Motorola Sues 12 Defendants In Kong Kong For $5.26B, Including A Fugitive Turkish Family Charged With Embezzlement Of Funds

Motorola (NYSE:MSI) has sued 12 defendants in a Hong Kong court, including a fugitive Turkish family, three Hong Kong-based companies and a British national, seeking $5.26 billion in damages for embezzlement of funds in a case that can be tracked back to 1998, South China Morning Post reported Friday.

The members of the Uzan family, one of Turkey's richest families that owned several companies in Hong Kong and millions in bank assets, were found guilty by a U.S. court in August of embezzling some of the funds loaned by Motorola and Nokia (NYSE:NOK), and using them to fund the purchase of luxury real estate, yachts and private jets. In November, Motorola issued a writ in Hong Kong against 12 defendants, including the Uzans, seeking $5.26 billion in damages following a Hong Kong court’s injunction to freeze the assets of the Uzan family.

In 1998, the Turkish family, which owned a mobile-phone company, a satellite-television station, utilities and banks in Turkey borrowed $2 billion from Motorola, and $700 million from Nokia, to create a wireless phone company. The Uzans claim they used Motorola's cash and equipment to build Turkey's second-biggest cellular network, Telsim Mobil Telekomunikasyon Hizmetleri, which had about 8 million customers and an estimated $1 billion in sales in 2003. Telsim was bought by UK-based Vodafone in 2005 after it declared bankruptcy.

Motorola and Nokia filed a lawsuit against the Uzans in 2003. In the same year, Turkey's Savings Deposit Insurance Fund seized more than 200 companies of the Uzan Group after it was discovered that the Uzans' İmar Bank sold nonexistent Treasury bonds and offered above-market interest rates for dollar deposits -- interest that was never paid.

In 2009, when Kroll, a corporate espionage agency, was investigating the Uzans, Cem Cengiz Uzan filed a criminal complaint against the agency for intercepting personal calls at HPF Private Investment Fund, a Hong Kong-based company that managed some of the Uzans' funds. Cem fled Turkey to France that same year to avoid jail, Turkish media had reported. In 2011, a Turkish court issued an arrest warrant for Kemal Uzan, his wife, a son and daughter, SCMP reported, citing Turkish media.

In an August 2013 ruling, U.S. District Judge Jed Rakoff found family members of the Uzan family guilty of embezzling funds and noted that the Uzans hid their assets preventing Motorola Credit from collecting about $3 billion in damages.

Judge Kevin Zervos of Hong Kong's Court of First Instance has ordered the defendants to state their grounds for contesting Motorola's suit by March 25, according to SCMP, and has asked Motorola to respond to the defendants by March 31.