Case 8:09-cv-00059-JVS-MLG Document 441 Filed 03/15/12 Page 1 of
25 Page ID #:9887 LJ..i->LA... GJI-!u0 !LJ..J;;;;::::: 1-=:.! CQ
15 2012 C'V - ('.,! t() - J . SBN#l31947 OFFICES OF JOHN Ridgewood
Rd. 1 mo, 94507 (925) 831-1882 (925) 831-1899 }k ail: omey tor
P1aintiffs Association ofKazakh lnvestors -and Eiltrepr n rs; 8
Public Foundation Our House Yerkin Bekta v; Berik Bektay; Kan.et '
9 11 1.2 t4 IS 16 18 19 21 22 25 26 27 IN UN1TED STATES COURT FOR
mE OF CALIFORNIA DMSION-SANTA et al. Piaintiffs v. .. et al.
Defendants TURAN INC. Defendant and Third-Party Plaintiff v. WELLS
FARGO et al. Third-Party Defendants Docket No.08:09cv00059-JVS
Assigried fur furpQs.es to; Hon. James V. SeJ.na, Dept: 1. VERIFIED
SECOND AND BYYERKIN AND FOR RELIEF BASE.D ON: 1. CORRUPT 2. OF
SECUR111ES LAWS; 3. CONVERSION; 4. BREACH OF 5. FRAUDAND ATION; 6,
UNJUST 7. CIVIL CONSPIRACY; 3115/2012 1:25:3() Case
8:09-cv-00059-JVS-MLG Document 441 Filed 03/15/12 Page 2 of 25 Page
ID #:9888Mar 15 2012 Schreiber Offioes .925J 831-18'99 2 4 5 6 7 8
9 1{) 12 13 J5 16 J7 )8 1\) 20 2J 22 and KANET ME1RMANOY,
CounterDefendants and 11tird-Party Ptnintiffs v. ASIAN PACIFIC OIL
& GAS in the Seychelles . slan s); AI,DIGAN YURI
ROBERT.VANbUREN; ROBIN BISARY FINANCIAL ALCJNA . (all three
Beli:r.e); PINE BROOK S.A., S.A. (both Panama); ESSEX MANAGERS
L1D., V ARRIAI .. FINANCIAL L m. British Virgin .Islands );
COASTFINANCE 111 STOCK INC. ThirdwParty Defendants 8. FRAUDULENT
CONVEYANCES; 9. 1 O.DECLARATORY REI..IEF; FOR JURY TRIAL 1 ..
NATURE OF 23 1. Pursuant to Federal Rule ofCivil Procedure 14 and
the Court Order da.ted 24 June 2009, Plaintiffs and Oefendants in
Counterclaim Yerkin Bektayev and 25 Kanet Meirmanov respectfully
file their Verified Amended 26 Complaint .for relief both in law
and in for monetary damagest punitive 27 damages and injunctive
reHel Third-Party Plaintiffs a11ege as foiJows. 3/15/2012 1:25:30
Case 8:09-cv-00059-JVS-MLG Document 441 Filed 03/15/12 Page 3 of 25
Page ID #:9889Mer 15 2012 Schreiber Law Officeg 1 1 - .IJ.
AR'I]J.$. ,IN .. 2 2. Defendant in Counterc]aim and P1aintiff i.n
this Amended Complaint BEKTAYEV (hereinafter '"Bektayev,') is
citizen of 4 en,gaging in bttsiness in and intemarionally; with the
s address: (hereinafter 33 Dostyk, #2, Almaty, 6 Kazakh.stan. At
all tirnes :relevant Bektayev was the Director of as 1 well as the
Pres)dent ofTuranEnerpetroleum s 3. Defendant in. Counterclaim and
P1aintiff in tbls Third-Party Amended 9 Complai.nt KANET
(hereinafter is citizen of 1 engaging in bu.siness in Kazakhstan
and internationally, with the 1.1 address: 33 Dostyk St . #2,
Ahnaty, Kazakhstan. At all relevant timesj 12 Meirmanov was the
employee of and stake holder therein; he also 1;; a.ssisted in
setting seismic tests for the project at issue. ,., 4. Both
Piaintiffs in this Third-Party Cross.--Claim were elected on
Februa.ry 19, 2009 as the interim directors of INC. 16 corporation
organized under the laws of the State of 17 pending restructuring
of its a:ffairs as more particuJarly discussed 1s herein.
distinction is m.ade that PJaintiffs have suing in tbls action an
19 associ.ation under similar corporate but consisting of 20
several indjvidua1s residing in. California" who have operated as
Turan 21 Petroleum when it was eithcr not tegiste:red or later when
its corpom1:e powers 22 were foxfeited in Califomia. Without
corporate authority, those Califomia residents continue to act in
the of the corporation in the Sta.te of 24 CaHfomia, despite the
forfeiture of its corpora.te status in California and in violation.
of the Desist and Refrain Order issued the State of California on
April 1 2009 an.d n10re particularly discussed herein. That
unincorporated 2.1 association operating in California is
identified he:rein as ''P'ort"eited. Tl:tird Pmty 3 1:;!5:3(1 Case
8:09-cv-00059-JVS-MLG Document 441 Filed 03/15/12 Page 4 of 25 Page
ID #:9890Mar 15 2012 Schreiber Offices a25J 5. Defendant in ASIAN
PACIF.IC OIL & GAS L1D. 2 (hereinafter is she11 under the Jaws
of the 3 SeycheHes Islands, IBC No. 050476, with registered
address: Suite l:o 4 Complex, D'Arhoa, Providence, 1004, Mahe, s
Seychelles. APOG's and its real address is: 33 Skyridge, Newport 6
Coast, 92657, where it accepted service. APOG engages in business
ix1 the 1 V.S. and in.temationally. APOG is subject to the
jurisdicti011 of this Court s because it was used for the unlawful
transfer of 20% of the asaets represented 9 rights under the
because it became invol.ved with assets 10 jn California) and APOG
was transferee ot assets in violation of the 11 Califomia Unifonn
Fraudulent Transfer Cai.Civ,Cod.e 3439. 12 6. ALDIZHAN (hereinafter
also "Dzbakishev;') is the principal of APOG, residing at: 33
Newport Coast, 92657; !4 as weJf as 30 Rublnslttein St.7 Almaty,
Dzhakisbev is subject to the 1 s jurisdiction of this Courtt
because is the principal of AIOG, who, whiJe being resident of
Califorriia, s.igned an agreement with certain other Defendants 11
regarding the transfer of the concession rights at issue.
Dzhakishev was involved in the unlawful transfer of Turan's assets,
causing approxim.ately $5 19 million in procecds to
&aud.ulently transferred in California in violation of 2t1
Cal.Civ.Code 3439 and other law. 21 7. Defendant (hereinafter also
"Amirgan") is zz the oth.er principal of residing at; 33 Skyridge,
Newport Coas'4 23 92657, as well as 30 St., Almaty, Kazakhstan. is
subject 24 to the jurisdictio11 of tbls Court, because he is
principal of APOG, is involved 25 in the unlawfu1 transfer of
Turan$s stock, causing approximately $5 in 2(i proceeds to
transfemd in California in vio]ation of 21 Cal.Civ.Code 3439 and
taw. Arncnd(:d Third Party O:l.rnplainl 4 Case
8:09-cv-00059-JVS-MLG Document 441 Filed 03/15/12 Page 5 of 25 Page
ID #:9891 15 2012 Schreiber 825) 831-1899 8. .Defendant YURI v
(hereina.fter also is an mdividual 2 residing at 18301 Von Karroan
Avenue, Irvine, 92612, who engaged in business in Califomia and
wl1o was an original of Turan. Yu.ri is 4 subject to the
jutisdiction of this Court because he has involved in the s
unJ.awful transfer of s as.sets". in processing the: receipt of
certain. proceeds 6 through third pa.rty distributions and other
acts that originated in 7 Califomia, and because he knowing1y
violated CaJ.Civ.Code 3439 and other law. 9 9. Defendant ROBERT VAN
DUREN (hereinafter a1so ''Van is an individ11al who} until of2008,
un]awfully held himself out as Turan's director) residing at; 3720
S. Susan St; Ana, 92704.-.6967, and at: 812 12 Monticello Dr.
Naperville, IL 60563. Van Duren was an active participant in the
sccurities fraud schemes described herein; bls sign.ature can found
on 14 most of the unlawfully issued stock certificatest including
"duplicate 1.s certificates," and he facilitated &audulent
offshore transters of corporate assets. 16 This Court has
jurisdiction over Van Duren who acted knowingly contrary to t7
Cal.Civ.Code 3439 and other law. 1 Defendant ROBIN BISAR
(h.ereinafter also "Bisarya!') is an 19 individuaJ; &om June
of2008 to ApriJ of2009 unlawfully held blmselfout w as Turan"'s
secretary and treasurer, with the address: Deve1opment I ... CC, 21
940 South Coast Dr., 1 Costa Mesa, 92626. Bisarya was an active 22
participant in the securities fraud sch.em.es herejn.. Assisting
.he managed Turan's accounts and drafted the wire transfers 24
involved in wire fraud at WeiJs Fargo Bank. This Court has
jurisdiction over 2s Bisarya who acted knowingly contrary to
Cal.Civ.Code 3439 and other 26 la\v. 27 5 113M4!)20541'\26tif. Case
8:09-cv-00059-JVS-MLG Document 441 Filed 03/15/12 Page 6 of 25 Page
ID #:9892Mar 15 2012 .325.1 I 1. Defendant F"INANCIAL, LTD. also is
shell 2 o1:ga.nized under the laws ofBelize, No. 15768. Okke
engages in business in the U.S. and being, on infomation and 4
alter ego. the de facto address: Ibar Developme.nt LLC, s 940 South
Coast Dr., 100, Costa Mesa, 92626. Okke;s registered address 6 is:
Morgan & Morgan Trust C...orp. (Belize) 35 Regent St., Belize,
7 Be1ize. Okke is subject to the jurisdiction of this Court it was
used for s ftaudulent contrary to Cal.Civ.Code 3439 and other 9
laws. 10 12. Defendant ALCINA CORP. (hereinafter also "Aicina'') is
11 shell under 1aws of Belize, lBC No. 52723. Alcina 12 engages in
business in the U.S. and intemationaJly, on infonnation and belief,
Karabayev's alter ego, with thc de facto address: lbar Development
t4 LLC::- 940 South Coast Dr 100, Co$ta 92626. Alcina's registered
1s address is: Suc-re & Sucre Ltd., 6() M.arket Square, Belize.
Alcina is subject to the jurisdiction of this Court because it was
used for r.1 fraudulent transfers assets, contrary to Ca1.Civ.Code
3439 and other 18 laws. t9 13. Defendant PINGTON L1D. (hereinafter
aJso "Pington") zo )$ shell compa.tly organized under the laws of
Belize. Pington engages in 2t business in the U.S. and
i.ntemationalJy, being, on infonnation and belief, Karabayev"s
alter ego, with the de facto address: lbar Devclopment 23 940 South
Coast Dr., 1 Costa Mesa, 92626. registered 24 address is at: Morgan
and Morgan Trust Corporation {Belize), of Regent Street, Belize
Belize (the same for Okke). Pington is subject to 26 the
ju....-jsdiction of this Court because it vtas used for {r.audulent
transfers of 27 Tumn's assets, contrary to Cai.Civ.Code 3439
andother laws. 1 Amr.-:ndcd Tbird Party Complait1t 6 Case
8:09-cv-00059-JVS-MLG Document 441 Filed 03/15/12 Page 7 of 25 Page
ID #:9893Nar 15 2012 325) 831-1888 14. Detendant V ARRlAL FINANCIAL
I .. TD. (bereinafter also 2 is shell company organized under the
laws of the British Virgi.n Is.lands, at: Overseas Management
Tt11st Ltd.) R.G. Hodge Plaza 4 2nd FJoor, 31152 Road Town1
Torto1a, the BV1. IBC No. 425957. s Vanial engages in business i.n
the U.S. and intern.ationally, being, on 6 informatiot1 and s alter
ego, with th.e de facto address: Ibar '7 DeveJopment LLC, 940 South
Coast Dr., 100, Costa 92626. V arri.al (which has had stake in
cert.ain realty in Califomia) is subject to the 9 jurisdiction of
this Court it was used for ftaudulent tra.nsfers of the assets of
Turan, contrary to Cal.Civ.Code 3439 and other laws. 11 J 5.
Defendant ESSEX L 1D. (here:inafter also "Essex") is 12 sheiJ
company organized the laws of the British Virgin at the J;)
preseJJt registered agent's address: Blcnheim Trust Ltd., R.G.
Hodge 1-1 PJaza Road Town, TortoJa, the BVIt IBC No. 5 I 7296.
Initially, 11 it was inco:rporated on October 14t 2002 and operated
while su.spended in the 16 BVI for nonpayment of the agent's fees
before being reinstated effective 11 January 1, 2007. engag:es in
business in the U.S. and 18 be.ing, on information and Anatoly
Vanetik's alter egot wi.th the de facto 19 address: 3720 South
Susan St.? Suite 100, Santa Ana, 92704. Essex is 20 subject to the
jurisdiction of this Court because it was used for fraudulent 21
transfers asscts, contra.ry to Cal.Civ.Code 3439 and other
applicabl.e :n Jaws. 16. Detendant HINES S.A. (hereina:fter also is
shell organized under the laws ofPanama on 14.2007, IBC zs at the
regi.stered address: El Cangreso 17, 26 Panama City, Panama. Hines
engages in business in the tl.S. and intemationally, 21 011
information and Anatoly alter egc, with the de facto Secnod Third
.f"11rty Cumplait1t ? Case 8:09-cv-00059-JVS-MLG Document 441 Filed
03/15/12 Page 8 of 25 Page ID #:9894Mar 15 2012 12:56F Schreiber
Law Offiaes address: 3720 South Susan Su.ite 100, Santa Ana, 92704.
Hines is 2 subject to the jurisdiction of this Court because it was
used for ftaudulent transfers ofTuran's to Cal.Civ.Code 3439 and
otl1er 4 laws, s 17. Defendant PINE BROOK, S.A. (hereinafter also
"Pine Brook") is shel1 organized under the laws of Panama_.
registered on March 16; 2007, 1 #8491-274, 44607/4122, at the
registered address: Plaza, 8 Panama City, agent Brigido Navarro.
Pine Brook engages in business in the 9 tJ.S. and intemationa:Hy,
on and beliet: Anatoly Vanetik's 10 alter ego, wi.th the defacto
address: 3720 South Susan St., Suite Santa 11 92 704. Pine Brook is
subject to the jurisdiction of because it was 12 used for
ftaudulent transfers of Turan's contrary to Cal.Civ.Code 3439 and
other laws. 1.t. 18. De.fen&nt COAST FINANCE; Lm. (hereinafter
also is shel! 1.s organized, on information and be1ief, under the
laws of an offshore jurisdiction yet to identified. Coast engages
i11 business in the U.S. 11 on infom1ation and beliet s alter ego,
with the 18 de facto address: DeveJopment IJ .... C, 940 South
Coast Dr., 1 Costa 19 Mesa, 92626. Coast is subject to the
jurisdiction of tbls Court because it :ro was used for fraudulent
transfers of assets, contrat:y to CaJ.Civ.Code 21 3439 and other
]aws. zz 19. Defendant 111 (hereinafter is company ()fganized under
the laws on January 30, 2008, that engages 24 in bus:iness
intema.tionally, being, on infonnation and belief, Karabayev's
alter .Z5 ego, with the de facto address: Ibar .Development LLC,
940 South Coast Dr+, 26 100, Costa Mesa, 92626. Karabayev's
mother-inlaw purportedly 21 incorporated Karlan in Aktoby, and has
its director. Kar1an is Aroended Third Party CompJ11int Case
8:09-cv-00059-JVS-MLG Document 441 Filed 03/15/12 Page 9 of 25 Page
ID #:9895Msr 15 2012 Schreiber Law Offices 925) 831-1899 10 subject
to the jurisdiction of this Court because it was used tor
frauduient 2 transfers assets! contrary to Cal.Civ.Code 3439 and
other ]aws. 4 20. Detendant (hereinafter js 5 company organized
under the laws of that engages in business 6 ittternationally with
two different offices in Almaty, It was 7 incorporated in April of
2005 as wholly owned subsidiary. Bek1ayev served as its Dire Yuri
and other operato.rs 10 on the Pink Sheets, as directed Yuri in his
e-mail the 4-phase plan. The price was set at $1.2.50 per on and
couple of 12 transa.ctions of only 100 shares on the Pink Sheets.
Tbls manipulation was done s3 to attract investors and inflate the
apparent value of the stock sold to various t4 investors. 44. Since
its inception, has had no business revenues. From J6 the start,
Vanetik and certain other Defendants never intended to make Turan n
but as the vehic1e for an Ponzi scheme to divert the proceeds of
their tblrd party distributions to theii own including through the
19 accounts of ofl:Shore entities in Swit:r.erland, and to spend as
Httle as on 20 business purposes. (d) Iss.uing iq Order to Acquire
Concession 45. purchase the 100% interest in the Concessiont
Vanetik proposed to Bektayev to compensate interest in transfening
27 million shares 24 in Turan (with 50 million authorized which
represented 54% rnajority 2s stock). purohase contract also
included an option on 10 26 shares in Turan that could exercised
later. However, give11 the 27 !5 :J{1f,>l:/()1(' 1:2!;30 I'M
Case 8:09-cv-00059-JVS-MLG Document 441 Filed 03/15/12 Page 16 of
25 Page ID #:9902 15 2012 I:01PM Schreiber Law Offices 3251
831-1898 17 secret distribution of "founders;' stock a.nd the
overissue, V anetik did not intetld 1 to meke that optio:n to
Bektayev. 46. 24,381,862 of these shares were to held through
Nevada holding 4 corporation (Trck Resources, Inc.; see be1ow) to
set up specificaJ1y for that 5 purpose Vaneti.k: for Bektayev's
benefit. Additionally, 2,618,138 shares in 6 Turan were to issued
directly in Bektayev' s 1 4 7. That Maroh 26, 2005 agreemen.t
represented to an.d YEv that was authorized to issue 100 tnillion
shares. However, both the 9 ficritious Janua:ry 25, 2005 increase
in authorized shares and the 10 misrepresentation to and YEV in the
26, 2005 agreement 11 that TURAN was authorized to issue 100
million shares were fulse. On 12 February 7, with V signing as
President of prepared its Exchange Commission Information and
Disclosure 14 Staternent pursuant to .Rule of the Securities
Exchange Act of 1934. Js Item vi of this Statement stated that the
number of total TURAN sha:res 16 authorized was 50 with shares
outstanding. VANE11K and 11 with 50 authorized and almost 33 shares
J8 outstanding, therefore could not have validly co.mmitted as of
that date to sell 19 27 shares in to BEKTAYEV and sa.le is void 20
un1awful and fraudulent . .21 48. While the allegations in
Parngraphs 47 through 48 of this Seco11d :zz Amended Vetified Third
Party CompJaint may vary in detaHs from the 23 allegations
contained in Paragraphs 4 7 and 48 of the Amended Verified 2-1
Party Complaint, the variations de.rive &om addi.tiona1
information revealed zs ftom discovery, including, not limited to
the f'ebruary 7 2005 SEC Rule 26 Infonnation and Disclosure
Statement, from obtained 21 between Iat.e September 2009 and
January after the appeaJ in Ninth 16 11 - 12 1:25:30 Case
8:09-cv-00059-JVS-MLG Document 441 Filed 03/15/12 Page 17 of 25
Page ID #:9903Mar 15 2012 l:OlPM Circuit Court of Appeals No.
09-56329 and before the January 19. 2011 2 mandate issued the Ninth
Circuit i.n this case. proceedings in whicb and BEKTAYEV obtained
this discovery were I.,ube}]ki1 et. al. v. Turan 4 et aj., Carson
City) First Judicial District, Case No. 5 submitted for decision
following oraJ argument on January 11, 2012 in Nevada 6 Suprerne
Court Case Nos. 55488t 56908. allegations are consistent., 7
however, in that: the January 25, 2005 document that purported to
increase the s of authorized shares was bogus and w.ithout any
authority, making the 9 representations to and YEV cont.ained
therein false and mis1eading an.d that the agreement would have
given YEV and the 1argest 11 singl.e of shares in TORAN, giving
these plaintiffs control over the 12 Concession. the statements on
the 11JRAN share certificate 83, 93, and 95 show that 50 miJiion
shures ofTURAN were a.uthorized 14 also represented to and TURAN
that they owned 54% ts interest in 11JRAN and thus over the
Concession. !6 49. According t Case 8:09-cv-00059-JVS-MLG Document
441-3 Filed 03/15/12 Page 14 of 25 Page ID #:9975' ; ; ! : -------
-(r;nr ', N!IJo\1!!!.111 :Z$0 "' ... .., ........ .......... 1_ ..
._._ .. ____ ._..,_ .,.. ... , ......... -_ .. _ ....______
-----........ "__......,....,.. .... __ .._. ...... _____ _
--J!< ... _ _,.._ ____ ..... ..... -$fiAIIIE$ .. :. INC
c...-:.=:J '"', : . .. - v:;;> .... COMMON COMMON STOCK CUS!P
1!8989J10G --.. -CI!fl ..... -""""' "tiiAT - FoUI"tsen Hu:dl1!d
Elgttty.One Elght FUU.Y PAIO NC 11014-ASSESSA&E 01' COINON 01'
I"E'J'ROU:U!'t(. 'INC. itf fk i:J lh /'wlfW ,.,-,.. hliJ llilm.ltd
",CW: i1f tlilr CN'/ifit1N. "11it.t tJ .., 111< 'l"nvftr """"''
tk jiiVifffitt -r fr,U tl,...OilJ'I!S 16{1!1 00""'' 21!115 lle ..
.......,._ .. ,.... .. ..... -Case 8:09-cv-00059-JVS-MLG Document
441-3 Filed 03/15/12 Page 15 of 25 Page ID #:9976APPENDIX et al. v.
TURAN PETROLEUM, et al. EXHIBIT Title for Exhibit: Memorandum of
Defendant Freeman Freeman Smiley LLP, Dated July 29, 2008 Case
8:09-cv-00059-JVS-MLG Document 441-3 Filed 03/15/12 Page 16 of 25
Page ID #:9977freeman freeman Memorandum ATTORNEY -CLIENT
PRIVILEGED AND CONFIDENTIAL FROM: DATE: SUBJECT: Turan Petro!eum,
lnc. ('Turan" or the company") Sylvia Scott July 29, 2008 Analysis
of lnformation Gathered Ouring Turan's lnternal Audit; Oue
Diligence for Revised Private Placement Memorandum; and Proposed
Solutions This memorandum provides an analysis of factual findings
resulting from an internal audit performed Turan's Robln Bisarya.
This memorandum also serves as due diligence for needed revisions
to Turan's private placement memorandum and anticipated capital
raise. The purpose of this memorandum, outlined in the of contents
below, is to simultaneously identify and solutions so that the can
move forward in positive direction and decisively address the
issues described herein. At the end of each section of this
memorandum there is summary that includes: 1} concise statement of
the (2) why the is signiftcant; and (3) proposed solutions to the
Case 8:09-cv-00059-JVS-MLG Document 441-3 Filed 03/15/12 Page 17 of
25 Page ID #:9978ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL ABLE
OF CONTENTS 1. Background of the Company 11. lssue: Whether Certain
Stock Transfers Relating to Trek 4 Resources, the Bektayev Group,
Karlan 111 and Pine Brook Were Authorized/Legal Facts Relevant to
the lssue 4 and Solutions 9 1. Concise Statement of the 9 2. Why
the is Significant 9 3. ltems and Proposed Solutions 11 111. lssue:
of Disclosure to lnvestors; Uses of 12 Turan's Funds 12 Facts
Relevant to the lssue 14 and Solutions 14 1. Concise Statement of
the 14 2. Why the is Significant 14 Action ltems and Proposed
Solutions IV. lssue: Commingling; lnternal Controls and
Recordkeeping 15 Facts Relevant to the lssue 15 and Solutions 16 1.
Concise Statement of the 16 2. Why the is Significant 16 3. Action
ltems and Proposed Solutions 16 2 Case 8:09-cv-00059-JVS-MLG
Document 441-3 Filed 03/15/12 Page 18 of 25 Page ID #:9979 -CLIENT
PRIVILEGED AND CONFIDENTIAL 1. Background of the Company Turan was
incorporated in Nevada in March 2001 under the name, Elite
Registry, lnc. ("Eiite") and is currently based in Costa Mesa,
California. Elite's name was changed to Turan in December 2004 and.
in January 2005, the Company's Articles were amended to designate
as its "initia! directors" Vanetik and Robert Van Duren. The
January 2005 Amended Articles also authorized Turan to issue 100
Million shares. On 2/22/07, the Articles were amended to authorize
the issuance of 150 Million shares. the Articles were amended to
authorize the issuance of 200 Million shares. Currentry, there are
approximately 113 Million shares of Turan stock and outstanding.
Additionally, there are approximately 40 Million shares of stock
options issued and outstanding. Mr. Vanetik was Turan's President
from the Company's inception through about 2008. Mr. Van Duren was
Turan's Secretary and Treasurer from about November 2004 to 2008.
(Yuri Vanetik was the Secretary from April2001 to about December
2004 and Vanetik was the Treasurer to about November 2004.) Mr.
Vanetik is the Chairman of the Board of Turan. ln or about June
2008, the following new officers were appointed: 1. President and
Askar Karaba_yev 2. Chief Exploration Officer S,guyres 3. VP of
Business Development Jacky 4. VP of Operations Naum Voloshin 5.
Secretary & Treasurer Robln Bisarya 6. VP of Administration and
Alex Striganov echnical Support The had virtually no operations
until2004, when it entered into the oil and gas industry recruiting
new management and acquiring Turan EnerPetroleum, LLP organized and
domiciled in the of Kazakhstan. is the holder of license granted
the Kazakhstan government (the "Concession") to explore and extract
hydrocarbons in territory consisting of over 5,000,000 acres
located in South Kazakhstan (close to China and Uzbekistan). ln
June 2006, Turan entered into certain agreements with Resources,
lnc. ('TRI"). TRI is privately held, institutionally controlled,
international oil and gas exploration and technology company. lt
utiJizes what it claims to advanced Case 8:09-cv-00059-JVS-MLG
Document 441-3 Filed 03/15/12 Page 19 of 25 Page ID #:9980 -CLIENT
PRIVILEGED AND CONFIDENTIAL technology to increase the efficiency
of the exploration efforts in oll and gas. ln July 2008, the
Turan-TRI agreements were renegotiated and the companies look
forward to productive relationship. Since its inception, Turan has
had no revenues, other than the receipt of proceeds from the sale
of piece of another concession for $300,000 to Russian Angel
Acquisition, LLP. The Company's financial statements have been
audited since the end of 2005. Additionally, the Company has never
filed tax returns with federal or state authorities. However,
recently the has undertaken an internal audit of the Company's
books ar1d records. 11. lssue: Whether Certain Stock Transfers
Relating to Trek Resources, the Bektayev Group, Karlan 111 and Pine
Brook Were Authorized/Legal facts Relevant to the lssue The "Trek"
Transactions way of background, March 26, 2005, Turan entered into
contract with Kazenercom Kazakhstan LLC) and Yerkin Bektayev
(collectively, the ''Bektayev Group") entitled. Enerpetroteum
Confidential Asset Purchase Agreement" (hereinafter, Agreement").
Under the agreed to purchase 100% of TEP's assets in exchange for
the payment of 26,181,372 Turan shares to the Bektayev Group. Turan
paid the Bektayev Group under Agreement forming Trek Resources,
lnc. ("Trek") to house most of the shares. Trek, formed in April
2005, is Nevada corporation. Bektayev was initially the President,
Secretary, Treasurer and sole director. Turan paid the Bektayev
Group under effecting the following Turan stock transfers:
Bektayev: Trek: TOTAL: 2,618,138 24,381,862 27,000,0001 ln about
2006, the Bektayev Group (through LLC) filed lawsuit against Turan
in Kazakhstan alleging that pursuant to Nominal Purchase Agreement
between the Bektayev Group and Turan, dated 25, 2005 (two months
after the Agreement), was to Kazenercom for its 49% interest in 1
letter dated June 2. 2006, the transfer agent (Empire) confirmed
that Bektayev his shares 2005 (certificate 83); and Trek received
its shares July 12, 2005 (9,800,000 shares/certificate 93) and
August 22, 2005 (14,581 ,862 shares/certificate no. 95). 4 Case
8:09-cv-00059-JVS-MLG Document 441-3 Filed 03/15/12 Page 20 of 25
Page ID #:9981 -CLIENT PRIVILEGED AND CONFIDENTIAL TEP's nominal
capital total of 49,000 (roughly $400 USD), plus $450,000 USD in
accordance with additional terms mentioned in the Purchase
Agreement. ln July 2006, the Court issued Decision (the "July 2006
Court Order") ruling in favor ofTuran finding that the Nominal
Purchase Agreement was ancillary to the Purchase Agreement.
Significantly, the July 2006 Court Order also found that the
Bektayev Group had received adequate and fair compensation for the
asset sale because they had received 27 Turan shares as represented
Turan's President in letter dated July 1 3, 2006 which was
submitted to the Court. [The July 2006 Court Order and July 13,
2006 Letter (both translated into English) are attached hereto as
Attachment An appeal and two more lawsuits were filed the Bektayev
Group against Turan. The second lawsuit resulted in the Bektayev
Group getting back the 49% stock ownership interest in about March
2007. The third lawsuit the Bektayev Group was an attempt them to
get the remaining 51% stock ownership interest. The initial court
decision resulted in an award ofthe remaining 51% to the Bektayev
Group. Although the time to appeal this award had expired, through
certain Kazakh contacts oblained the current President of Turan and
Karlan 111 (hereinafter, "Karlan"), belated appeal was successfully
lodged and Turan got back its 100% ownership interest in This was
an important victory for Turan because (along with its exploration
and drilling license), was (and is} Turan's only significant asset.
The net result of the events is that Turan is to the Bektayev Group
total of 27 Million shares and to Karlan 111 total of 35 Million
shares. However, review of Turan's transfer agent records and other
documents show that the 24,381,862 Turan shares held in Trek's name
for the benefit of the Bektayev Group were transferred to persons
not for the benefit of the Bektayev Group and in apparent violation
of the July 2006 Court Order. Unbeknownst to the Bektayev Group and
through certain activities that are not currently known Turan's
senior management staff, Bektayev was somehow removed as President,
Secretary, Treasurer and sole director of Trek in April 2006 and
the following replacement officers and directors were appointed:
President: Sergey lipatov (replacing Bektayev) Secretary: Anatoly
Vanetik (replacing Bektayev) Treasurer: Anatoly Vanetik (replacing
Bektayev) Directors: Sergey Lipatov and Alexy Stojarov (replacing
Bektayev) 2 Karlan has significant contacts in Kazakhstan which are
also important to the retention of the licenses held For these
services and as further detailed in the "Confidential Turan
Petroleum Consulting Subscription Agreement for Karlan 111 ," dated
February 15, 2008, Turan was required to Karlan 35 Million shares
of Turan. 5 Case 8:09-cv-00059-JVS-MLG Document 441-3 Filed
03/15/12 Page 21 of 25 Page ID #:9982ATTORNEY -CLIENT PRIVILEGED
AND CONFIDENTJAL Thereafter, in October 2006, Alexander Kushnirenko
became the new president, treasurer and director of the and
Asylkhan Burbayev became the nev11 secretary of Trek. According to
emails dated October 26 and 31, 2006, these changes were assisted
Mr. Vanetik. The emails are attached as Attachment Pursuant to
undated Stock Powers that are signed Mr. Kushnirenko, Trek was
divested of all of its Turan stockholdings and the shares were
transferred to three entities controlled Karlan as payment for the
contract between Turan and Karlan (referenced above) and to Hines
lnvestments, SA ("Hines"). According to Articles of lncorporation
for Hines that Mr. Karabayev received from Mr. Vanetik, Hines is
Panama corporation. The Karlan companies received approximately 16
Million shares and Hines received approximately 8.4 Million shares.
Hines transferred approximately 6.24 Million of its shares to two
companies. which were further distributed to various investors.
These transfers are apparently invalid because the shares should
have remained with Trek (i.e., the Bektayev Group) according to the
Jufy 2006 Court Order. Additionally, the legality of the new Trek
officer/director appointments is an open question given that
Bektayev (the original and sole officer/director of Trek) has no
knowledge of these appointments and would strenuously oppose them.
Additionally, even assuming Bektayev was legally removed without
his knowledge (if for example 100% of Trek's shares were owned
another person), Bektayev is likely to claim that he was
fraudulently induced to transfer his shares to Trek as result of
false or misleading representations made agents of Turan that the
Turan shares would remain in Trek for the benefit of the Bektayev
Group. Bektayev's attorneys have already threatened lawsuits as
they have recently learned that something is amiss, as discussed
below. Below is flow chart detailing the Turan stock transfers away
from Trek to various persons: [THIS SPACE INTENTIONALL LEFT 6 Case
8:09-cv-00059-JVS-MLG Document 441-3 Filed 03/15/12 Page 22 of 25
Page ID #:9983 -CLIENT PRIVILEGED AND CONFIDENTIAL Stock Transfers
From Trek (Bektayev) to Various Persons Pington lnv. (Karlan)
5,333,000 shs (8/07) Private Equity Mgt 4,240,000 shs (2/08)
24,381,862 shares received Trek Varrial Fin. (Karlan) (July/Aug
2005) 5,333,000 shs (8/07) HJnes t-----t>i 888 Capital LLC as
required Transfrs/Sel/s July 2006 Cour1 Order Coast Fin. (Karlan)
5,333.000 shs (8/07) Transfrs!Sel/s 2,000,000 shs (3/08) Hines lnv.
SA 8,382,862 shs (10/07) 1. Nhung Thi Nguyen Hines 2,142,000 shs
(bal.) ransfrs!Sells 35,000 shs transfr req'd NRG 2. Bui Nevada LLC
100,000 shs transfr req'd NRG Vivian Nguyen 80,000 shs transfr
req'd NRG 4. Chrlstlan Llsing 20,000 shs (3/08); transfr req'd NRG
5. Le 888 Dynasty 83,333 shs transfr req'd NRG 6. Kevln Jones
Brightstone 250,000 shs {3/08); transfr req'd NRG 7. Judv Trinh
20,000 shs (3/08); transfr req'd NRG Delta Fine Chemicals 1 Mil shs
(3/08); transfr req'd NRG 9. Partners 2 Mil shs (3108); transfr
req'd NRG 10. 3 Polnt lnvestment 20,000 shs (4108); transfr req'd
Turan 11. FamiLee lnvestment 46,000 shs (4108); transfr req'd Turan
12. Tlffany 14,290 shs (4/08); transfr req'd Turan 1 Minh Tran 2000
shs (4/08); transfr req'd Turan 14. 569,337 shs (balance as of
4/08) 7 Case 8:09-cv-00059-JVS-MLG Document 441-3 Filed 03/15/12
Page 23 of 25 Page ID #:9984 -CLIENT PRIVILEGED AND CONFIDENTIAL
The "Pine Brook" Transactions With regard to Turan's Agreement to
Karlan 35 Million shares ofTuran, 10 Million of those shares were
transferred to Pine Brook (or Brooke) as evidenced transfer agent
records and various documents. Pine Brook is unrelated to Karlan.
This transfer was facilitated letter to Turan, dated February 22,
2008, and allegedly signed Manat Torbergenova, principal of Kar!an
(the "alleged Torbergenova Letter" or "Letter"). The al/eged
Torbergenova Letter is in English; however, Ms. Torbergenova does
not speak or read EngHsh (she speaks Russian). Turan's current
President (Askar Karabayev) questioned Ms. Torbergenova about the
Letter and she stated that the signature was not hers and that it
is forgery. The Letter instructs Turan to issue 35 Million shares
as follows: 1. Pine Brook, SA (Panama City, Balboa Plaza. Panama: 1
Million shares); 2. Varrial Financial Trading (affiliated with
Karlan): 10 Million shares; 3. Karlan 111 : 15 shares. The alleged
Terbergenova Letter was from Van Duren, attached to an email from
Mr. Van Duren to Turan's senior management, dated July 8, 2008
(''Van Duren Email"). The Letter and Van Duren Email are attached
to this memorandum as Attachment "D". ln the Van Duren Email, Mr.
Van Duren states, among other things the following: "On February
15, 2008 we passed Board resolution regarding entering into
contract with Karlan 111 obligatlng Turan to issue 35,000,000
shares in return for services provided Karlan 111 . . .. ony
(Vanetik] asked me to prepare resolution to issue the shares in the
name of 3 separate companies. Since this was change from the name
of the entity that we had executed the contract with (Karlan 111) 1
asked to get an instruction letter from Karlan 111 instructing
Turan to issue the shares in the names Tony had provided. provided
me with the attached instruction letter on February 22 (the alleged
Tobergenova Letter] .... lf mistake was made in the issuance of the
shares it needs to resolved .... ln reviewing the records from the
transfer agent 1 see 3 separate certificates were issued as result
of the board action regarding the 35,000.000 share transaction. One
of the certificates was # 296 issued in the name of Pine Brooke SA
in the amount of 10,000,000 shares. 417-08 the transfer agent broke
certificate # 296 into several different certificates. 1,000,000
shares were issued into new names represented 4 separate
certificates numbered 334, 335, 336, 8 Case 8:09-cv-00059-JVS-MLG
Document 441-3 Filed 03/15/12 Page 24 of 25 Page ID #:9985
PRIVILEGED AND CONFIDENTIAL and 337. The balance of 9,000.000
shares were reissued into the name of Pine Brooke SA represented
certificate # 333. On the transfer agent cancelled certificate
number 333 and reissued certificate # 340 in the name of Pine Brook
SA in the amount of 9,000,000 shares. As you may notice this is
slightly different spelling. Mr. Van Duren goes on to advise that
freeze placed the shares relating to the Pine Brook transfer. As
referenced in the Van Duren Email, and reflected in transfer agent
records, the 1 Million shares issued to Pine Brook were broken up
and 1 Million of the shares was issued to four (4) recipients. all
of whom have the same address in Switzerland. The recipients of the
1 Million shares apparently have no affiliation with Karlan. Three
of the certificates are in the name of UArticle Second Trust" and
one of the certificates is in the name of "Eiizabeth Fago Trust."
Turan. in consultation with corporate counsel. has placed freeze on
the certificates relating to the Pine Brook transfers. pending
Turan's continuing inguiry into this matter. Additionally, in light
of the other transfers, Turan has instructed the transfer agent to
get all stock transfer reguests pre-approved Turan's Secretarv
(Robln Bisarva) until further notice. This was done to prevent the
continuation of activities that might in contravention of federal
and state securities laws, among other things. As regards the
identity of Pine Brook, the Terbergenova Letter indicates that it
is Panama corporation (like Hines). Mr. Van Duren also stated that
Pine Brook is Panama Corporation. agent records report that Pine
Brook's address is the United States is the same as NRG's (which is
Turan's former address), i.e., 3720 South Susan St., Santa Ana,
According to bank wire transfers relating to the Lee" transaction,
discussed below, Pine Brook has bank account in Switzerland. and
Solutions 1. Concise Statement of the Substantial shares of Turan
(24,381 ,862 ) have been transferred out of Trek in apparent
violation ofthe July 2006 Court Order. Most ofthose shares
(15,999,0000) were transferred to entities controlled Karlan
pursuant to contract between it and Turan. lf the transfers of
Turan stock away from Trek are illegal, then the stock transfers to
Karlan are invalid. This further results in failure Turan to the
consideration it owes to Kar/an under the contract, potentially
threatening to undermine an important relationship and trigger
lawsuit. Additionally, assuming that Bektayev or Trek never had
right to the 24,381,862 shares, why were they not returned to Turan
and cancelled? 9 Case 8:09-cv-00059-JVS-MLG Document 441-3 Filed
03/15/12 Page 25 of 25 Page ID #:9986ATTORNEY-CLIENT PRIVILEGED AND
CONFIDENTIAL 2. W/ry the is Significant 1, The appointment of
Trek's current officers/directors and the removal of Bektayev may
not legal because Bektayev {Trek's sole officer/director at the
time of the appointments/removal) did not authorize these actions.
lf the removal of Bektayev was not legal, the divestment of Trek's
stockholdings in Turan is not legal; nor are the subsequent
transfers to Karlan, et al. Additionally, if any Turan officers or
directors facilitated any illicit activities, Turan willlikely the
subject of regulatory scrutiny and private lawsuits, 2. Karlan is
an important partner for Turan as it has key contacts in
Kazakhstan, which are essential for TEP's retention of its license.
Additionally, Karlan provided services for Turan with regard to the
lawsuits the Bektayev Group and TEP's renewal of its license with
the Kazakh government. lf Turan's relationship with Karlan is
compromised, lawsuits are likely and TEP's license (Turan's only
significant asset at this time) would in peril. Attorneys for the
Bektayev Group have contacted Turan threatening lawsuit because
they have received information that Bektayev no longer has any
interest in Trek.3 At this point, Bektayev's attorneys do not know
that all of the Turan shares have been transferred out of Trek.
lawsuit is practically certain if they become aware of this fact.
4. Registration lssues: The sales Private Equity Management, lnc.
(which is apparently not broker-dealer) to 14 persons raises issues
of whether acted as an unregistered broker-dealer and/or sales
agent in violation of state and/or federallaws.4 Additionally, if
purchased the shares with view towards 3 Specifically, one of
Trek's current officers, Mr. lipatov, sent letter to attorneys for
the Bektayev Group (Rutan Tucker in New York) that Mr. Bektayev has
interest in Trek. 4 Brokers and dealers in securities are required
register with the SEC. Similarly, each state has its own
requirements for broker/dealer registration. Under federallaw,
"broker" is any person engaged in the business of effecting
transactions in securities for the account of others, but does not
include bank. "dealer" is person engaged in the business of buying
and selling securities for his own account, through broker or
otherwise. lssuers {i.e., companies) generally are not "brokers"
because they sell securities for their own accounts and not for the
accounts of others. lssuers generaliy are not "dealers" because
they do not buy and sell their securities for their own accounts.
Persons associated with issuers could brokers is they receive
transaction based compensation. 10 Case 8:09-cv-00059-JVS-MLG
Document 441-4 Filed 03/15/12 Page 1 of 17 Page ID
#:9987ATTORNEV-CLIENT PRIVILEGED AND CONFIDENTIAL distribution and
there is no exemption this raises issues of compliance with
securities registration requirements.5 3. Action ltems and Proposed
Solutions Action /tem(s) 1. answers to the following questions as
soon as How was the removal of Bektayev and of new officers and
directors for Trek accomp/ished and whom (i.e., confirm whether
legal; get of Trek's By/aws)? With regard to the recipient of the
Trek shares (other then the Karlan companies, who are known),
ascertain: (1) general information regarding the identity of the
persons (i.e., who controls the entities, are the individuals
affiliated in any way with Turan or any of its control persons);
and (2) what consideration if any was paid the recipients of the
shares. Who controls Pine Brook and why did Pine Brook receive
shares earmarked for Karlan?6 Who controls Hines and what
consideration, if any, did Hines for the Turan shares it received.
Proposed Solution(s): With regard to Finders, the SEC's
interpretation of the finder's exemption is predicated on the
finder merely making to the issuer, introduction or otherwise, the
identity of interested investors, and the absence of certain
factors (i.e., participation in negotiations, counseling investors
of the merits of investing, recommending the investment to
investors, receiving compensation based on percentage of the
offering proceeds, holding or cash, conducting sales efforts). 5 is
not to confused with Private Equity Management Group (hereinafter,
"PEMGROUP"). PEMGROUP is global private equity investment firm
located in North America and Asia, with over US$4 blllion in assets
under management and over 100 investment professionals worldwide.
Turan has leamed from PEMGROUP that it believes it has cause of
action against for improper use of its corporate name. PEMGROUP has
apparently received calls from Turan sharehotders who have stated
that is essentially posing as PEMGROUP, triggering the possibllity
of further lawsuits in which Turan could get looped in (even if
Turan engaged in no wrongdoing). 6 The Company's Secretary has put
forth substantial efforts to get these and related questions
answered and has encountered Consequently, in the absence of legal
action, it may not to get these questions answered. 11 Case
8:09-cv-00059-JVS-MLG Document 441-4 Filed 03/15/12 Page 2 of 17
Page ID #:9988 -CLIENT PRIVILEGED AND 1 Cancel all of the shares
(24,381,862) that were issued as result of the divestment of al! of
Trek's stockholdings in Turan (unless immediate responses received
as to the above-listed questions indicating that different action
is appropriate). 2. Re-issue to Trek new shares of Turan totaling
24,381,862 (unless immediate responses are received as to the
questions indicating that different action is appropriate). 3.
Cancel the 10 Million shares that were issued to Pine Brook (and
re-issued to various Swiss accounts) and issue 10 Million shares to
Karlan or its designee(s) (unless immediate responses are received
as to the above-listed questions indicating that different action
is appropriate). 4. Re-issue to Karlan (or its beneficial
designees) new shares of Turan to1aling 15,999,000. 5. Send letters
to each of the recipients of Turan shares apparently belonging to
Trek notifying them that: 1) their Turan certificates have been
cancelled pending an internal audit; 2) their shares will
immediately re-issued to them pending receipt and evaluation of
certain requested information, as appropriate. 6. Return all of the
Turan shares (24,381,862) back to Trek and re-issue new Turan
shares (15,999,000) to the three entities controlled Karlan.
Additionally, re-issue Turan shares to those who are legally
entitled to them (i.e., recipients who have "fully paid for" the
Turan shares they received). 7. Adopt corporate governance
documents (i.e., Corporate Governance Guidelines, etc.) and
establish Finance and Audit Committee as soon as to evaluate these
and other issues referenced in this memorandum. 8. Continue to
require Turan's transfer agent to oblain pre-approval Turan's
Secretary for all stock transfer requests, until Turan completes
its investigation into the stock transfers. 111. lssue: Adequacy of
Disclosure to lnvestorsj Uses of Turan's Funds Facts Relevant to
the lssue Turan's does not disclose the risks and uncertainties
relating to Turan's primary asset as result of the Bektayev and use
of investor proceeds. While the makes general reference to the
Bektayev litigation,7 it goes on to state, 7 The dated February
2007 states, initiated litigation in the United States against
Kazakhstan national and Kazakhstan based company. ln addition. 12
Case 8:09-cv-00059-JVS-MLG Document 441-4 Filed 03/15/12 Page 3 of
17 Page ID #:9989 PRIVILEGEO ANO CONFIDENTIAL 'The does not believe
that the Legal Proceedings it is currently involved in have
material impact on its business.'' During the tirne Turan was in
litigation with the Bektayev Group (frorn about 2006 to September
2007), Turan was at risk of Josing its sole asset Further, various
court orders (that were subject to appeal and eventually
overturned) found that Turan did not have right to all or part of
its claimed ownership interest in (from about March 2007 to
September 2007). Turan's only asset apparently remains at risk
because the Bektayev Group has not received the 24,381,862 shares
of Turan required the July 2006 Court Order. lf the Bektayev Group
learns that all of these shares have been transferred out of Trek
and into the hands of other persons, lawsuit is highly likely. This
could, again, jeopardize Turan's only asset. Specifically, lf
Kazakh Court finds that Turan violated the July 2006 Court Order,
there is substantial risk that the Court could issue rulings
negatively impacting Turan's interest in or otherwise penalizing
Turan. During the pending litigation with the Bektayev Group,
substantial number of Turan shares (8,382,862) were sold to various
institutions and individuals, as detailed in the chart above.
Additional shares were sold to other investors. There are no
versions of Turan's private placement identified to date that
disclose the Bektayev litigation. the substantial threat that Turan
lose its only asset and the fact of court rulings that found
against Turan as to all or part of its ownership interest in
Failure to disclose these facts willlikely viewed as omission of
fact under federal and state securlties laws.8 Turan's internal
audit (the details of which are addressed in the next section of
this memorandum) found that shareholder proceeds were used to
expenses incurred other persons and not for the Company's
Concession. lnformation is still being gathered the Company on this
issue: however, the has oblained historical document indicating
that significant of funds Turan's checking account were distributed
for uses inconsistent with disclosures regarding use of the has
been the defendant against litigation initiated in Kazakhstan the
individual and entity. The parties recently reached an agreernent
to end all of the outstanding litigation .... " 8 Facts are if
investor would consider them important in an investment decision
and would view disclosure of them as significantly altering the
total of made The of relating to financial condition, solvency and
profitabllity is not subject to serious challenge." SEC v. Murphy,
626 F.2d 633, 653 (9th Cir. 1980), cited us in Charles French, 52
S.E.C. 858, 863 n.19 (1996). See also, Leandro Emerg. Med. Group
Proflt Sharing Plan v. Philip Morris Cos., 75 F.3d 801,809 (2d Cir.
1996) ("Material facts include ... those facts which affect the
future of the company.") (quoting SEC v. Texas Gulf Sulphur 401
P.2d 833, 849 (2d Cir. 1968)). 13 Case 8:09-cv-00059-JVS-MLG
Document 441-4 Filed 03/15/12 Page 4 of 17 Page ID #:9990
PRIVILEGED AND CONFIDENTIAL proceeds. The states that all net
proceeds will used to develop the Concesslon. According to
historical ledgers and the Company's former accountant Taylor),
Turan paid expenses to NRG Resources Corp. ("NRG") totaling
$413,330.00. Additionally, an employee of Turan for several years
specifically identified number of expense items paid for Turan tha1
were not for the benefit of Turan. Such items included, among other
things, the fo/lowing payment: 1 $50,000.00 payment to Gintautas
Vileita (apparently related to ''aluminum deal" having nothing to
do with Turan); 2. $98,000.00 in payments to law firm representing
NRG; 3. $150,000.00 payment to Judy Trinh (the wife of former Turan
Secretary, Hiep Trinh); and 4. $7,000.00 payment to Len Futaba, an
employee of NRG.9 and Solutions 1. Concise Statement of the Whether
Turan shareholders received adequate disclosure regarding: (1) the
Bektayev litigation and the threat it posed (and continues to pose)
as to Turan's sole asset and (2) use of proceeds. 2. Why the is
Significant F ailure to disclose material information to investors
and/or making materially misleading statements constitutes fraud
under federal (SEC) and state securities laws. Even if this did not
actually occur, red flags or highly suspicious activities
indicating that it has occurred expose Turan to private lawsuits
and investigation (or prosecution) the regulators (i.e., the SEC
and/or state regulators). 3. Action ltems and Proposed Solutions
Action Jtem(s) answers to the questions outlined in Section 11.8.3,
above, and below. 9 Most recently, in June 2008, an improper
expense was charged to Turan (i.e .. Victoria's Secret). Though the
amount was small and reimbursement was received after the incident
was called to the attention of NRG, this occurrence underscores the
need for immediate implementation of internal controls and
corporate governance policies and procedures. 14 Case
8:09-cv-00059-JVS-MLG Document 441-4 Filed 03/15/12 Page 5 of 17
Page ID #:9991 ATTORNEY -CLIENT PRIVILEGED AND CONFIDENTIAL
Proposed Solution(s): Revise Turan's as soon as Send out
shareholder letter with an update of current and past events, if
appropriate and as additional information is lf an investor
complains and depending upon the basis for the complaint, consider
settling the matter offering to rescind the transaction, if
appropriate and in consideration of the merits, litigation risk,
cost of litigation, and negative Adopt strong corporate governance
policies/procedures and internal controls addressing shareholder
disclosure issues. IV. lssue: Comminglingj lnternal Controls and
Recordkeeping Facts Relevant to the lssue As noted above, Turan's
ongoing internal audit has identified significant expenses paid the
Company via checks and wire transfer that may not have been
appropriate.11 Additionally, with regard to the total amount of
money raised Turan, corporate records received to date state that
total total of $15,237.082 worth of Turan shares were sold for
comblnation of cash and services. Total cash received Turan amounts
to $2.635,610, according to records received to date. Additionally,
the internal audit has been to identify only $5.193,466 worth of
services received. Additionally, sales third parties of their Turan
stock have resulted in the receipt of far more cash than Turan has
ever raised to date (for example, see Sam lee Transaction, below).
Turan's Secretary is continuing to seek answers to these issues
working with NRG employees and others. This task is complicated the
fact that segregated bank accounts were apparently not kept for
Turan and NRG. Additionally, records were apparently not kept of
whether given expense was to Turan only, NRG only or joint
Turan/NRG expense. Turan's former accountant stated that she
attempted to oblain this information from the companies but was to
get responses from them. Consequently, the ledgers that she did
keep do not have the requisite detail. That said, separate
historicalledgers were kept of expenses submitted NRG and expenses
submitted Mr. Vanetik for disbursements from Turan checking
account. As noted above, the NRG ledger shows expenses for the 10
Turan has received complaints from certain investors through their
attorneys who have questioned, among other things, Turan's
recordkeeping and stock transfer. Those matters being handled
corporate counsel. 11 The checks were apparently signed Mr.
Vanetick and the wires were apparently sent an NRG employee
(Haneczka Czernaichowski). 15 Case 8:09-cv-00059-JVS-MLG Document
441-4 Filed 03/15/12 Page 6 of 17 Page ID #:9992ATTORNEY-CLIENT
PRIVILEGED AND CONFIDENTIAL period $413,330.00 for the period
February 2005 to 2008. The Vanetik ledger shows expenses of
$1,781.962.00 for the period February 2005 to 2008. Turan's
Secretary has not yet successful in his continuing efforts to
details for these ledgers. During Turan's internal audit, Turan's
Secretaryrrreasurer further requested copies of the Company's
historical minutes of all meetings of the board of directors in
order to reconstruct the purpose of various significant
expenditures and understand the basis for Turan's of substantial
amounts of shares (including the stock transfers discussed above).
As noted above, to date, Turan has issued total of approximately 11
Million shares. The received the Secretary summarized document
Board of Directors Summary." This document is attached hereto as
Attachment Some of the actual are do not identify the and do not
details, it difficult to events. For example, 12/14/04, states oean
Miller 1, 600,000 shares." 1t is clear from the corresponding
minutes the nature of the benefit received (or to received)
Consequently, it is unclear whether these many other Turan stock
issuances were fully paid, as required. of stock options were to
persons apparently involved with Turan or with apparent benefit to
Turan. Many of these stock options are referenced Turan's board of
directors minutes or board The Sam Lee Transaction high net worth
with whom Mr. Karabayev had done business, Sam Lee, told Mr.
Karabayev that he was in Turan. Mr. Karabayev, who was pre-occupied
with various business matters, introduced Lee to Mr. Vanetik and
Hiep to raise money for Turan. Subsequently, Lee purchased 1
Million shares of Turan for purchase price of $3.80 per share, for
total purchase price of $3.8 Million. However, Mr. Lee apparently
purchased his shares from Essex Management, Turan (which has and to
in of capital). (The effect at the time had purchase price of $5.00
per share.) Records include Private Stock Sale Agreement Essex
Management and Mr. Lee ("Essex/Lee dated February 1, 2008, attached
hereto as Attachment F. The signor the Essex/Lee Agreement is
Sergey Polyanichkin. to Alex Striganov consultant who also worked
in NRG's offices), Mr. is involved an aluminum deal in which
Vanetick is involved. According to emails and other documents
during internal audit, Attachment G, Mr. Yuri Vanetik is affiliated
with Essex. These documents also reflect Turan Board Action (with
Mr. Vanetik and Mr. Van Duren as signors), dated July 5, 2005, the
issuance of 10 Million shares to Essex at $6.00 per share in of
cash and financial consu!ting services relating to the raising of
capital for [Turan] outside of the United States .... " 16 Case
8:09-cv-00059-JVS-MLG Document 441-4 Filed 03/15/12 Page 7 of 17
Page ID #:9993 CLIENT PRIVILEGED AND CONFIDENTIAL Mr. Lee paid for
his shares via three wires dated February, and June 2008. totaling
$3.8 Million (substantially more than total cash apparently ever
raised Turan through its sale of shares- i.e., $2.6 Million). The
money ($3.8 Million) was wired to Swiss bank account in the name of
"Pine Brook." The wire transfer requests are included in Attachment
F. referenced above. As result of these transactions, Turan missed
the opportunity to raise millions of dollars. Mr. Karabayev stated
that he was unaware of these transactions until Mr. Lee happened to
them to his attention. Mr. Karabayev further stated that he was
deeply concerned about the Sam Lee transactions because Turan
really needed these funds to fulfill its under the contract for
exploration on ARYS with the government of Kazakhstan. Continuing
lnternal Audit of the lssues uran recently sent out questionnaires
to shareholders in an attempt to ascertain the identity of certain
shareholders and whether consideration had been paid the
shareholder. One of tfle responses states that the shareholder did
not for the shares he received. The questionnaire response is
attached hereto as Attachment The continues to collect and analyze
information it has received to provide further answers. However,
substantial facts have already been verified the as detailed
herein. and Solutions 1. Concise Statement of the Turan's
recordkeeping and internal controls have raised serious questions
regarding proper use of Turan's funds and whether other activities
were proper and/or authorized. 2. W/1y the is Significant Misuse of
investor funds constitutes fraud under federal (SEC) and state
securities laws. Even if this did not actually occur, red fiags or
highly suspicious activities indicating that it has occurred expose
Turan to private lawsuits and investigation (or prosecution) the
regulators (i.e., the SEC and/or state regulators). The
recordkeeping and internal controls at Turan place the Company at
risk for corporate abuse, which in turn trigger lawsuits and
regulatory scrutiny. 3. Actlon ltems and Proposed Solutions
Additional information is needed for Turan to further assess the of
the issues detailed above. However, what is known to date
demonstrates that Turan 17 Case 8:09-cv-00059-JVS-MLG Document
441-4 Filed 03/15/12 Page 8 of 17 Page ID #:9994APPENDIX VERIFIED
AMENDED THIRD-PARTY COMPLAINT et al. v. TURAN PETROLEUM, et al.
EXHIBIT F Title for Exhibit: Chart Admitted Turan Petroleum, Inc.
in V erified Complaint Against its Board Chairman Anatoly Vanetik
Showing Misappropriation of Plaintiffs' Stock through Panama
offshore Case 8:09-cv-00059-JVS-MLG Document 441-4 Filed 03/15/12
Page 9 of 17 Page ID #:9995r Escrow For 24.6 snares NewShares
NewShares / / -- - -- -- -- -------- ----- ------ --- - --- -
Attacks in Kazakhstan Have to restarted Criminal. legal Case
8:09-cv-00059-JVS-MLG Document 441-4 Filed 03/15/12 Page 10 of 17
Page ID #:9996r i Escrow For 24.61\11 shares New Shares 2461\11 r
-------------.---------------------- Attack&, based on
"racketeenng and alit:n s tatus :Redacted : . . Lw' ,. rt.a 1
Attacks on Bektayev in Kazakh$tan Have to restarted Cnminal, legal
Augmented extract, on information and belief, pierces
attorney-client privilege Case 8:09-cv-00059-JVS-MLG Document 441-4
Filed 03/15/12 Page 11 of 17 Page ID #:9997APPENDIX et al. v. TURAN
PETROLEUM, et al. EXHIBIT G Title for Exhiblt: Letter of Demand to
Defendant Freeman Freeman Smiley LLP, dated March 2, 2009 Case
8:09-cv-00059-JVS-MLG Document 441-4 Filed 03/15/12 Page 12 of 17
Page ID #:9998\ k i \ Case 8:09-cv-00059-JVS-MLG Document 441-4
Filed 03/15/12 Page 13 of 17 Page ID #:9999\ Case
8:09-cv-00059-JVS-MLG Document 441-4 Filed 03/15/12 Page 14 of 17
Page ID #:10000Case 8:09-cv-00059-JVS-MLG Document 441-4 Filed
03/15/12 Page 15 of 17 Page ID #:10001APPENDIX et al. v. TURAN
PETROLEUM, et al. EXHIBIT Title for Exhiblt: Banking Records of $5
million Transfer Defendant Adilzhan Dzhakishev on February 3, 2009
Case 8:09-cv-00059-JVS-MLG Document 441-4 Filed 03/15/12 Page 16 of
17 Page ID #:10002I.JEt.LS FI\RGO BA!IK II.A. FULl TRANSACTION
REPORT >>> *F 2F 2 **** ---*** MESSAGE *** MESSAGE HISTORY
SEQUENCE Page 49122 FOR 03-FEB-2009 - - - - - - - - ~ SND DATE:
09/02/03 CUR:USD TRDR# Case 8:09-cv-00059-JVS-MLG Document 441-4
Filed 03/15/12 Page 17 of 17 Page ID #:10003\JELLS FARGO BAI4K
FUI.L REPORT ;;::;;-:.; TRIJ: 090203069058 > **** Page 30870 FOR
03-FEB-2009 SNO DATE: 09/02/03 CUR:USD TRDR# ________ FTRL ___ FNDS
:S C.!LCi;DB: R Cll;_l\ . :JL ..
------------------------------------------------------*** MESSAGE
*** NRF 0000006DOOOO.OOSFTR 2FTR 0015000150 01iH=Accordi ng to 2
.1. of attachment - 2 to the Turan Entergetroleum LLP -share Sale
d""td""."'""'"'J""a""'n""?=-',""i:z""o----------- Pacific Oil and
Gas LTD) SRF=FW00150034469671 DZHAKISHEV -33 SKYR!DGE
BNF=D/5738215283 -TURAN PETROLEUM INC :.9,40 S COAST DR STE 100
-COSTA MESA 92626-7851 MESSAGE HISTORY SEQUENCE 121 -------R 114114
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