusion of the ordinary courts by a three-person Arbitral Tribunal in accordance with the International Arbitration Rules of the Zurich Chamber of Commerce (“the COC Rules”).... (emphasis supplied)
16
Plaintiffs’ Separately Marked Trial Exhibit DX (“DX”)~3 (License Financing Agreement), at 23; DX-5 (Equipment Financing Agreement), at 23 (emphasis supplied). Similarly, the other relevant agreement— the Share Pledge Agreement, dated April 24, 1998 — incorporates this language by reference.
See
DX-14 (Share Pledge Agreement) at 7 (“This Agreement shall be governed by and construed in accordance with the laws of Switzerland, and disputes shall be resolved in accordance with the procedures, terms and conditions set forth in the License Financing Agreement for resolution of disputes.”).
17
Thus, what the parties agreed to arbitrate was only a dispute that “arises hereunder, or under any document or agreement delivered in connection herewith.” Under still binding Second Circuit precedent, this language renders the arbitration clause narrow in scope,
see In re Kinoshita,
287 F.2d 951 , 953 (1961), and inapplicable to MCC’s state law claims of fraud and the like, which on their face concern matters extrinsic to the contract itself, such as fraudulent inducement, fraudulent diversion, and the like, rather than “disputes and controversies relating to the interpretation of the contract and matters of performance.”
Id.
The Court is aware that
Kinoshita
“has been frequently criticized in this Circuit” and has been “confined to its precise facts,” that is to the phrase “arising under” or, at most, “its equivalent.”
ACE Capital Re Overseas Ltd. v. Central United Life Ins. Co.,
307 F.3d 24, 33 (2d Cir.2002) (internal' quotation marks omitted). But these are the words here used in the applicable agreements, and the fact remains that
Kinoshita
has not been overruled,
see, e.g., Genesco v. T. Kakiuchi & Co.,
815 F.2d 840 , 854 n. 6 (2d Cir.1987) (“[W]e decline the invitation [to overrule
Kinoshi-ta
].”);
S.A. Mineracao da Trindade-Sam-
*508
itri v. Utah Int’l, Inc., 745
F.2d 190, 194 (2d Cir.1984) (“We decline to overrule
In re Kinoshita.”). Kinoshita
is therefore binding where, as here, the arbitration clause is indistinguishable from, if not more narrow than, the clause at issue in that ease.
Moreover, it may be suggested that there is a good reason why
Kinoshita
has not been overruled. For all the current “tilt” in favor of arbitration, it is still a function of what the parties agreed to. Under ordinary principles of contract interpretation — indeed, under plain English meaning — “arising under” a contract cannot fairly be read to extend to disputes that either proceeded the formation of the contract (such as fraudulent inducement) or that are entirely extrinsic to the contract (such as the Uzans diverting of the loan monies into their own pockets). However much some courts may prefer arbitration, private parties are still entitled to have straightforward contractual agreements that are couched in simple English words enforced in accordance with their terms.
The difference between the language in MCC’s contract with Telsim and the language in ABN-AMRO Bank’s contract with Telsim still further reinforces the conclusion that MCC never agreed to arbitrate the instant disputes. The ABN-AMRO Bank agreement, which in its most recent form is known as the “Third Facility Agreement” dated May 30, 2000
(see
Findings of Fact,
infra),
provides that:
Any dispute(s)
arising between the Parties out of or in connection with
this Agreement (including its interpretation, closing, execution, binding effect, amendment, breach, termination or enforcement) shall be submitted, to the exclusion of the ordinary courts, to a three-person arbitration tribunal in accordance with the International Arbitration Rules of the Zurich Chamber of Commerce....
PT-1004D (Third Facility Agreement) §§ 22.1-22.2 (emphasis supplied).
18
This is classic “broad” language, but by its very breadth it illustrates why the MCC-Telsim language is narrow and should not be interpreted to cover the same scope as the broad ABN-AMRO-Telsim language.
19
To be sure, Nokia itself is not a party to any of these agreements, but a reasonable argument can be advanced that ABN-AMRO Bank was acting as Nokia’s agent in regard to these agreements. Thus, if the instant defendants were able to invoke these agreements on their own behalf, they could compel Nokia, but not MCC, to arbitrate.
See Thomson-CSF, S.A. v. Am. Arbitration Assoc.,
64 F.3d 773, 777 (2d Cir.1995) (“Traditional principles of agency law may bind a nonsignatory to an arbitration agreement.”). But since, as previously noted, the instant defendants cannot
*509
invoke these agreements on their own behalf with respect to either of the plaintiffs, defendants motion to compel arbitration must be denied in its entirety.
As
to the tenth motion,
defendants move to dissolve the Court’s preliminary injunction and attachment orders and void all related findings of contempt, on the grounds that (a) the case is subject to arbitration, (b) the remaining claims are insufficient to support a preliminary injunction, and (c) the Court’s preliminary injunction was structurally flawed.
The first of these arguments fails because, as determined above, the case is not subject to arbitration. Moreover, even if this were not the ease, the injunctive relief would be warranted as an injunction in aid of arbitration. Indeed, as noted earlier, MCC expressly bargained for such relief when it agreed with Telsim (in the arbitration clause defendants now seek to invoke for their benefit) that “nothing in this section will prevent either party from resorting to judicial proceedings if ... interim relief from a court is necessary to prevent serious and irreparable injury to one party or to others.”
20
As to the other objections, they are largely mooted by the fact that the Court of Appeals expressly declined to vacate the preliminary injunction but only directed this Court to address its scope,
see Motorola,
322 F.3d at 138-39 , and by the further fact that, as a result of the Court’s determination of the merits
(see
Part II
infra),
the preliminary injunctions are now replaced by the permanent injunctive relief set forth below. Moreover, the same findings that supplement the Court’s original grant of preliminary injunctive relief would have equally supported the same relief even if the only claims then before the Court were the state-law claims.
See
Supplemental Order of Attachment, dated January 3, 2003; Supplemental Order of Attachment, dated November 14, 2002; Order, dated August 29, 2002; Opinion, dated May 21, 2002; Order, dated May 10, 2002; Order, dated May 9, 2002.
It follows that defendants were rightfully held in contempt for failure to abide by the preliminary injunction, and that they remain in contempt to this day
(see
Part II,
infra).
While the Court of Appeals questioned the portion of the preliminary injunction extending beyond the collateral-derived Telsim stock held by defendant Standard Telekom to the collateral-related Telsim stock still held by non-party Rume-li Telefon,
see Motorola,
322 F.3d at 138 ,
21
defendants willfully refused to transfer even the former stock to the registry of this Court, and that failure, along with their willful contempt of other provisions of the preliminary injunction not here challenged, was more than sufficient to require the finding of contempt.
*510
As
to the eleventh motion,
defendants move to dissolve the Court’s order enjoin-’ ing defendants from pursuing certain Swiss arbitrations.
In granting plaintiffs’ motion to enjoin defendants from pursuing some (but not all) foreign arbitrations, the Court noted that “it [was] painfully obvious that they were commenced in an effort to undercut the prior orders of, and proceedings before, this Court.” Order, dated October 15, 2002, 2002 WL 31319932 at *4. As final judgment is now being entered on plaintiffs’ state law claims and as plaintiffs’ RICO claims will most likely not ripen until the arbitrations conclude, the arbitrations will no longer interfere with this Court’s jurisdiction, and it is appropriate that they go forward at this time, so that plaintiffs can ultimately qualify to reinstate their RICO claims. Accordingly, the motion to dissolve the prohibition on defendants’ pursuing certain Swiss arbitrations is granted.
This is not to suggest, however, that these defendants (as opposed to Telsim) have a lawful right to participate in such arbitrations; indeed, as previously indicated, this Court believes they do not. But in the present posture that itself becomes an issue for the arbitration panel, this Court holding only that defendants have no right to compel arbitration. Also, of course, any failure by defendants to adhere to this Court’s prior order forbidding them from participating in the Swiss arbitrations may still be relevant to the assessment of issues of willfulness and contempt still relevant to the instant case.
As
to the twelfth motion,
plaintiffs move to hold defendants in a further act of civil contempt for their failure to comply with the Court’s Memorandum Order, dated January 6, 2003, which,
inter alia,
directed defendants, their proxies, and all others in concert with them “to take all steps necessary to withdraw and cause to be dissolved the Turkish injunction granted on November 27, 2002 and the action on which it is premised, and enjoin[ed] defendants from initiating any similar proceeding.” Memorandum Order, dated January 6, 2003, 2003 WL 56998 at *2-3. Against the background of the defendants’ prior acts of contempt,
see
Opinion and Order, dated August 22, 2002; Order, dated October 15, 2002; Memorandum Order, dated January 6, 2003, and for the further reasons set forth in the Findings of Fact,
infra,
the Court finds by clear and convincing evidence that the defendants have unreasonably failed to comply with the requirements of the January 6, 2003 Order.
See EEOC v. Local 580,
925 F.2d 588 , 594 (2d Cir.1991). Further, as the aforementioned findings make plain, defendants’ non-compliance was willful and was purposely designed to obstruct the proceedings before this Court. Accordingly, the Court hereby finds defendants in civil contempt for their non-compliance with the January 6 Order. The related issue of appropriate sanction to compel compliance is considered below in Part II.
As
to the thirteenth motion,
plaintiffs move for attorneys’ fees and expenses as prevailing plaintiffs on their federal claims. As to the RICO claims, the motion is denied as moot and without prejudice to reinstatement should plaintiffs ultimately prevail on their RICO claims if and when they become ripe and are reinstated. As to the federal computer hacking claims, the motion is denied with prejudice, since these claims have now been dismissed with prejudice.
As
to the fourteenth motion,
non-party HSBC Mortgage Corporation (USA) (“HSBC”) moves to modify the Court’s prior orders of attachment to provide, in effect that, certain real properties present
*511
ly attached can be sold pursuant to mortgage foreclosure, provided the proceeds are deposited with the United States Marshal for the Southern District of New York and become subject to the attachment, at which point the attachment orders shall not thereafter be liens on the real properties themselves. Having satisfied itself that no party to this litigation will be prejudiced by such modification, the Court hereby grants the motion.
Having disposed of the motions,
22
the Court next turns to the merits of the remaining state law claims and matters related thereto:
II.
The Merits
Findings of Fact
The Court makes the following findings of fact based on the evidence of record, reasonable inferences drawn therefrom (including negative inferences drawn from false testimony), assessment of credibility and demeanor, and resolution of conflicts in the evidence. Exhibit and testimonial references cited below indicate some, though not necessarily all, of the direct evidence pertaining to a given finding but not necessarily the inferences drawn therefrom, which in some cases depend on assessment of the entire record.
Plaintiffs and their Affiliates
1.Plaintiff Motorola Credit Corporation (“MCC”), an international supplier of telecommunications equipment, is a wholly owned subsidiary of Motorola, Inc. Both MCC and Motorola, Inc. have primary offices in Illinois. MCC provides financing for certain customers of Motorola, Inc. and affiliated companies.
See
Plaintiffs’ Trial Exhibit (“PT”) 458 (Edward Hughes testimony at preliminary injunction hearing) at 8,12-18.
2. Motorola Ltd. is a company based in the United Kingdom that manufactured the cellular infrastructure equipment purchased by the Uzan-controlled company, Telsim Mobil Telekomunikayson Hizmet-leri A.S. (“Telsim”), for the construction of its cellular telephone network.
3. Motorola Turkey is a company based in Turkey that provided some services with respect to Telsim’s network and that sold certain handsets to Telsim.
4. Plaintiff Nokia Corporation (“Nokia”), headquartered in Finland, is a worldwide supplier of telecommunications equipment. Nokia provided Telsim with switching equipment and related services. Defendants
5. Defendant Kemal Uzan is a citizen and domiciliary of the Republic of Turkey. Kemal Uzan is also an' officer, director and/or owner of various companies controlled by the Uzans.
See
PT-232 (Rumeli Holding Annual Report); PT-442 (Thomas Brunner Deposition) at 27.
6. Defendant Murat Hakan Uzan (“Hakan Uzan”) is a citizen and domiciliary of the Republic of Turkey and also is a citizen of the Kingdom of Jordan. Hakan Uzan is an officer, director and/or owner of various Uzan-controlled companies. Hak-an Uzan is the son of defendant Kemal Uzan.
See
PT-436 (Responses to MCC Requests to Admit) at Response No. 4; PT-232 (Rumeli Holding Annual Report); PT-233 (Telsim marketing materials); Answer ¶ 6.
7. Defendant Cem Cengiz Uzan (“Cem Uzan”) is a citizen and domiciliary of the
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Republic of Turkey and also is a citizen of the Kingdom of Jordan. Cem Uzan is 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.
See
PT-436 (Responses to MCC Requests to Admit) at Response No. 11; PT-232 (Rumeli Holding Annual Report); Answer 17.
8. Defendant Melahat Uzan is a citizen and domiciliary of the Republic of Turkey. Melahat Uzan is the wife of defendant Kemal Uzan, and holds positions in various of the Uzan-controlled entities.
See
PT-436 (Responses to MCC Requests to Admit) at Response No. 26; PT-176 (Rumeli Cimen-to Charter Agreement, listing her as a “founder”); PT-178 (Registration and Approval of the Rumeli Cimento Charter Agreement); PT-179 (Rumeli Telekom Contract of Incorporation, listing her as a “foundation shareholder”); Answer ¶ 8.
9. Defendant Aysegul Akay (“Akay”) is a resident of Istanbul, Turkey. Akay is a director and/or owner of various Uzan-controlled companies. Akay is the daughter of defendant Kemal Uzan and the sister of defendants Hakan Uzan and Cem Uzan.
See
Preliminary Injunction Exhibit (“PI”) 26; (Rumeli Telefon board resolution); PI-29 (Standart Telekom articles of incorporation); PI-30 (Telsim board resolution); PT-177 (Rumeli Cimento corporate resolution); Answer ¶ 9.
10. Defendants Kamal Uzan, Hakan Uzan, Cem Uzan, Melahat Uzan, and Akay are collectively referred to here as the “Uzans” or the “Uzan family.”
11. Defendant Antonio Luna Betanc-ourt (“Luna”) is a citizen of Mexico. Luna is a close associate of the Uzan family and has served as a director of numerous Uzan-controlled companies.
See
PT-284 (Appendix 7 to Samuel Report) at 5-22, 24-26 (summary of bank transactions including instances in which Luna transacted business for various Uzan offshore companies); PT-1135 (letter dated May 20, 1998 from Luna to Nokia).
12. 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 in Istanbul, Turkey. Defendants Cem Uzan and Hakan Uzan each own 39.4% of Stan-dart Paz, and Akay owns another 20%, so that 98.8% of Standart Paz’s stock is owned by the Uzans.
See
PT-218 (Stan-dart Paz shareholder registry);
see also
PT-436 (Responses to MCC Requests to Admit) at Response Nos. 42, 43; Answer ¶ 11.
13. Defendant Standart Telekomunika-syon Bilgisayar Hizmetleri A.S. (“Standart Telekom”) is a corporation organized under the laws of the Republic of Turkey with its principal place of business in Istanbul, Turkey. Defendants Cem Uzan and Hakan Uzan each own 39.4% of Stan-dart Telekom, and Akay owns another 20%, so that 98.8% of Standart Telekom’s stock is owned by the Uzans.
See
PI-29 (Standart Telekom articles of incorporation); PI-37 (Standart Telekom shareholder registry); PT-436 (Responses to MCC Requests to Admit) at Response Nos. 45-49; Answer ¶ 12.
14. Defendant Unikom Iletism Hizmet-leri Pazarlama A.S. (“Unikom”) is a corporation organized under the laws of the Republic of Turkey with its principal place of business in Istanbul, Turkey. Rumeli Telekom A.S. (“Rumeli Telekom”), another Turkish company controlled by the Uzan family, owns 90% of the stock of Unikom.
See
PT-436 (Responses to MCC Requests to Admit) at Response Nos. 53-55; Answer ¶ 13.
Procedural Background
15. Plaintiffs filed this action on January 28, 2002. On that same day, plaintiffs
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sought an ex parte temporary restraining order commanding defendants to, among other things, deposit 73.5% of Telsim’s stock into the Court’s registry and to refrain from further diverting any assets from Telsim. The Court granted the temporary restraining order and set a hearing for February 11, 2002 to determine whether the restrictions placed upon defendants should be continued.
•16. At an in-court conference on February 1, 2002, defendants through their counsel Robert F. Serio Esq., of the law firm of Gibson, Dunn & Crutcher LLP (who at the time represented all defendants), requested a postponement of the February 11, 2002 hearing, so that it could be consolidated with a full preliminary injunction hearing, but, pending that hearing, consented to continuation of all of the restrictions placed upon defendants by the temporary restraining order other than the requirement that they deposit Telsim stock into the Court’s registry and requested leave to file a motion to modify the temporary restraining order so that defendants would not be required to deposit Telsim’s stock into the Court’s registry. The Court set a briefing schedule for defendants’ motion to modify the temporary restraining order, and scheduled the preliminary injunction hearing for April 9, 2002.
17. On February 7, 2002, defendants filed their motion to modify the temporary restraining order. In those papers, defendants consented to all portions of the temporary restraining order until a decision was rendered on plaintiffs’ preliminary injunction motion, other than the requirement that defendants deposit Telsim’s stock into the Court’s registry.
18. On February 14, 2002, after receiving further briefing, the Court issued an opinion and order on defendants’ motion to modify the temporary restraining order. Although the Court rejected defendants’ argument that the Court lacked the power to order the deposit of Telsim’s stock into the Court’s registry, the Court granted defendants’ motion as a matter of prudence, recognizing that a full evidentiary hearing on plaintiffs’ preliminary injunction motion was scheduled to begin on April 9, 2002.
19. On March 15, 2002, defendants filed an opposition to plaintiffs’ motion for a preliminary injunction. Included in that filing were sworn declarations from Kemal Uzan, Melahat Uzan, Hakan Uzan, Akay, Luna, and representatives of the three corporate defendants.
20. On March 20, 2002, defendants served two motions to dismiss plaintiffs’ complaint and to compel arbitration. All of the defendants other than Cem Uzan asserted the defense of lack of personal jurisdiction. Counsel for defendants subsequently confirmed in open court (at the preliminary injunction hearing) that Cem Uzan was not contesting personal jurisdiction.
See
PT-458 (transcript of PI hearing) at 796-97. It was not until August 5, 2002, however, during the oral argument before the Court of Appeals, that all of the defendants unequivocally consented to arbitration.
See
Transcript of Oral Argument Before the Court of Appeals, dated August 5, 2002, at 38-39.
21. On March 25, 2002, defendants filed a motion seeking a “blocking order” that would render Hakan Uzan immune from service of process if he appeared at the preliminary injunction hearing. In an order dated April 1, 2002, the Court denied defendants’ motion as insufficiently supported. (However, the Court subsequently granted a motion for a blocking order in connection with the contempt hearing,
infra.)
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22. On March 22, 2002, the Court entered a Case Management Plan and Scheduling Order after receiving comments from both sides. On April 3, 2002, the parties exchanged initial disclosures as required by the Case Management Plan and Scheduling Order.
23. The preliminary injunction hearing began as scheduled on April 9, 2002 and concluded on April 18, 2002. The Court heard testimony on April 9, 10, 12, 15, and 16, 2002, and heard oral argument from counsel on April 18, 2002.
24. The preliminary injunction hearing was a fully contested hearing. Plaintiffs, who had the burden of proof, called a total of seven witnesses, namely, Edward Hughes, Ernst Kramer, Dr. Fadlullah Cer-rahoglu, Randy Rosetta, Ferda Yildiz, Allan Baxter, and Jeffrey Diamond, Esq. Defendants’ attorneys cross-examined all of these witnesses other than Mr. Diamond, a New York lawyer who has represented the Uzans for several years and who was called by plaintiffs for the purpose of establishing facts relevant to the issue of personal jurisdiction.
25. Defendants called a total of five live witnesses, namely, Fatih Azami, Dr. Omer Teoman, Professor Necmi Yuzbasioglu, Michael Coyne, and Gervase MacGregor. Mr. Azami, the Chief Financial Officer of Telsim, was also permitted to remain at defendants’ counsel table throughout the proceedings on defense counsel’s representation that “he is likewise a representative of the Uzan family.” PT-458 (Robert Ser-io statement at PI hearing) at 749. Additionally, each of the defendants other than Cem Uzan submitted a sworn statement that the Court received, including a seventy-six page declaration from Hakan Uzan. Defendants also submitted a declaration from Vincent Love, a witness who was available to testify but as to whom plaintiffs waived their right of cross-examination. However, although the Court had previously indicated its preference for live testimony over affidavits, none of the defendants elected to appear in person to testify at the preliminary injunction hearing.
26. On May 9, 2002, after receiving further briefing, the Court issued a preliminary injunction, ordering defendants to, among other things, deposit 73.5% of Tel-sim’s stock into the Court’s registry by May 24, 2002 and prohibiting defendants from taking any action to affect the status of the Telsim stock pledged to plaintiffs. The Court followed that order with an opinion dated May 21, 2002 detailing its findings that plaintiffs had proved, by clear and convincing evidence, both a strong likelihood of success on the merits and a strong likelihood that they would be irreparably harmed if the injunction did not issue.
27. On May 10, 2002, the day after the Court issued the preliminary injunction, defendants, in direct violation of the injunction and the prior temporary restraining order, took steps in Turkey to further dilute the Telsim shares pledged to plaintiffs. This was not revealed to the Court until discovered by plaintiffs on May 21, 2002.
28. On May 14, 2002, the firm of Baker Botts LLP, by R. Stan Mortenson, Esq., filed a notice of appearance on behalf of the individual Uzan defendants.
29. Beginning on or about April 19, 2002, at the instance of third parties acting in collusion with defendants, three injunctions were issued by local Turkish courts prohibiting the transfer of Telsim stock outside Turkey. Defendants expressly directed their U.S. counsel not to reveal this to the Court, or subsequently, to the Court of Appeals to which defendants appealed on May 22, 2002 for an emergency stay of
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the preliminary injunction. Defendants’ counsel did not reveal this information until May 28, 2002.
See
Opinion and Order, dated August 22, 2002, 2002 WL 1968301 at *5 & n.3.
30. As defendants had failed to comply with the preliminary injunction by failing to deposit 73.5% of Telsim’s stock into the Court’s registry and by taking action to dilute the value of the stock pledged to plaintiffs, plaintiffs moved on May 28, 2002 for a finding of civil contempt against defendants. The Court scheduled a hearing on the contempt motion for June 10, 2002.
31. At the June 10, 2002 hearing, defense counsel informed the Court that Hakan Uzan would like to appear to present live testimony on the contempt motion, but that he was concerned that plaintiffs would serve him with process during his appearance in New York and that the Court might use Hakan Uzan’s appearance to order him coercively confined pending compliance with the preliminary injunction motion. Plaintiffs, however, agreed not to serve any process on Hakan Uzan during his travel to New York for testimony on the contempt motion, and the Court gave Hakan Uzan “safe passage” by indicating that it would not issue a ruling on the contempt motion during the time that Hakan Uzan was in New York to testify. The Court scheduled a resumption of the contempt hearing for June 21 and 24, 2002 so that Hakan Uzan could appear to testify-
32. At the June 10, 2002 hearing, defense counsel once again reconfirmed that Cem Uzan had waived any defense of lack of personal jurisdiction.
See
Transcript dated June 10, 2002, at 20 (statement by defendants’ counsel that “Mr. Cem Uzan, by not filing a motion has, for legal purposes, waived the defense [of lack of personal jurisdiction]”).
33. Hakan Uzan appeared and gave live testimony on both June 21 and 24, 2002. The Court made clear that Hakan Uzan was free to testify about virtually any issue relevant to the case, since it would all bear on his intent with regard to the contempt.
See
PT-459 (transcript of contempt hearing) at 26.
34. On August 22, 2002, the Court issued an order finding Hakan Uzan’s testimony incredible in material respects and holding defendants in civil contempt based on their violations of the preliminary injunction order.
See
Opinion and Order dated August 22, 2002. Nevertheless, the Court imposed a modest coercive fine of $1000 (doubling, however, each month) in the express hope that it would bring defendants into compliance.
35. On September 23, 2002, defendants — representing that they were intent on fully litigating the merits of the case— moved for a three-month extension of the October 15, 2002 cut-off set in the Case Management Plan. On October 1, 2002, the Court granted their request in part, extending the discovery cut-off until November 22, 2002.
36. Meanwhile, defendants had also represented to Magistrate Judge Maas, to whom certain discovery aspects of the case had been referred, that they intended to fully litigate the case on the merits.
See Motorola Credit Corp. v. Uzan,
02 Civ. 666(JSR) (FM), 2003 WL 203011 , at *2 (S.D.N.Y. Jan. 29, 2003). In response, by order dated September 13, 2002 (and over plaintiffs’ objections), Magistrate Judge Maas extended the limit on the number of depositions to twenty depositions per side, plus experts.
See
Transcript dated September 13, 2002, at 46-47.
37. On September 30, 2002, the Court issued an order denying defendants’ motion to dismiss plaintiffs’ complaint, and denying defendants’ motion to compel arbi
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tration.
See
Order, dated September 30, 2002; Memorandum Order, dated October 15, 2002.
38. On October 1, 2002, a hearing was held on plaintiffs’ request to increase the contempt sanctions. At that hearing, defendants requested additional time to comply with the Court’s May 9 preliminary injunction order, and represented that they would make diligent efforts to do so over the next six to eight weeks. Based on this representation, the Court issued a decision on October 15, 2002, keeping the contempt fines at the presently-set levels until November 26, 2002 but increasing the fine at the end of November 2002 to $100 million, with the fine to double each month thereafter.
See
Order dated October 15, 2002.
39. On October 15, 2002, defendants filed their answer to plaintiffs’ complaint. Defendants Hakan Uzan and Cem Uzan filed counterclaims and third-party claims, which they subsequently voluntarily dismissed on November 11, 2002.
40. By letter dated October 21, 2002, defendants moved to stay this lawsuit pending their appeal of the Court’s September 30 and October 15 orders. The Court denied this motion by Memorandum Order dated October 28, 2002.
41. On November 27, 2002, defendants obtained an
ex parte
order from a Turkish court purporting to enjoin this Court from proceeding with this action. On January 6, 2003, this Court issued an order enjoining defendants from proceeding with the Turkish suit and requiring them to take all steps necessary to have the injunction dismissed or withdrawn.
See
Memorandum Order dated January 6, 2003, 2003 WL 56998 at *2-3.
42. Despite periodic claims that they were appearing in this suit for limited purposes and/or that they were barred by the Turkish courts from defending this action, defendants filed more than seventy-five separate legal papers in this action, both in this Court and in the Second Circuit. Defendants’ counsel appeared more than twenty-nine times for hearings in this action.
43. Until November 2002, defendants also participated in discovery in this action. Defendants served document requests on plaintiffs, in response to which plaintiffs produced more than 96,000 pages of documents. Defendants also appeared on multiple occasions before Magistrate Judge Maas to seek orders compelling plaintiffs to produce documents, and other discovery. Ultimately, however, defendants refused to produce themselves for depositions or to produce most of the other discovery requested by plaintiffs, raising various objections that Judge Maas determined were spurious.
See Motorola Credit Corp. v. Uzan,
02 Civ. 666(JSR)(FM), 2003 WL 203011 , at *1-4 (S.D.N.Y. Jan. 29, 2003).
44. As a result, plaintiffs were able to obtain only five depositions, all of non-parties.
45. The Court had previously set a February, 2003 trial date. On January 24, 2003, defendants filed a statement reciting that they would not participate in person, or through counsel, in the trial of this action, purportedly on the basis of the Turkish injunction that they had obtained contumaciously in violation of this Court’s order.
See
Defendants’ Statement of Intention Regarding the Trial Scheduled for February 10, 2003, dated January 24, 2003.
46. On January 31, 2003, the Court granted plaintiffs’ motion to withdraw their jury demand. In light of the fact that defendants had previously contested both the preliminary injunction hearing and the contempt hearing, the Court permitted plaintiffs’ counsel to rely at trial on
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evidence from those prior hearings, as well as to present new evidence.
47. At the February 18, 2008 trial, plaintiffs principally relied on testimony adduced at the preliminary injunction hearing, a hearing in which defendants’ counsel had participated and vigorously cross-examined plaintiffs’ witnesses. In addition, plaintiffs presented additional testimony by declaration from Edward Hughes, Ernst Kramer, Anthony Samuel, and Ian Menzies. The four witnesses who submitted declarations all appeared in court on February 18, 2003 in order to take the stand and respond to any questions posed by the Court. Of particular importance was plaintiffs’ expert, Mr. Samuel, whose report and testimony evidences the huge diversions of funds from Telsim by defendants. Plaintiffs also relied on documentary evidence, much of which was evidence admitted into the record at the preliminary injunction hearing. Neither defendants nor their counsel appeared for trial.
Personal Jurisdiction
48. Notwithstanding defendants’ refusal to be deposed, plaintiffs, as the Court has previously ruled,
see
Opinion dated May 21, 2002, 202 F.Supp.2d at 251 ; Order dated September 30, 2002, have carried their burden of establishing personal jurisdiction over defendants. Indeed, given Cem Uzan’s concession of personal jurisdiction and the Court’s findings,
infra,
that he participated from New York in furthering a civil conspiracy that included the other defendants that alone would be sufficient to establish personal jurisdiction over all defendants. Also, regarding the Illinois state counts, it is undisputed that various of the Uzan defendants signed numerous documents relating to the transactions here in issue that were forwarded to MCC in Illinois. Additionally, however, the following facts support personal jurisdiction as to each defendant.
Kemal Uzan
49. Kemal Uzan owns real property in New York at 100 United Nations Plaza, # 45A, New York, New York 10017.
See
PT-436 (Responses to MCC Requests to Admit) at Response No. 2; PT-453 (Declaration of Kemal Uzandated March 14, 2002 (“K. Uzan Decl.”)) ¶ 2; PT-448 (Kemal Uzan witness statement in English proceeding) ¶ 4.
50. Kemal Uzan admits to “maintaining] bank accounts at two New York financial institutions.” PT-453 (K. Uzan Decl.) ¶ 6.
51. Kemal Uzan has had frequent and extensive contacts with the New York City branch of UBS AG (“UBS New York”).
52. For example, Kemal Uzan has maintained a personal bank account with UBS New York since 1997. He has used this account to pay condominium fees and utility expenses associated with his New York real property.
See
PT-142 (UBS letter attaching Kemal Uzan’s bills dated August 14, 2002); PT-181 (account master agreement dated July 31,1997).
53. Kemal Uzan also serves as a client contact for Telsim’s account at UBS New York. According to the account master agreement and power of attorney, he is the only individual with full signatory authority on the account.
See
PT-185 (account master agreement dated March 9, 1998); PT-186 (power of attorney dated March 20,1998).
54. Kemal Uzan is likewise a client contact for Rumeli Cimento’s account at UBS New York. According to the account master agreement, he is the only individual with full signatory authority on the account.
See
PT-180 (account opening dated July 21, 1997); PT-182 (account master agreement dated July 31,1997).
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55. Kemal Uzan is listed as a client contact on UBS New York’s account for Yapi ve Ticaret (“Yapi”).
See
PT-134 (client commercial profile dated March 22, 1999). This account has had a balance as high as $200 million.
See
PT-285 (bank statement) at UBS 1 00734.
56. Kemal Uzan is listed as a client contact for Rumeli Telekom’s account with UBS New York.
See
PT-192 (client commercial profile dated September 25, 1998).
57. Kemal Uzan negotiated with UBS New York for a $300 million loan to Tel-sim, which was combined with funds from MCC to purchase a Global Standard for Mobile (“GSM”) license from Turkey in 1998. The loan was guaranteed by the cash deposits of Rumeli Cimento, Yapi, and Kemal Uzan himself. In April 1999, the loan was renewed by UBS New York for a year. In 2000, Kemal Uzan arranged for the loan to be paid off when he knew that such payment was in violation of the Telsim’s agreements with MCC.
See
PT-127 (UBS credit protocol dated April 3, 1998); PT-131 (Telsim credit approval dated April 23, 1999); PT-435 (Samuel Report) at 85-92 (discussing improper repayment).
58. In association with both his personal bank account and the accounts of Rume-li Group companies with UBS New York, Kemal Uzan has had extensive contacts with UBS representatives (mainly in New York City) for the purpose of transacting business through New York. The following table summarizes some of those contacts that have been recorded in UBS Client Visit Reports/Call Reports:
Exhibit Description
PT-147 Meeting in New York 10/7/97
PT-145 Meeting in New York 12/30/97
PT-148 Meeting in New York 4/2/98
PT-148 Meeting in New York 4/7/98
PT-148 Meeting in Istanbul 6/16/98
PT-148 Meeting in New York 7/17/98
PT-148 Meeting in New York 10/20/98
PT-148 Meeting in New York 10/11/96
PT-148 Telephone Conversation 5/1/97
PT-148 Telephone Conversation 7/10/97
PT-148 Telephone Conversation 3/2/98
PT-148 Telephone Conversation 4/15/98
PT-148 Meeting in Istanbul 11/20/97
PT-148 Meeting in New York 1/29/01
PT-123 Meeting 3/4/99
PT-124 Meeting 3/20/00
59. Kemal Uzan also maintains a personal bank account with the New York branch of JP Morgan Chase (formerly Chase Manhattan Bank).
See
PT-436 (Responses to MCC Requests to Admit) at Response No. 227; PT-285 (bank statement) at Chase 0006 .
60. Kemal Uzan’s passport indicates that he has entered the United States on at least twenty occasions since 1997. On nineteen of those trips he traveled to New York City.
See
PT-225 (passports).
61. In addition, Kemal Uzan admits in his declaration to having visited New York “approximately three times each year since January 1, 1997” and to “hav[ing] spent a maximum of approximately ten days at the New York apartment during each visit since January 1, 1997.” PT-453 (K. Uzan Decl.) ¶ 3. Thus, by his own admission, he has spent approximately thirty days a year in New York each year since 1997. He also admits in his declaration to having visited the United States, other than New York, five times since January 1, 1997.
See
PT-453 (K. Uzan Decl.) ¶ 7.
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Hakan Uzan
62. Hakan Uzan owns real property in New York at 100 United Nations Plaza # 40E, New York, New York 10017, and also at 100 United Nations Plaza #46B, New York, New York 10017.
See
PT-436 (Responses to MCC Requests to Admit) at Response Nos. 8 and 9.
See also
PT-459 (Hakan Uzan testimony at contempt hearing) at 96; PT-454 (Declaration of Hakan Uzan dated March 14, 2002, (“H. Uzan Decl. dated March 14, 2002”)) ¶ 185.
63. Hakan Uzan possesses a New York driver’s license, which he has had since 1988 and which lists his address as 100 United Nations Plaza, # 45A, New York, New York, 10017.
See
PI-43 (N.Y. Driving Record Abstract); PT-436 (Responses to MCC Requests to Admit) at Response No. 196;
see also
PT-459 (Hakan Uzan testimony at contempt hearing) at 108.
64. Hakan Uzan also owns vehicles registered in the United States.
See
PT-20 (vehicle registrations and related documents).
65. In April 1999, Hakan Uzan purchased apartments # 89A and # 89B at 845 United Nations Plaza, New York, New York, 10017 for a combined price of over $14 million. These apartments made up the second highest floor (Cem Uzan purchased the top floor for $17 million) in the new Trump World Tower. Between April 1999 and October 2001, Hakan Uzan paid over $3 million dollars toward the purchase of the apartments.
See
PT-384 (Cem Uzan’s purchase agreement for # 89A); PT-385 (purchase agreements of April 26, 1999); PT-435 (Samuel Report) at 95-97 (describing payments).
66. In October 2001, Hakan Uzan refused to close on the Trump World Tower apartments. He and Cem Uzan then availed themselves of New York courts by bringing an action attempting to rescind their purchase agreements and to recover their down payments. In their complaint in that action, Hakan Uzan asserted that he maintained residences in the County, City, and State of New York.
See
PI-102 (Complaint,
Cem and Hakan Uzan v. 845 UN Plaza
Partnership);
see also
PT-459 (Hakan Uzan testimony at contempt hearing) at 96-97.
67. Hakan Uzan has been represented for several years by the New York law firm of Marcus, Rosenberg, and Diamond (“MRD”) in New York real estate transactions and other personal matters. The following is a summary of matters on which MRD performed work for Hakan Uzan, as demonstrated by MRD billing records:
Exhibit Client Matter
PI-126 Cem and Hakan Uzan v. 845 ' UN Plaza Partnership
PI-129 Purchase of Apartments #40E and #46B at 100 UN Plaza
PI-130 Hakan Uzan Airplane Purchase
PI-131 Trump World Tower Apartment Purchase
PI-134 Star TV, USA Office Lease at 450 Park Ave.
PI-137 Cem and Hakan Uzan Contract Rescission
PI-139 Star TV, USA General Representation
68. Hakan Uzan appointed Luna his attorney in fact for the purchases of apartments #40E and #46B at 100 United Nations Plaza.
See
PI-45 (powers of attorney).
69. Flight logs indicate that Hakan Uzan has traveled to the United States on at least twenty-seven occasions between 1997 and 2002.
See
PT-175 (flight logs). In addition, Hakan Uzan admits that he has visited New York “approximately
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three times each year since January 1, 1997” and has “spent a maximum of approximately six total days at the New York apartments during each visit since January 1, 1997.” PT-454 (H. Uzan Decl. dated March 14, 2002) ¶ 186. Thus, by his own admission, Hakan Uzan has been in New York City approximately eighteen days a year since 1997. Hakan Uzan’s Turkish passport indicates that he has entered the United States on nine occasions between 1999 and 2001.
See
PT-173 (passport log).
70. Hakan Uzan maintains a personal bank account with UBS New York. He has used this account to pay condominium fees and utility expenses associated with his New York property.
See
PT-143 (UBS letter to Hakan Uzan dated August 14, 2002 attaching bills); PT-164 (UBS transaction detail for Hakan Uzan dated January 1, 2001 to February 7, 2001).
71. Hakan Uzan has joint signature authority along with Cem Uzan and Akay over Kemal Uzan’s UBS New York account.
See
PT-181 (account master agreement dated July 31, 1997); PT-183 (power of attorney).
72. Hakan Uzan also maintains personal bank accounts with the New York branches of JP Morgan Chase (formerly Chase Manhattan Bank) and HSBC USA.
See
PT-436 (Responses to MCC Requests to Admit) at Response Nos. 225, 227; PT-285 at Chase 0576 , HBUS 00332.
73. Hakan Uzan maintains joint signatory authority with Cem Uzan and Akay over Rumeli Cimento’s account with UBS New York.
See
PT-177 (Rumeli Cimento corporate resolutions); PT-180 (account opening dated July 21, 1997); PT-182 (account master agreement dated July 31, 1997).
74. Hakan Uzan maintains joint signatory authority with Cem Uzan and Akay over Telsim’s account with UBS New York.
See
PT-185 (account master agreement dated March 9, 1998); PT-186 (power of attorney of March 20,1998).
75. Hakan Uzan maintains joint signatory authority with Cem Uzan and Akay over Rumeli Telekom’s account with UBS New York.
See
PT-191 (account master agreement dated August 26, 1998); PT-192 (commercial client profile dated September 25,1998).
76. Hakan Uzan also transacts business extensively in New York and in other parts of the United States in his assorted roles with Rumeli Group companies. In 2001, Hakan' Uzan filed and obtained a Non-Immigrant Visa for his role as Chairman of Rumeli Telecom, USA, which incorporated in New York in November 2000.
See
PI-44 (certificate of incorporation); C-49 (non-immigrant visa petition);
see also
PT-454 (H. Uzan Decl. dated March 14, 2002) ¶ 187; PT-459 (Hakan Uzan testimony at contempt hearing) at 105-108. In connection with this business endeavor, Rumeli Telecom leased office space on Park Avenue.
See
PT-459 (Hakan Uzan testimony at contempt hearing) at 104;
see also
PT-458 (Jeffrey Diamond testimony at PI hearing) at 228-229.
77. On numerous occasions, while working in the United States, Hakan Uzan contacted representatives of MCC in furtherance of the activities that are at issue in this case. For example, in an email to Edward Hughes dated December 27, 1999, relating to the loans here in issue, Hakan Uzan represented that he was “working” in New York and could be reached at his “home number” or his “New York mobile” number.
See
PI-83 (email dated December 27, 1999 from Hakan Uzan to Edward Hughes);
see also
PT-459 (Hakan Uzan testimony at contempt hearing) at 103.
78. Hakan Uzan met with MCC in New York on April 11, 2001 and, in order to forestall the possibility that MCC would
*521
foreclose on the collateral, falsely represented to MCC that Telsim would take no action that would adversely affect MCC’s ability to recover on its loans to Telsim. The Court finds that Hakan Uzan knew this representation was false when made, as shown by the overall fraudulent scheme described
infra
and also by the fact that less than two weeks later the Uzans, through Telsim and other entities they controlled, diluted the value of the collateral by two-thirds.
See
PT-458 (Edward Hughes testimony at PI hearing) at 80-81;
see also
PT-459 (Hakan Uzan testimony at contempt hearing) at 102-103.
Cem Uzan
79. As previously found, Cem Uzan does not contest personal jurisdiction over him. For example, as stated by his then attorney, Robert Serio, Esq., at the preliminary injunction hearing:
Mr. Serio: Your Honor, if I might, Cem Uzan has not raised a personal jurisdiction defense, and so I wonder if these questions are relevant.
Mr. Brown: I guess the issue is whether Cem Uzan consents to jurisdiction.
The Court: I thought he had.
Mr. Serio: Your Honor, we had not raised any personal jurisdiction defense in this case.
The Court: With respect to him?
Mr. Serio: With respect to Cem.
The Court: So I take that to be de facto consent.
Mr. Serio: We certainly assume it would be so taken.
PT-458 (transcript of PI hearing) at 796-97.
80. Cem Uzan owns the following real property in New York: 515 Park Ave. # 19, New York, New York 10022; 515 Park Ave. # 3K, New York, New York 10022; 515 Park Ave. Storage Unit 3K, New York, New York 10022; 100 United Nations Plaza # 29C, New York, New York 10017; 845 United Nations Plaza # 80B, New York, New York 10017.
See
PT-436 (Responses to MCC Requests to Admit) at Response Nos. 17, 18, 19, 20, 21;
see also
PT-447 (Cem Uzan Declaration in English proceeding) ¶ 4.
81. Cem Uzan’s wife and children currently reside in the United States, as they did in 2001.
See
PT-436 (Responses to MCC Requests to Admit) at Response Nos. 22, 23;
see also
PT-459 (Hakan Uzan testimony at contempt hearing) at 92-93.
82. Cem Uzan’s children currently attend school in New York, as they did in 2001.
See
PT-436 (Responses to MCC Requests to Admit) at Response Nos. 24, 25;
see also
PT-459 (Hakan Uzan testimony at contempt hearing) at 92-93.
83. Cem Uzan has possessed a New York Driver’s License from 1998 to the present.
See
PT-436 (Responses to MCC Requests to Admit) at Response Nos. 197, 198.
84. In April 1999, Cem Uzan purchased apartments # 90A and # 90B at 845 United Nations Plaza, New York, New York, 10017, for a combined price of over $17 million. These apartments made up the top floor in the new Trump World Tower (Hakan Uzan purchased the second highest floor for $14 million). Between April 1999 and October 2001, Cem Uzan paid over $3 million toward the purchase of the apartments.
See
PT-380 (purchase agreement for # 90B); PT-386 (purchase agreement for # 90A); PT-435 (Samuel Report) at 95-97 (describing payments).
85. In October 2001, Cem Uzan refused to close on the Trump World Tower apartments. He and Hakan Uzan then availed themselves of New York courts by bringing an action attempting to rescind the purchase agreements and to recover their down payments. In their complaint
*522
in that action, Cem Uzan asserted that he maintained residences in the County, City, and State of New York.
See
PI-102 (Complaint, C
em and Hakan Uzan v. 845 UN Plaza Partnership).
86. Cem Uzan has been represented by the New York law firm MRD in New York real estate transactions and other personal matters. The following is a summary of matters on which MRD performed work for Cem Uzan, as demonstrated by MRD billing records:
Exhibit Client Matter
PI-126 Cem and Hakan Uzan v. 845 UN Plaza Partnership
PI-128 Cem Uzan Purchase of Connecticut House
PI-131 Trump World Tower Apartment Purchase
PI-133 Cem Uzan Purchases at 515 Park Ave.
PI-137 Cem and Hakan Uzan Contract Rescission
PI-139 Star TV, USA General Representation
87. Cem Uzan has recorded powers of attorney with New York County in connection with his real estate purchases. For example, he appointed Diamond and Marcus his attorneys in fact for the purchases of apartments at 515 Park Avenue.
See
PI-46 (power of attorney).
88. Flight logs indicate that Cem Uzan has traveled to the United States on at least twenty-six occasions between 1997 and 2002.
See
PT-175 (flight logs). Cem Uzan’s passport shows that he has entered the United States on at least eleven occasions between 2000 and 2002.
See
PT-173 (passport log).
89. Cem Uzan has maintained a personal bank account with UBS New York.
See
PT-170 (Cem Uzan account statement for period dated April 1, 1996 to April 30, 1996).
90. Cem Uzan has joint signature authority along with Hakan Uzan and Akay over Kemal Uzan’s UBS New York account.
See
PT-181 (account master agreement dated July 31, 1997); PT-183 (power of attorney).
91. Cem Uzan also maintains personal bank accounts for himself and his wife with the New York branch of HSBC USA.
See
PT-436 (Responses to MCC Requests to Admit) at Response No. 225; PT-285 (bank statement) at HBUS 378-505.
92. Cem Uzan maintains joint signatory authority with Hakan Uzan and Akay over Rumeli Cimento’s account with UBS New York.
See
PT-177 (account signatories dated December 15, 1992); PT-180 (account opening dated July 21, 1997); PT-182 (account master agreement dated July 31,1997).
93. Cem Uzan maintains joint signatory authority with Hakan Uzan and Akay over Telsim’s account with UBS New York.
See
PT-185 (account master agreement dated March 9, 1998); PT-186 (power of attorney dated March 20,1998).
94. Cem Uzan maintains joint signatory authority with Hakan Uzan and Akay over Rumeli Telekom’s account with UBS New York.
See
PT-191 (account master agreement dated August 26, 1998); PT-192 (commercial client profile dated September 25,1998).
95. Cem Uzan also transacts business extensively in New York and in other parts of the United States in his assorted roles with Rumeli Group companies. For example, Cem Uzan oversees the business of Star Newspaper, USA and Star Television USA, both of which are incorporated in New York.
See
PI-44 (incorporation documents). Cem Uzan directed the law firm of MRD to form these companies.
*523
See
PT-458 (Jeffrey Diamond testimony at PI hearing) at 214. He employed a personal assistant in New York, Nil Erbil, who worked at Cem Uzan’s direction on these matters and others.
See id.
at 214-15. These entities also negotiated a léase for office space on Park Avenue.
See id.
at 228-229.
Melahat Uzan
96. Melahat Uzan owns real property in New York at 100 United Nations Plaza #23B, New York, New York, and 100 United Nations Plaza # 26A, New York, New York. She has owned # 23B since July 1996.
See
PT-436 (Responses to MCC Requests to Admit) at Response Nos. 27, 28; PT-220 (power of attorney for # 23B); PT-221 (contract for sale of # 23B); PT-223 (checks for Melahat Uzan purchase of # 23B);
see also
PT-451 (Declaration of Melahat Uzan dated March 14, 2002 (“M. Uzan Decl.”)) at ¶ 2.
97. Melahat Uzan has collected rent on one or more of her properties in New York. For example, she rented #23B to Luna following water damage in his apartment in 1999.
See infra.
She admits to having purchased the apartment as an investment.
See
PT-451 (M. Uzan Decl.) ¶ 2.
98. Melahat Uzan has held a New York driver’s license at some time between April 24, 1998 and now. The license listed her address as 100 United Nations Plaza # 45A, New York, New York.
See
PT-436 (Responses to MCC Requests to Admit) at Response No. 200; PI-43 (license information).
99. Melahat Uzan was represented by the New York law firm MRD in her purchase of 100 United Nations Plaza # 23B.
See
PI-138 (MRD billing records for # 23B); PT-224 (letter from Jeffrey Diamond attaching deed to # 23B).
100. Melahat Uzan’s passport indicates she has entered the United States at least ten times since 1997, nearly always in New York.
See
PT-173 (passport log); PT-219 (Melahat Uzan passports). In addition, she admits to having visited New York approximately four times each year since January 1, 1997 and having spent a maximum of approximately ten days in New York during each such visit.
See
PT-451 (M. Uzan Decl.) ¶ 3. Thus, by her admission, she has spent approximately forty days in New York each year since 1997. In addition, she states that she has visited the United States (other than New York) five times since January 1, 1997.
Id.
¶ 9.
101. Melahat Uzan maintains a personal bank account at JP Morgan Chase (formerly Chase Manhattan Bank) in trust for Akay.
See
PT-285 (bank statement) at Chase 0107 .
See also
PT-451 (M. Uzan Decl.) ¶ 8.
102. Melahat Uzan is listed as a founder of Rumeli Cimento on that corporation’s 1992 charter and the registration form for the charter. Rumeli Cimento transacts business in New York through its UBS account.
See
PT-176 (Rumeli Cimento charter agreement); PT-178 (Rumeli Ci-mento registration of charter); PT-180 (Rumeli Cimento UBS account opening). Aysegul Akay
103. Aysegul Akay’s passport indicates that she has entered the United States on at least four occasions since 1997, always in New York.
See
PT-173 (passport log). She admits to having visited New York “approximately two times each year since 1997” and to having spent a “maximum of approximately ten days in New York” during each such visit. PT-452 (Declaration of Aysegul Akay dated March 14, 2002) ¶ 3. In addition, she states that she has visited the United States (other than New York) four times since January 1, 1997.
See id.
¶ 8 .
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104. A sales agent for 845 United Nations Plaza swore under oath that Akay purchased one of the Trump World Tower apartments.
See
C-112 (Summary Judgment Motion and Affidavit of Sherry To-bak dated December 27, 2001).
105. Akay transacts business for the Rumeli Group companies through their New York bank accounts. On nearly all such accounts, she has signatory authority.
106. Akay maintains joint signatory authority with Hakan Uzan and Cem Uzan over Rumeli Cimento’s account with UBS New York.
See
PT-177 (account signatories dated December 15, 1992); PT-180 (account opening dated July 21, 1997); PT-182 (account master agreement dated July 81,1997).
107. Akay maintains joint signatory authority with Hakan Uzan and Cem Uzan on Telsim’s account with UBS New York.
See
PT-185 (account master agreement dated March 9, 1998); PT-186 (power of attorney dated March 20,1998).
108. Akay maintains joint signatory authority with Hakan Uzan and Cem Uzan on Rumeli Telekom’s account with UBS New York.
See
PT-191 (account master agreement dated August 26, 1998); PT-192 (commercial client profile dated September 25,1998).
109. Akay maintains joint signatory authority with Hakan Uzan and Cem Uzan on Kemal Uzan’s personal account with UBS New York.
See
PT-181 (Kemal Uzan account master agreement dated July 31, 1997).
Antonio Luna Betancourt
110. Luna owns the following real property in New York: 100 United Nations # 40E, New York, New York 10017; 845 United Nations Plaza # 59C, New York, New York 10017; .845 United Nations Plaza # 59D, New York, New York 10017.
See
PT-436 (Responses to MCC Requests to Admit) at Response No. 39; PT-381 (Luna purchase agreement for # 59C); PT-382 (Luna purchase agreement for # 59D); C-50 (deed for # 59C); PT-450 (Declaration of Luna dated March 14, 2002 (“Luna Deck”)) ¶ 2. He has stated that he bought these apartments primarily as an investment.
See
PT-450 (Luna Decl.) ¶ 2.
111. The purchase price of $2.36 million was funded by the Rumeli Group with monies Luna purportedly received from his “employment within the Rumeli Group.”
Id.; see also
PT-458 (Jeffrey Diamond testimony at PI hearing) at 207-OS, 211-12. The money was wired by the Rumeli Group to MRD’s Citibank account in New York.
See
PT-458 (Jeffrey Diamond testimony at PI hearing) at 207-08, 211-12.
112. In 1999, Luna was residing with his family at 100 United Nations Plaza in Apartment #40E (which he owns) when that apartment suffered water damage due to a leak from the floor above. While the apartment was repaired, Luna paid rent to Melahat Uzan and moved his family to her apartment (# 23B) in the same building.
See
PT-436 (Responses to MCC Requests to Admit) at Response Nos. 40, 41; C-109 (lease from Melahat Uzan to Luna).
113. Luna was represented by MRD in the dispute over payment for the water damage in his apartment in 1999. According to an MRD letter regarding this dispute, “Mr. Luna and his family were forced to move out of the apartment for six months, and considerable time and money [was] spent to repair the apartment and replace their belongings.” In addition, MRD represented Luna in his purchase of Apartments # 59C and # 59D in the Trump World Tower at 845 United Nations Plaza.
See
PI-132 (billing records for water damage); C-110 (letter dated
*525
January 10, 2000 from MRD to Hon. Mohammed Samhan); PI-135 (billing records for purchase of # 59C and # 59D).
114. Luna holds a New York Driver’s license.
See
C-48 (Luna’s driver’s license).
115. Hakan Uzan appointed Luna as his attorney in fact to coordinate and complete the purchases of Apartments # 40E and #46B at 100 United Nations Plaza.
See
PI-45 (powers of attorney).
116. Luna maintains bank accounts with the New York branches of UBS, JP Morgan Chase (formerly Chase Manhattan Bank), and HSBC USA.
See
PT-450 (Luna Decl.) ¶ 6; PT-156, 157 (Luna UBS client visit reports); PT-285 (Luna bank statement) at Chase 0693 ; PT-285 (HSBC transaction report) at HBUS 01054. He has used funds from the Chase account to pay for condominium fees and other expenses related to his property in New York.
See
PT-436 (Responses to MCC Requests to Admit) at Response Nos. 225, 227-28; PT-153 (UBS client visit report dated August 14, 2001); PT-19 (Luna check from Chase account); PT-285 (bank statement) at HBUS 01054.
117. Luna has frequently been in contact with representatives of UBS New York to carry out transactions for himself and the Uzans. The following table describes these contacts as reported in UBS Client Visit Reports/Call Reports:
Exhibit Description
PT-153 Meeting in New York 8/14/01
PT-154 Cash Withdrawal 8/14/01
PT-155 Cash Withdrawal 4/20/01
PT-156 Meeting in New York 4/12/01
PT-157 Meeting in New York 2/9/01
PT-158 Meeting in New York 11/28/00
PT-159 Meeting 3/4/99
PT-160 Telephone Conference 8/16/00
118. Luna facilitated the purchase of an aircraft for the Uzans from Bombardier through accounts at UBS, receiving a “substantial payment” as a commission.
See
PT-156 (client visit report dated April 12, 2001); PT-153 (client visit report dated August 14,2001).
119. Luna has been issued passports by a number of countries, including Italy, Monaco, and Mexico.
See
PT-436 (Responses to MCC Requests to Admit) at Response Nos. 202-05.
120. Luna has stated that he has visited New York “approximately six times each year since January 1, 1997” and has spent “a maximum of approximately eight days in New York during each visit since January 1, 1997.” PT-450 (Luna Decl.) ¶ 3. Thus, by his own admission, he has spent approximately forty-eight days in New York each year since 1997. In addition, he states: “[o]ther than New York, [he has] visited the United States twenty times since January 1, 1997.”
Id.
at ¶ 7 .
121. Luna has stated that he holds positions as “an officer” of the New York companies of Star TV and Rumeli USA and that he has conducted meetings for these corporations in New York in his official capacity.
Id.
at ¶ 4 .
122. Luna participated in negotiations between Telsim and MCC in December 1999 in Chicago that led to the Seventh Amendment, one of the financing agreements involved in this case.
See
PT-458 (Edward Hughes testimony at PI hearing) at 35.
123. Personal jurisdiction over the corporate defendants exists because they were, as detailed below, totally controlled by the Uzan defendants with respect to the transactions here in issue. In addition,
*526
further findings regarding jurisdiction over these entities is set forth
infra.
Joint Control and Foundation for Civil Conspiracy
124. The Uzan defendants, directly or indirectly, own or control more than 130 active companies, including two holding companies — Rumeli Holding A.S. (“Rumeli Holding”) and Prime Holding A.S. — as well as companies in the banking, cement, electricity, television, radio, newspaper, printing, insurance, construction, trade, jewelry, telecommunications, Internet, and sports industries.
See
PT-232 (Rumeli Holding Annual Report) at 12; PT-458 (Edward Hughes testimony at PI hearing) at 58-59; Answer ¶ 23; PT-325 (list of contact information for Uzan-controlled companies provided to UBS, with 62 different companies listed).
125. Specifically, the Uzan family directly or indirectly owns a majority interest in and controls the following companies:
Adabank AS (PT-232 at 9)
Adanaspor Spor Faaliyetleri AS (PT-232 at 9)
Alloy Aircraft Co., Ltd. (PT-403; PT-449)
Alpha International Co. Ltd. (PT-435, Appendix 4 at 8)
Altintas Altin ve Muceveherat (PT-437 at 16)
Ant Gazetecilik (PT-232 at 8)
Aysan Anadolu Yay Sanayi AS (PT-232 at 9)
Banko Musik AS (PT-232 at 9)
Bartin Cimento Sanayii Turk (PT-437 at 113)
Basintas Anadolu Basin Endustrisi (PT-437 at 63)
Beta Insaat ve Ticaret (PT-437 at 73)
Beyaz Basin Sanayi ve Ticaret AS (PT-437 at 84)
Bilgi Bilgisayar Ticaret AS (PT-437 at 62)
Birlesik Insaat Ticaret AS (PT-437 at 49)
Bis Organizasyon ve Menajerlik Ticaret AS (PT-437 at 253)
Brampton N.V. (PT-435 at app. 4, 7; PT-307; PT-341; PT-344; PT-348)
Brampton Holdings and Investment N.V. (PT-435, Appendix 4, at 1; PT-303; PT-340; PT-341; PT-344; PT-442 at 105, 107, 110 (Thomas Brunner Deposition))
BVS Bira Viski Su Sanayi (PT-437 at 174)
Cementownia Nowa Huta (Poland) (PT-232 at 9)
Clear Cut Ltd. (PT-435, Appendix 4, at 15)
Corfez Cimento ve Hazir Betón Sanayi ve Ticaret (PT-437 at 256)
Cukurova Elektrik AS (PT-437 at 271)
Demas Demir Mamulleri AS (PT-232 at 9)
Dogan Kardes Matbaaeilik (PT-437 at 154)
Edime Lalapasa Cimento (PT-232 at 9)
EMS Management Systems AG (PT-156; PT-311; PT-400; PT-405)
ERI Ltd. (PT-435, Appendix 4, at 16)
Ergani Cimento (PT-232 at 9)
Filpark Internet Hzm (PT-437 at 238)
Gaziantep Cimento Sanayii Turk (PT-437 at 138)
Grup Medya Reklamcilik ve Filmcilik (PT-437 at 95)
Gumushane Cimento Sanayii (PT-437 at 83)
Hawk Aviation Ltd. (PT-366; PT-367; PT-435, Appendix 4, at 16; PT-468)
Hurriyet International GMBH (PT-232 at 8)
Imar Bank (PT-437 at 314)
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Imar Bank Offshore Ltd. (PT-433 at T0004605)
Imar Finansal Kiralama (PT-437 at 67)
Incidentally Ltd. (PT-435, Appendix 4, at 14-15)
Inter Televizyon Servisleri (PT-437 at 288)
Isaac Ltd. (PT-435, Appendix 4, at 14)
Istanbulspor Spor Faaliyetleri AS (PT-232 at 9)
Jordan Public Payphones (PT-435, Appendix 4 at 9-10)
Joy FM (PT-232 at 8)
Kepez Elektrik (PT-437 at 318)
Keps Kurumsal Telekom Hzm (PT-437 at 313)
Kingsbury Holding and Investment N.V. (PT-435, Appendix 4 at 6-7; PT-304; PT-336)
Klasik Insaat ve Ticaret (PT-437 at 124)
Klavama B.V. (PT-435, Appendix 4 at 16)
Krai FM (PT-232 at 8)
Krai TV (PT-232 at 8)
Kristal Insaat ve Ticaret (PT-437 at 130)
Kutup Produksiyon ve Filmcilik AS (PT-232 at 9)
Ledranet Operations Ltd., Internet Services/Kibrisbee (PT-232 at 8)
Lismas Liman Is

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/2493622. Public record. Not legal advice.