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United States v. Besneli

United States District Court, S.D. New York

January 16, 2018

HASAN BESNELI and SABA, INC., Defendants.



          OPINION & ORDER


         Before the Court is Hasan Besneli's motion to dismiss the Government's complaint, which seeks a civil penalty against Besneli under 12 U.S.C. § 1833a for alleged violations of 18 U.S.C. §§ 1341 and 1343. Construing Besneli's pro se motion to raise the strongest arguments that it suggests, the Court has determined that the grounds for Besneli's motion are lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2) and failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6). For the reasons below, the Court concludes that the Government's complaint does not establish a prima facie showing of personal jurisdiction and, accordingly, grants Besneli's motion to dismiss.

         I. Background

         A. Factual Background

         Besneli is a Turkish citizen residing in Istanbul, Turkey. (Compl. ¶ 10, ECF No. 1 (filed Sept. 10, 2014).) From 2003 until at least 2010, Besneli served as an agent for SABA, Inc. (“SABA”), a business incorporated and headquartered in Tennessee that operates as an exporter of U.S.-made goods. (Id. ¶¶ 9-10.)

         In early 2003, Besneli, on behalf of SABA, negotiated an agreement with Basbakani Baskanliginda Darussafaka Cemiyeti (“Darussafaka”), a non-profit organization located in Istanbul. (Id. ¶¶ 1, 11.) Besneli agreed to act on Darussafaka's behalf to procure a loan and loan guarantee for the completion of several construction projects in Istanbul and Urla, Turkey (collectively, the “Urla Project”). (Id. ¶¶ 2, 29.) SABA was to act as exporter for all U.S. goods purchased with loan funds in connection with the Urla Project. (Id. ¶ 29.)

         Jennifer Windus, who performed work for Besneli, SABA, and Darussafaka, prepared the loan and guarantee applications, respectively, in connection with the Urla Project. (Id. ¶¶ 14, 30.) Ultimately, Darussafaka obtained a loan from Deutsche Bank's branch office in New York (“Deutsche Bank”). (Id. ¶ 13.) On March 17, 2004, Deutsche Bank, Darussafaka, and the Export- Import Bank of the United States (the “Ex-Im Bank”) entered into a credit agreement and Darussafaka signed a promissory note for an amount in excess of $38 million. (Id. ¶ 35.) The complaint does not specify who signed the credit agreement or promissory note on Darussafaka's behalf.

         The Ex-Im Bank is the official export credit agency of the United States. (Id. ¶ 16.) It offers loan guarantees to foreign entities that wish to use loan funds to purchase U.S.-made goods. (Id. ¶ 17.) In determining whether to guarantee a loan, the Ex-Im Bank relies upon the application by or on behalf of a foreign borrower as well as all relevant contractual agreements. (Id. ¶ 21.) In the event that a borrower defaults, the lender has the right to make a claim to the Ex-Im Bank for the unpaid loan funds that are the subject of the guarantee. (Id. ¶ 22.)

         To fulfill its statutory mission of maintaining or increasing employment of U.S. workers, see 12 U.S.C. § 635(a)(1), the Ex-Im Bank places various conditions on its loan guarantees. (Compl. ¶¶ 18-19.) Two such conditions are relevant here. First, during the time period of the Urla Project, no more than 15 percent of loan funds could be used by a borrower for “local costs, ” including labor costs and the cost of materials not made in the United States. (Id. ¶ 18.) Second, a borrower must provide a 15 percent down payment “towards the total cost of all U.S.-made goods purchased.” (Id. ¶ 20 (citing 12 U.S.C. § 635(a)(2).)

         Here, to comply with the Ex-Im Bank's requirements, under the proposed loan terms: (1) SABA would use $28.8 million of the loan funds to purchase U.S.-made goods that SABA would export to Darussafaka, and (2) approximately $5 million in loan funds would be available for local construction costs in Turkey. (Id. ¶ 31.) Additionally, in connection with the loan guarantee application submitted to the Ex-Im Bank, SABA included a Construction and Procurement Agreement (“CPA”) executed by SABA and Darussafaka. (Id. ¶¶ 32-33.) The CPA was signed by Besneli as Vice President of SABA and provided that Darussafaka would pay a down payment of 15 percent to SABA. (Id.) The complaint does not specify who signed the CPA on Darussafaka's behalf.

         The Government claims that SABA, Besneli, and Darussafaka did not adhere to the proposed terms above, but rather conspired to circumvent the Ex-Im Bank's requirements. At the first step of the alleged scheme, SABA marked up the price of the U.S. goods it purchased and exported to Darussafaka, resulting in the expenditure of $28.8 million in loan funds for goods worth only $16 million. (Id. ¶ 40.) Besneli allegedly was aware of and participated in the marking up of goods. (Id. ¶ 41.) Then, the extra funds generated through this strategy were deployed in two ways. First, Besneli, acting through a separate business entity, [1] channeled some of the funds to Darussafaka through payments characterized as donations so as to skirt the Ex-Im Bank's restriction limiting the availability of loan funds for local costs to 15 percent. (Id. ¶¶ 47-52.) Second, SABA used some of the funds to make the required down payment, sidestepping the requirement that Darussafaka, as borrower, provide the money for a down payment. (Id. ¶¶ 54-61.) The Government further contends that SABA ceded its responsibility to provide progress reports to an individual named Unver Orer, who, “with SABA and Besneli's knowledge, ” signed progress reports containing inaccurate information to induce Deutsche Bank to disburse loan funds. (Id. ¶¶ 62-67.)

         On April 20, 2007, Darussafaka defaulted after making one interest payment. (Id. ¶ 71.) On September 13, 2007, Deutsche Bank submitted a claim to the Ex-Im Bank for payment on the loan guarantee. (Id. ΒΆ 72.) The Ex-Im Bank ultimately paid the full amount ...

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