SEC v. Straub

SEC v. Straub

Opinion

 [*248]  MEMORANDUM AND ORDER

Richard J. Sullivan, District Judge:

Plaintiff Securities and Exchange Commission (the "SEC") brings this action against Defendants Elek Straub, Andras Balogh, and Tamas Morvai (collectively, "Defendants") — executives of the Hungarian telecommunications company Magyar Telekom, Plc. ("Magyar") — arising out of alleged violations of the Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1, et seq. (the "FCPA"). Before the Court is Defendants'  [**2] joint motion to dismiss the Complaint in this action on the grounds that: (1) the Court lacks personal jurisdiction over Defendants; (2) the SEC's claims are time barred; and (3) the Complaint fails to state claims for certain of its causes of action. For the reasons that follow, the Court denies Defendants' motion in its entirety.

I. Background

The SEC alleges that Defendants engaged in two related schemes involving the bribery of public officials in Macedonia and Montenegro. However, the SEC has advised the Court that the Complaint's antibribery claims "are based solely on the allegations involving Macedonia." (Opp'n 3 n.2.) Accordingly, for the purpose of resolving the instant motion, the facts below relate almost entirely to Defendants' alleged Macedonian scheme.

A. Facts¹

In  [**3] early 2005, the Macedonian Parliament enacted a new Electronic Communications Law, which "liberalized the telecommunications market [in Macedonia] in a manner that would have been unfavorable to Magyar." (Compl. ¶ 20.) Specifically, the legislation increased frequency fees, imposed regulatory burdens, and authorized the licensing of a third mobile telephone operator in direct competition with Makedonski Telekommunikacii A.D. Skopje  [*249]  ("MakTel") — the former telecommunications services provider jointly owned by Magyar and the Macedonian government. (Id.) To mitigate the effects of the new law, Defendants allegedly began executing a scheme in March 2005 to bribe public officials from both political parties in Macedonia's coalition government, memorializing the elements of that scheme in a "secret document" maintained on Magyar's computers. (Id. ¶ 21.)

In furtherance of the alleged scheme, Magyar's Macedonian subsidiaries retained a Greek intermediary to facilitate negotiations with Macedonian government officials on Magyar's behalf. (Id. ¶ 22.) The negotiations resulted in a "secret agreement" with those officials entitled the "Protocol of Cooperation" (the "Protocol"), which set a framework  [**4] whereby the Macedonian officials would mitigate certain adverse effects of the new law in return for the Macedonian government receiving a €95 million dividend payment from MakTel and Macedonian officials receiving undisclosed bribe payments from Magyar. (Id.) On or about May 25, 2005, Straub approved the Protocol on behalf of Magyar, and approximately two days later, Balogh and a senior Macedonian government official signed and countersigned the document. (Id. ¶ 23.)

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