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    United States Attorney for the Southern District of New York and the United States Department of Justice, Fraud Section ("these Offices") will not criminally prosecute Omega Advisors, Inc. and its subsidiaries and affiliates (collectively, "Omega") for any crimes (except for criminal tax violations, as to which these Offices cannot and do not make any agreement) related to an investment Omega and an investment fund named Pharos Capital Management, L.P. made in a privatization program in Azerbaijan, as described in Indictment 05 Cr. 518 (SAS), in Superseding Information S 1 03 Cr. 930 (NRB), a

    • Date
      June 19, 2007
    • City/County
      New York, New York
    • Type of Case
      Fraud Section - Criminal Tax Violations - Settlement
    • Case Details
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    Title

    United States Attorney for the Southern District of New York and the United States Department of Justice, Fraud Section ("these Offices") will not criminally prosecute Omega Advisors, Inc. and its subsidiaries and affiliates (collectively, "Omega") for any crimes (except for criminal tax violations, as to which these Offices cannot and do not make any agreement) related to an investment Omega and an investment fund named Pharos Capital Management, L.P. made in a privatization program in Azerbaijan, as described in Indictment 05 Cr. 518 (SAS), in Superseding Information S 1 03 Cr. 930 (NRB), a

    Date
    June 19, 2007
    State or Country
    New York
    County/City:
    New York, New York
    The Court the Case was filed in

    US Department of Justice. Southern District of New York

    Type of Case
    Fraud Section - Criminal Tax Violations - Settlement
    Case Number

    Docket Nos. 09-4704-cr(L), 09-5149-cr(XAP) Related Case(s): U.S. v . Hans Bodmer: Docket No. 03-CR-947-SAS (08/05/03) U.S. v . Clayton Lewis: Docket No. 03-CR-930-NRB (07/31/03) U.S. v. Thomas Farrell: Docket No. 03-CR-290-RMB (03/10/03) U.S. v. Viktor Kozeny 05-CR-518-SAS (05/12/2005) U.S. v. David Pinkerton 05-CR-518-SAS (05/12/2005) U.S. v. Frederic Bourke 05-CR-518-SAS (05/12/2005)

    Judges

    TBD

    Plaintiff

    United States of America

    Defendant

    In RE: OMEGA ADVISORS INC

    OMEGA ADVISORS, INC. relating to OMEGA’s

    investment in a privatization program in Azerbaijan alongside of

    Czech national VIKTOR KOZENY. OMEGA acknowledged in the

    Agreement that CLAYTON LEWIS, one of its former employees, had

    learned, prior to OMEGA’s investment, that KOZENY had entered

    into arrangements with some officials of the government of

    Azerbaijan that gave those officials a financial interest in the

    privatization of certain Azeri industries.

    Founder: Leon Cooperman
    Founded: 1991
    Headquarters: New York, NY
    PHONE: 1-212-495-5200
    ADDRESS: 1 New York Plaza New York, NY

    VIKTOR KOZENY, DAVID PINKERTON,
    Defendants,
    FREDERIC BOURKE JR.,
    Defendant-Appellant-Cross-Appellee,
    LANDLOCKED SHIPPING COMPANY, DR. JITKA CHVATIK,
    Petitioners.

    Plaintiff Attorney

    U.S. ATTORNEY’S OFFICE
    YUSILL SCRIBNER,
    REBEKAH CARMICHAEL
    PUBLIC INFORMATION OFFICE
    (212) 637-2600

    DOJ
    DEAN BOYD
    OFFICE OF PUBLIC AFFAIRS
    (202) 514-2007

    FBI
    NEIL DONOVAN, JIM MARGOLIN
    PUBLIC INFORMATION OFFICE
    (212) 384-2715, 2720

    PREET BHARARA,
    United States Attorney for the
    Southern District of New York,
    Attorney for the United States
    of America.
    To Be Argued By:
    HARRY A. CHERNOFF
    HARRY A. CHERNOFF,
    IRIS LAN,
    ANDREW L. FISH,
    Assistant United States Attorneys,
    ROBERTSON PARK,
    Assistant Chief, Fraud Section,
    United States Department of Justice Counsel

    Defendant Attorney

    John D. Cline, Esq.
    5A Funston Avenue
    San Francisco CA 94219

    SAMANTHA COLLINS
    Record Press, Inc.
    229 West 36th Street, 8th Floor
    New York, New York 10018
    (212) 619-4949

    Others that affected your case

    MICHAEL J. GARCIA, the United States Attorney for the

    Southern District of New York, ALICE S. FISHER,
    Assistant

    Attorney General in Charge of the Criminal Division, and MARK J.

    MERSHON,

    the Assistant Director In Charge of the New York Field

    Office of the FBI,

    Judges Comments

    United States Attorney
    Southern District of New York
    FOR IMMEDIATE RELEASE
    JULY 6, 2007
    CONTACT: U.S. ATTORNEY’S OFFICE
    YUSILL SCRIBNER,
    REBEKAH CARMICHAEL
    PUBLIC INFORMATION OFFICE
    (212) 637-2600
    DOJ
    DEAN BOYD
    OFFICE OF PUBLIC AFFAIRS
    (202) 514-2007
    FBI
    NEIL DONOVAN, JIM MARGOLIN
    PUBLIC INFORMATION OFFICE
    (212) 384-2715, 2720
    U.S. ANNOUNCES SETTLEMENT WITH HEDGE FUND OMEGA

    ADVISORS, INC. IN CONNECTION WITH OMEGA’S

    INVESTMENT IN PRIVATIZATION

    PROGRAM IN AZERBAIJAN

    MICHAEL J. GARCIA, the United States Attorney for the

    Southern District of New York, ALICE S. FISHER, Assistant

    Attorney General in Charge of the Criminal Division, and MARK J.

    MERSHON, the Assistant Director In Charge of the New York Field

    Office of the FBI, today announced a non-prosecution agreement

    (the "Agreement") with OMEGA ADVISORS, INC. relating to OMEGA’s

    investment in a privatization program in Azerbaijan alongside of

    Czech national VIKTOR KOZENY. OMEGA acknowledged in the

    Agreement that CLAYTON LEWIS, one of its former employees, had

    learned, prior to OMEGA’s investment, that KOZENY had entered

    into arrangements with some officials of the government of

    Azerbaijan that gave those officials a financial interest in the

    privatization of certain Azeri industries.

    The Agreement provides that OMEGA will not be

    prosecuted for any crimes (except for criminal tax violations, as

    to which we cannot and do not make any agreement) related to its

    participation in this investment. The Agreement further provides

    that OMEGA will civilly forfeit $500,000 and will continue to

    cooperate with the Government in connection with its

    investigation and prosecution of this matter.

    As described in a statement of facts that is part of

    the Agreement entered into today, the Republic of Azerbaijan

    instituted a program in the mid-1990s to privatize certain of its

    state-owned industries, and the Azeri government issued freely-

    tradable vouchers to its citizens which could be bid for shares

    of industries to be privatized. Certain industries, including

    SOCAR, the State Oil Company of the Azerbaijan Republic, could

    only be privatized if the President of Azerbaijan issued a

    special decree. Beginning in the summer of 1997, KOZENY invested

    heavily in the Azeri privatization program through two companies

    he controlled, Oily Rock Group Ltd. ("Oily Rock") and Minaret

    Group Ltd. ("Minaret"). KOZENY also recruited individual and

    institutional investors to invest in the privatization program,

    including OMEGA. LEWIS was OMEGA’s point of contact on the Azeri

    investment.

    LEWIS pleaded guilty before United States District

    Judge NAOMI REICE BUCHWALD on February 10, 2004 to a two-count

    superseding Information charging him with conspiracy to violate

    the Foreign Corrupt Practices Act ("FCPA") and violating the

    FCPA. During his guilty plea, LEWIS admitted that (1) in March

    1998, KOZENY informed him that KOZENY had entered into

    arrangements with some Azeri officials that gave those officials

    a financial interest in the privatization of certain industries;

    and (2) LEWIS entered into the investment, on behalf of OMEGA,

    with the understanding that LEWIS was taking advantage of the

    arrangements that KOZENY had already set up. OMEGA invested a

    total of more than $100 million in the Azeri privatization

    program in the spring and summer of 1998 through a "co-investment

    agreement" with Oily Rock and Minaret. Omega lost all of its

    investment, and to date privatization of SOCAR has not occurred.

    The investigation into this matter is being handled

    jointly by the United States Attorney’s Office for the Southern

    District of New York (the "Office"), the Fraud Section of the

    United States Department of Justice (the "Fraud Section"), and

    the New York Office of the Federal Bureau of Investigation. The

    Office and the Fraud Section’s decision to enter into the

    Agreement was guided by the factors set forth in the Department

    of Justice’s "Principles of Federal Prosecution of Business

    Organizations," as amended December 12, 2006. Among other

    factors, the Office and Fraud Section’s decision took account of

    (1) OMEGA’s cooperation with the Government’s investigation into

    the foreign bribery scheme; (2) OMEGA’s commitment to continue to

    provide cooperation; (3) OMEGA’s remedial actions, including its

    implementation of a compliance policy regarding the FCPA; (4) the

    -2­

    absence of any history of similar conduct by OMEGA; and (5) the

    prosecution of LEWIS, who is awaiting sentencing. The Office and

    Fraud Section also considered the consequences that a criminal

    Indictment could have upon the ongoing operations and employees

    of OMEGA. In light of the above, and after careful balancing of

    all the factors in the Principles of Federal Prosecution Business

    Organizations, the Office and Fraud Section have concluded that

    criminal prosecution of OMEGA is not necessary to serve the

    public interest.

    Mr. GARCIA praised the investigative efforts of the FBI

    in this case.

    Assistant United States Attorney JONATHAN S. ABERNETHY

    and Fraud Section Assistant Chief ROBERTSON PARK are in charge of

    the investigation.

    07-172

    Comments

    Robert J. Anello, Esq.
    Morvillo, Abramowitz, Grand, lason,
    Anello, & Bohrer, p.e.
    565 Fifth Avenue
    New York, NY 10017

    U.S. Department of Justice
    United States Attorney
    Southern District of New York
    The Silvio J. Mollo Building
    One Saint Andrew's Plaza
    New York. New York 10007

    June 19,2007

    Re: Omega Advisors, Inc.

    Dear Mr. Anello:

    On the understandings specified below, the Office ofthe United States Attorney for
    the Southern District of New York and the United States Department of Justice, Fraud Section
    ("these Offices") will not criminally prosecute Omega Advisors, Inc. and its subsidiaries and
    affiliates (collectively, "Omega") for any crimes (except for criminal tax violations, as to which
    these Offices cannot and do not make any agreement) related to an investment Omega and an
    investment fund named Pharos Capital Management, L.P. made in a privatization program in
    Azerbaijan, as described in Indictment 05 Cr. 518 (SAS), in Superseding Information S 1 03 Cr. 930
    (NRB), and in Exhibit A hereto, which is incorporated by reference herein.
    If Omega fully complies with the understandings specified in this Agreement, no
    information given by or on behalf of Omega at the request of these Offices (or any other
    information directly or indirectly derived therefrom) will be used against Omega in any criminal
    tax prosecution. This Agreement does not provide any protection against prosecution for any
    crimes except as set forth above, and applies only to Omega and not to any other entities or any
    individuals except as set forth herein. Omega expressly understands that the protections provided
    to Omega shall not apply to any successor entities, whether the successor's interest arises through
    a merger or plan of reorganization, unless and until such successor formally adopts and executes
    this Agreement. The protections arising from this Agreement will not apply to any purchasers of
    all or substantially all of the assets of Omega, unless such purchaser enters into a written
    agreement, on terms acceptable to these Offices, agreeing in substance to undertake all obligations
    set forth in this Agreement.
    It is understood that Omega (a) shall truthfully and completely disclose all
    information with respect to the activities of Omega, its officers and employees, and others
    concerning all matters about which these Offices inquire of it, which information can be used for
    02,03,05
    Robert J. Anello, Esq.
    June 19,2007
    any purpose, except as limited by the second paragraph ofthis Agreement; (b) shall cooperate fully
    with these Offices, the Federal Bureau of Investigation, and any other law enforcement agency
    designated by these Offices, in connection with any investigation related to the privatization
    program in Azerbaijan; (c) shall, at these Offices' request, use its best efforts to assist these Offices
    in any prosecution or investigation arising out ofthe conduct described in the opening paragraph
    ofthis Agreement by providing logistical and technical support for any meeting, interview, grand
    jury proceeding, or any trial or other court proceeding; (d) shall, at these Offices' request, use its
    best efforts promptly to secure the attendance and truthful statements or testimony of any officer,
    agent or employee at any meeting or interview or before the grand jury or at any trial or other court
    proceeding; (e) shall use its best efforts promptly to provide to these Offices, upon request, any
    document, record, or other tangible evidence about which these Offices or any designated law
    enforcement agency inquires; and (f) shall bring to these Offices' attention all criminal conduct by,
    or criminal investigations of, Omega or its respective senior managerial employees that comes to
    the attention of Omega or its senior management, as well as any administrative proceeding or civil
    action brought by any governmental authority that alleges fraud by or against Omega. It is further
    understood that Omega shall commit no crimes whatsoever. Moreover, any assistance Omega may
    provide to federal criminal investigators shall be pursuant to the specific instructions and control
    of these Offices and designated investigators. Omega's obligations under this paragraph shall
    continue until the date upon which all prosecutions listed in, or arising out ofthe conduct described
    in, the opening paragraph of this Agreement are final.
    It is understood that Omega agrees to the civil forfeiture, pursuant to 18 U.S.C. §
    981, of$500,000 in United States currency. Omega must pay this sum to the United States within
    thirty days of executing this Agreement. Such payment shall be made by a certified check payable
    to the United States Marshals Service. Omega agrees to execute all documentation required to
    effectuate this forfeiture. Omega agrees that, in the event that the United States files any civil
    actions seeking to forfeit the above-referenced property, Omega will not file a claim with the Court
    or otherwise contest this civil forfeiture action and will not assist a third party in asserting any
    claim. It is further understood that Omega will not file or assist anyone in filing a petition for
    remission or mitigation with the Department of Justice concerning this property.
    It is understood that, should Omega commit any crimes subsequent to the date of
    signing of this Agreement, or should it be determined that Omega has given false, incomplete, or
    misleading testimony or information, or should Omega otherwise violate any provision of this
    Agreement, Omega shall thereafter be subject to prosecution for any federal violation of which these
    Offices have knowledge, including peIjury and obstruction of justice. Any such prosecution that is
    not time-barred by the applicable statute of limitations on the date of the signing of this Agreement
    may be commenced against Omega, notwithstanding the expiration of the statute of limitations
    between the signing ofthis Agreement and the commencement of such prosecution. It is the intent
    of this Agreement to waive all defenses based on the statute of limitations with respect to any
    prosecution that is not time-barred on the date that this Agreement is signed.
    02.03.05 2
    Robert J. Anello, Esq.
    June 19,2007
    It is understood that Omega accepts and acknowledges responsibility for the conduct
    set forth in Exhibit A hereto, which is incorporated by reference herein.
    It is understood that, if it is detennined that Omega has committed any crime after
    signing this Agreement, or that Omega has given false, incomplete, or misleading testimony or
    information, or has otherwise violated any provision ofthis Agreement, (a) all statements made by
    Omega to these Offices or other designated law enforcement agents, including Exhibit A hereto,
    and any testimony given by Omega before a grand jury or other tribunal, whether prior to or
    subsequent to the signing ofthis Agreement, and any leads from such statements or testimony shall
    be admissible in evidence in any criminal proceeding brought against Omega; and (b) Omega shal1
    assert no claim under the United States Constitution, any statute, Rule 410 of the Federal Rules of
    Evidence, or any other federal rule that such statements or any leads therefrom should be
    suppressed. It is the intent of this Agreement to waive all rights in the foregoing respects.
    It is further understood that this Agreement does not bind any federal, state or local
    prosecuting authority other than these Offices. These Offices will, however, bring the cooperation
    of Omega to the attention of other prosecuting and other investigative offices, if requested by
    Omega.
    It is further understood that Omega and these Offices may disclose this Agreement
    to the public.
    With respect to this matter, from the date of execution of this Agreement forward,
    this Agreement supersedes all prior, if any, understandings, promises and/or conditions between
    these Offices and Omega. No additional promises, agreements, and conditions have been entered
    into other than those set forth in this letter and none will be entered into unless in writing and
    02.03.05 3
    Robert J. Anello, Esq.
    June 19,2007
    signed by all parties.
    AGREED AND CONSENTED TO:
    Omega Advisors, Inc.
    02.03.05
    Very truly yours,
    As Istant United
    (212) 637-2232
    APPROVED:
    Steven A. Tyrrell
    Chief, Fraud Section
    Mark F. Mendelsohn
    Deputy Chief, Fraud Section
    U.S. Department of Justice
    Date jf4 ~ 2Aco 7
    4
    EXHIBIT A
    The Republic of Azerbaijan instituted a program in the mid-1990s to privatize
    its State-owned industries. Under that program, enterprises in certain industries, including
    oil and gas, telecommunications, and utilities, could only be privatized if the President of
    Azerbaijan issued a special decree. One of those enterprises, in the oil and gas industry, was
    SOCAR, the State Oil Company of the Azerbaijan Republic, which owned Azerbaijan's
    substantial and extremely valuable oil deposits.
    Under the privatization program, the Azeri government issued free vouchers
    to all Azeri citizens, which allowed them to bid for shares of industries to be privatized.
    Privatization vouchers were freely tradable and were bought and sold, typically with U.S.
    currency. Foreigners could also participate in the privatization program, but only if they
    purchased government-issued "options" for each voucher they held. The Azeri government
    sold these options at an official price.
    Beginning in or about the summer of 1997, Viktor Kozeny, a Czech national
    and a resident of The Bahamas, invested heavily in the Azeri privatization program through
    two companies he controlled, Oily Rock Group Ltd. ("Oily Rock") and Minaret Group Ltd.
    ("Minaret"). Specifically, Kozeny directed individuals working for him to purchase Azeri
    vouchers and options. Kozeny also recruited American individuals and institutions to invest
    in the privatization program. Among the institutional investors Kozeny recruited was
    Omega. The point of contact for Omega on the Azeri investment was Clayton Lewis, an
    employee of Omega.
    As set forth in Clayton Lewis's February 10, 2004 guilty plea in Federal
    District Court, in March 1998, Kozeny informed Lewis that Kozeny had entered into
    arrangements with some Azeri government officials that gave those officials a financial
    interest in the privatization of certain Azeri industries.
    Thereafter, Omega made an investment in the Azeri privatization program
    pursuant to a "co-investment agreement" with Oily Rock and Minaret that was entered into
    on or about April 30, 1998. Under this co-investment agreement, Omega, Oily Rock,
    Minaret, and an investment fund named Pharos Capital Management, L.P. in substance
    agreed to pursue a joint investment strategy in acquiring, safeguarding, and exercising at
    auction Azeri privatization vouchers and options for the primary objective of acquiring a
    controlling interest in SOCAR and, to a lesser extent, other valuable Azeri State assets.
    Pursuant to this co-investment agreement, Omega invested a total of more than $100 million
    for the purchase of Azeri privatization vouchers and options between in or about late March
    02.03.05
    1998 and in or about late July 1998. An of this investment was lost. To date, privatization
    of SOCAR has not occurred.
    On February 10, 2004, Clayton Lewis pleaded guilty to a two-count
    superseding Information charging him with conspiracy to violate the Foreign Corrupt
    Practices Act ("FCP A") and violating the FCP A. See United States v. Clayton Lewis, S 1 03
    Cr. 930 (NRB). In his plea hearing before the Honorable Naomi Reice Buchwald, Lewis,
    in part and in substance, admitted (1) that in March 1998, Kozeny informed him that Kozeny
    "had entered into arrangements with some officials of the Azeri government" that "gave
    those officials a financia1 interest ... [in] the privatization ofthe Azerbaijan industries"; and
    (2) that Lewis entered into the investment, on behalf of Omega, with the understanding that
    Lewis "was taking advantage of these arrangements that Mr. Kozeny had already set up."

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    Document Links 1 (Scribd et. al)

    https://www.justice.gov/sites/default/files/criminal-fraud/legacy/2012/06/01/07-29-06bourke-2ndcircuit.pdf

    Document Link 2

    https://www.justice.gov/sites/default/files/criminal-fraud/legacy/2012/06/01/08-31-09bourke-aquittal-new-trial.pdf

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