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Magyar MtD

Magyar MtD

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Published by corruptioncurrents

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Published by: corruptioncurrents on Nov 02, 2012
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04/23/2013

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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK  ____________________________________ :U.S. SECURITIES AND EXCHANGE :COMMISSION, ::
 Plaintiff 
, :-v- : No. 11 Civ. 9645 (RJS):ELEK STRAUB, :
ORAL ARGUMENT:
ANDRAS BALOGH, and :
January 17, 2013
TAMÁS MORVAI, :: ECF Case
 Defendants
. : Electronically Filed ____________________________________:
MEMORANDUM OF LAW IN SUPPORT OFDEFENDANTS' JOINT MOTION TO DISMISS THE COMPLAINT
 SKADDEN, ARPS, SLATE,MEAGHER & FLOM LLPSaul M. PilchenAmanda R. Grier 1440 New York, Ave., NWWashington, D.C. 20005(202) 371-7000HOGAN LOVELLS US LLPCarl S. RauhColumbia Square555 Thirteenth Street, NWWashington, DC 20004(202) 637-5600
Counsel for Elek Straub
 PILLSBURY WINTHROP SHAWPITTMAN LLPWilliam M. Sullivan Jr.2300 N Street, NWWashington, DC 20037-1122(202) 663-8027william.sullivan@pillsburylaw.com
Counsel for Andras Balogh
 HINCKLEY, ALLEN & SNYDER LLPMichael L. KoenigVictoria P. Lane30 South Pearl Street, Suite 901Albany, NY 12207(518) 396-3100mkoenig@haslaw.comvlane@haslaw.com
Counsel for Tamás Morvai
Case 1:11-cv-09645-RJS Document 35 Filed 10/29/12 Page 1 of 43
 
 i
TABLE OF CONTENTS
TABLE OF AUTHORITIES ......................................................................................................... iii INTRODUCTION ...........................................................................................................................1BACKGROUND .............................................................................................................................2FACTS AND CONCLUSIONS ALLEGED IN THE COMPLAINT .............................................4ARGUMENT ...................................................................................................................................6I. THE COMPLAINT SHOULD BE DISMISSED BECAUSE THE COURT DOES NOT HAVE PERSONAL JURISDICTION OVER THE DEFENDANTS........................6A. The Defendants Lack Minimum Contacts With This Forum. .................................6B. The SEC's Theory Of Personal Jurisdiction. ...........................................................8C. Potential Foreseeable Adverse Impact On Investors Is Insufficient ToDemonstrate Personal Jurisdiction, And Is Not Alleged In The Complaint. .........10II. THE SECS CLAIMS ARE BARRED BY THE STATUTE OF LIMITATIONS. ..........17A. The SEC's Claims Are Subject To A Five-Year Statute Of Limitations. ..............17B. The Five Year Statute Of Limitations Applies To All Of The SECsClaims. ...................................................................................................................18C. The Defendants Foreign-National Status Does Not Eliminate the Statuteof Limitations. ........................................................................................................18III. THE COMPLAINT FAILS TO ADEQUATELY ALLEGE BRIBERY AND THERELATED CLAIMS. ........................................................................................................20A. The Applicable Legal Standard. ............................................................................21B. The Complaint Fails To Allege Facts Supporting The Legal Element ThatThe Defendants Corruptly Made Use of United States InterstateCommerce To Further The Alleged Bribe Payment. .............................................221. Email Traffic Sent To And From Foreign Countries, WhichAllegedly Passed For Technological Reasons Through The UnitedStates Unbeknownst To The Defendants, Is Insufficient ToSupport The Legal Element Of "Corrupt Use" Under The FCPA. ............23
Case 1:11-cv-09645-RJS Document 35 Filed 10/29/12 Page 2 of 43
 
ii2. Email Traffic Allegedly In Furtherance Of A Broad Bribe"Scheme," As Opposed To The Particular Bribe "Payment," IsInsufficient To Support The Legal Element Of "In Furtherance"Under The FCPA. ......................................................................................24C. The Complaint Fails To Allege Facts Supporting The Legal Element ThatThe Intended Bribe Recipients Were "Foreign Officials" Under The FCPA.................................................................................................................................261. Who Is A "Foreign Official" For FCPA Purposes Is A Fact-Intensive Inquiry. .......................................................................................262. The Basic Facts Regarding The Intended Recipient(s) Of A BribeIn Macedonia Are Not Alleged. .................................................................27D. The Complaint Fails To Adequately Allege False Statements To Auditors. .........281. The Heightened Pleading Standard For Fraud Applies. ............................292. The Complaint Fails To Individualize The Necessary FactualAllegations. ................................................................................................293. The Complaint Fails To Plead Facts Supporting The LegalElement Of Materiality. .............................................................................30CONCLUSION ..............................................................................................................................32
Case 1:11-cv-09645-RJS Document 35 Filed 10/29/12 Page 3 of 43

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