U.S. District Court issues $4.26 billion judgment against Uzan family of Turkey for perpetrating massive global fraud, according to Motorola.

Landmark Decision Supports Motorola Claim That Defendants 'Perpetrated a Huge Fraud'

Motorola, Inc. (NYSE:MOT) has announced that the Honorable Jed S. Rakoff of the United States District Court, Southern District of New York issued a $4.26 billion judgment against the Uzan family of Turkey for perpetrating a massive fraud against Motorola. Further, Judge Rakoff found the defendants in contempt of court and ordered that: "unless and until defendants purge their contempts, the individual defendants, if found within the jurisdiction of the United States, will be immediately arrested and held in confinement until such time as they comply with the directives of the Court's" prior orders.

In the ruling, Judge Rakoff stated that the evidence presented at trial proved that the members of the Uzan family "have perpetrated a huge fraud." Specifically, Judge Rakoff ruled that "[u]nder the guise of obtaining financing for a Turkish telecommunications company, the Uzans have siphoned more than a billion dollars of plaintiffs' money into their own pockets and into the coffers of other entities they control." The Court also found that the Uzans "have sought to advance and conceal their scheme through an almost endless series of lies, threats, and chicanery, including, among much else, filing false criminal charges against high level American and Finnish executives, grossly diluting and weakening the collateral for the loans, and repeatedly disobeying the orders of this Court."

Cem Uzan has consented to the validity of this judgment by his prior concession that the New York court has personal jurisdiction over him, a fact referenced by Judge Rakoff.

The U.S. District Court's ruling ordered the members of the Uzan family and the companies they control to pay Motorola $2.13 billion in compensatory damages and another $2.13 in punitive damages as a result of the Uzans fraudulently inducing Motorola to loan $1.8 billion to Telsim Mobil Telekomunikasyon Hizmetleri A.S. ("Telsim"), a telecommunications entity owned and controlled by the Uzan family. The court's ruling also orders that the Uzans be arrested and imprisoned if found within the jurisdiction of the United States until such time as Uzans purge their prior contempts of court, including their defiance of a court order requiring them to deposit 73.5% of Telsim's stock into the court's registry.

Judge Rakoff stated that Motorola is entitled to collect its judgment not only directly from the defendants, but also from the assets of any company (including 130 companies listed in the Court's opinion) the defendants own and/or control, directly or indirectly.

Christopher B. Galvin, chairman and chief executive officer of Motorola, said, "We are extremely pleased with the Court's strong ruling and we look forward to recouping the billions of dollars that were diverted by the Uzans and returning it to the rightful owners--Motorola's shareholders. The ruling is a landmark decision concerning the massive global fraud that has been perpetrated against Motorola by the Uzans, and the latest in a series of court judgments throughout the world against the Uzans."

"Today's judgment confirms our belief of wrong-doing against Nokia and proves the activities against us were fraudulent and intentional," said Olli-Pekka Kallasvuo, Chief Financial Officer of Nokia. "We will now use this ruling as part of our continued effort of recovering the funds."

Today's judgment against the Uzans originated from a series of financing and supply agreements that were entered into beginning April 1998 between affiliates of Motorola and Telsim. Under the agreements, Motorola provided Telsim with equipment financing, financing to purchase a GSM cellular license from the government of Turkey as well as the major supply components for a GSM cellular telephone system. Total financing under the agreements with Telsim, as amended, was approximately $2.0 billion. As collateral for the loans, the Uzans pledged to Motorola shares of Telsim-stock held in another Uzan-controlled company. Motorola noted that Telsim and the Uzans entered into similar financing and supply agreements with Nokia at about the same time, which were not disclosed to Motorola.

Despite repeated assurances by the Uzans that Motorola's collateral was secure and the loans would be repaid, Telsim's last payment to Motorola under the agreements occurred in June 2000. Beginning in late 2000, the Uzans requested to reschedule loan payments and initiated a campaign of fraudulent tactics in an effort to conceal from Motorola the fact that the Uzans had stolen more than $1 billion from Telsim. Motorola and Nokia (NYSE:NOK) jointly filed a complaint in the U.S. Courts against the Uzans in January 2002, seeking to recoup more than $2 billion that was owed to the companies. The court's ruling renders Nokia the equitable owner of 7.5% of Telsim's stock as a result of the Uzans' frauds.