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BRIAN C. LYSAGHT (Bar No. 61965) PAUL D. MURPHY (Bar No. 159556) O’NEILL, LYSAGHT & SUN LLP 100 Wilshire Boulevard, Suite 700 Santa Monica, California 90401-1142 Telephone: (310) 451-5700 Facsimile: (310) 399-7201 Attorneys for Plaintiff Roy L. Olofson UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION ROY L. OLOFSON, individually and as a representative of the general public, Plaintiff, vs. GARY C. WINNICK, an individual; JOSEPH P. PERRONE, an individual; DAN J. COHRS, an individual; THOMAS CASEY, an individual; and DOES 1-100, inclusive, Defendants. CASE NO. CV-02-01693 GAF (JTLx) COMPLAINT FOR: (1)VIOLATION OF ERISA; (2)DEFAMATION; (3)INTENTIONAL INTERFERENCE WITH CONTRACT; (4)NEGLIGENT INTERFERENCE WITH CONTRACT; (5)INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE; AND (6)NEGLIGENT INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE DEMAND FOR JURY TRIAL [ edited for Web publication] For his complaint, plaintiff Roy L. Olofson alleges as follows: OVERVIEW OF THE CASE 1. This case is about attempts by the defendants to artificially prop up the price of defendant Global Crossing Ltd.’s stock by engaging in misleading transactions and accounting methods which gave the appearance that Global Crossing Ltd. was generating hundreds of millions of dollars in sales and cash revenues that did not actually exist. After plaintiff learned of the misleading transactions and accounting methods, he confronted defendants. Their response was shocking. Fearful that their scheme to artificially prop up the price of the stock would be revealed to the public, defendants first attempted to force plaintiff to participate in actions which could have been interpreted as implicating him in the conspiracy. When plaintiff refused, defendants caused plaintiff to be fired. Further, after defendants’ scheme was made public, plaintiff was publicly accused of extortion. Plaintiff has therefore suffered damage in numerous ways, including general, special and presumed damages for defamation, and damages arising from defendants’ interference with contract and interference with prospective economic relations, and a substantial reduction in the value of Plaintiff’s retirement savings plan which has been rendered largely worthless as a consequence of defendants’ scheme. JURISDICTION AND VENUE 2. This court has subject matter jurisdiction over the action pursuant to 28 U.S.C. � 1331 and over the other claims herein pursuant to supplemental jurisdiction under 28 U.S.C. � 1367. 3. Venue is proper in this judicial district pursuant to 28 U.S.C. � 1391(b). THE PARTIES 4. Plaintiff Roy L. Olofson (“Plaintiff” or “Olofson”) is, and at all times herein mentioned was, a resident of Los Angeles County, California. At all relevant times, Olofson was the Vice-President of Finance for defendant Global Crossing Development Company. 5. Defendant Gary C. Winnick (“Winnick”) is, and at all times herein mentioned was, a resident of Los Angeles County, California. At all relevant times, Winnick was the Chairman of the Board of Directors for Global Crossing Ltd. He is sued herein in his individual capacity. 6. Defendant Joseph P. Perrone (“Perrone”) is, and at all times herein mentioned was, a resident of the State of New Jersey. On or about May 1, 2000, Perrone was hired by Global Crossing Ltd. as Senior Vice President, Finance. In December 2000, Perrone became Executive Vice President, Finance. Prior to being an officer of Global Crossing Ltd., Perrone was a partner at the accounting firm Andersen, LLP formerly known as Arthur Andersen, LLP and was the Chief Audit Partner for Andersen’s engagements at Global Crossing Ltd. He is sued herein in his individual capacity. 7. Defendant Dan J. Cohrs (“Cohrs”) is, and at all times herein mentioned was, a resident of Los Angeles County, California. At all relevant times, Cohrs was the Chief Financial Officer of Global Crossing Ltd. He is sued herein in his individual capacity. 8. Defendant Thomas Casey (“Casey”) is, and at all times herein mentioned was, a resident of Los Angeles County, California. At all relevant times, Cohrs was the Chief Executive Officer of Global Crossing Ltd. He is sued herein in his individual capacity. 9. Global Crossing Ltd. is, and at all times mentioned herein was, a corporation organized and existing under the laws of Bermuda, with its principal place of business in Bermuda and its executive offices in Beverly Hills, Los Angeles County, California. Plaintiff is informed and believes that the books and records of Global Crossing Ltd. were kept primarily in Bermuda. 10. Global Crossing Development Company is, and at all times mentioned herein was, a corporation organized and existing under the laws of the State of Delaware with its principal place of business in Beverly Hills, California. Global Crossing Development Company provided administrative services for Global Crossing Ltd.’s group of companies. Plaintiff is informed and believes that the books and records of Global Crossing Development Company were kept primarily in Beverly Hills, California. Plaintiff is further informed and believes that while certain employees of Global Crossing Development Company provided services for Global Crossing Ltd., Global Crossing Ltd. was charged and paid an administrative fee for those services. 11. Andersen, LLP, formerly known as Arthur Andersen, LLP (“Andersen”), is, and at all times here mention was, a limited liability partnership with its headquarters in Chicago, Illinois. At all relevant times, Andersen was and is the accounting firm responsible for auditing the books and records of both Global Crossing Ltd. and Global Crossing Development Company. 12. Simpson Thacher and Bartlett (“Simpson Thacher”) is a law firm based in New York City but with branch offices around the world. Plaintiff is informed and believes that at all relevant times, Simpson Thacher provided legal services to Global Crossing Ltd. and Global Crossing Development Company, including legal services regarding issues that ultimately led to Plaintiff’s termination. 13. Plaintiff is ignorant of the true names and capacities of defendants sued herein as Does 1 through 100, inclusive, and therefore sues these defendants by such fictitious names. 14. Plaintiff is informed and believes, and thereupon alleges, that each of the defendants herein was, at all times relevant to the action, the agent, employee, representative, partner, or joint venturer of the remaining defendants and was acting within the course and scope of that relationship. Plaintiff is further informed and believes, and thereupon alleges, that each of the defendants herein gave consent to, ratified, and authorized the acts herein alleged for each of the remaining defendants. FACTUAL BACKGROUND 15. Commencing on April 20, 1998, plaintiff was employed by Global Crossing Development Company in Beverly Hills, California as the Vice President, Finance. During Plaintiff’s employment, he had responsibility for numerous accounting and financial matters affecting both Global Crossing Ltd. and Global Crossing Development Company. 16. From April 20, 1998 to January 2000, Plaintiff was, at various times, responsible for managing Global Crossing Ltd. and Global Crossing Development Company’s accounting and financial reporting functions including processing of all accounting transactions, preparation of Global Crossing Ltd.’s consolidated financial statements and filings with the United States Securities and Exchange Commission (“SEC”), and budget preparation, among others. He was responsible for the selection and implementation of Global Crossing Ltd. and Global Crossing Development Company’s (and other subsidiaries) financial information systems and for providing insight and guidance regarding accounting matters relating to mergers and acquisitions, new business cases, and other issues. 17. As of January 2000, Plaintiff was responsible for a variety of accounting functions, including company accounting policies and procedures, external and financial statutory reports, revenue recognition and buy/sell accounting processes, and merger/acquisition accounting policy integration. Plaintiff also was responsible for the worldwide credit and collections processes and accounting for the issuance of securities and stock options. As of January 2000, four people reported directly to Plaintiff and an additional 10 to 15 people reported to them and indirectly to Plaintiff. 18. On or about May 1, 2000, defendant Perrone was hired by Global Crossing Ltd. as Senior Vice President, Finance. In December 2000, Perrone became Executive Vice President, Finance of Global Crossing Ltd. Almost immediately, Perrone began to assume responsibility for the Global Crossing Ltd. accounting and reporting requirements that were formerly the responsibility of Plaintiff. In turn, Plaintiff was given different responsibilities including a number of special projects. 19. At about the time Perrone was promoted, Global Crossing Ltd. began experiencing a slowdown in revenues and cash generation. Global Crossing Ltd. was very concerned about its ability to meet or exceed the expectations of the financial analysts that covered Global Crossing Ltd. and its culture was such that meeting or exceeding these financial expectations became one of Global Crossing Ltd.’s highest priorities. Plaintiff is informed and believes that this pressure was exerted by various members of Global Crossing Ltd.’s management but particularly by upper management including defendant Winnick. In addition, defendants and others were concerned that, if Global Crossing did not meet or exceed its analysts’ financial expectations, its stock price would suffer which, in turn, would radically devalue these defendants’ personal holdings of Global Crossing Ltd. stock and stock options. Further, defendants and other members of senior management had bonuses that were tied, at least in part, to Global Crossing Ltd.’s “Cash Revenues” and “Adjusted EBITDA” (terms that are discussed more fully below). Finally, defendants also were concerned that the value of their investments in Global Crossing Ltd. would be severely and detrimentally impacted if Global Crossing Ltd. violated its financial covenants with its banks and defendants knew or suspected that if Global Crossing Ltd’s financial statements accurately reflected the financial condition of the company, Global Crossing Ltd. was in danger of violating its financial covenants. Based in part on the pressure caused by these issues, defendants embarked upon a scheme to artificially prop up the price of the stock by engaging in a series of misleading transactions more fully described below. 20. In January 2001, Plaintiff was diagnosed with lung cancer. He underwent cancer surgery and related therapy and was on medical leave until May 2001. During the period of medical leave, defendant Winnick and others wished Plaintiff well, and told him they looked forward to his returning to work. In late April 2001, Plaintiff met with Winnick, who welcomed him back and told him to talk with Cohrs about specific work assignments when he formally returned the first week of May 2001. Plaintiff Questions Global Crossing Ltd.’s Financial Reporting 21. Starting at the time Plaintiff was on medical leave and continuing after his return, Plaintiff began to learn about various transactions involving Global Crossing Ltd. and various third-parties and he began to seriously question the manner in which Global Crossing Ltd. was reporting its revenues and cash generation to the public. 22. At Cohrs’ suggestion, on May 31, 2001 and again on June 1, 2001, Plaintiff met with Perrone to discuss his ongoing job responsibilities. During the second meeting, Plaintiff took the opportunity to voice his concerns regarding the financial practices of Global Crossing Ltd. In that meeting, Plaintiff told Perrone he was concerned about Global Crossing Ltd.’s first quarter 2001 results. In particular, Plaintiff informed Perrone that he had heard that Global Crossing Ltd. had entered into last minute “swap” transactions to achieve Global Crossing Ltd.’s targets for “Cash Revenue” and “Adjusted EBITDA.” In these swap transactions, Global Crossing Ltd. would exchange certain assets. Plaintiff told Perrone in particular that he was concerned about a swap transaction with a company called 360 Networks where Global Crossing Ltd. booked $150 million in Cash Revenues when no cash had been received, and where Global Crossing Ltd. booked $200 million as a capital expense when only $50 million had actually been paid to 360 Networks. Apparently, the gross amount of cash did not actually change hands because Global Crossing Ltd. was concerned that 360 Networks was about to file bankruptcy and that, if it sent the additional $150 million, 360 Networks might declare bankruptcy in the interim and would therefore not be able to return the $150 million to Global Crossing Ltd. 23. During this meeting, Plaintiff also expressed his concerns about defendant Casey’s statement in the quarterly conference call with analysts and the public that there had been “no swaps” in the first quarter, when in fact there appeared to have been a significant number and a substantial dollar amount of swap transactions. 24. Perrone brushed-off the concerns by stating that he had added some language to Global Crossing Ltd.’s press release regarding purchase commitments and that he interpreted the question from an analyst regarding swaps as referring only to a transaction called a “Global Network Offer” and not to capacity swaps. Plaintiff told Perrone that he disagreed with this interpretation. Plaintiff also expressed his concern that the additional language was vague and that analysts and investors would not understand the ramifications of the brief mention of purchase commitments. 25. As the meeting ended, Perrone was visibly upset with Plaintiff. Although Perrone had just discussed key roles and projects Plaintiff could perform for Global Crossing Ltd., after Plaintiff expressed concerns about the financial reporting, Perrone threatened Plaintiff by suggesting for the first time that Plaintiff was in danger of being laid off. In particular, Perrone told Plaintiff that the Executive Committee was meeting on June 4 and 5 to determine which management employees would be laid off in a planned layoff and that Plaintiff should call him on June 6 to find out whether Plaintiff was being terminated. On June 6, 2001, Plaintiff called Perrone but he was told that Perrone was unavailable. 26. On June 21, 2001, still not having heard from Perrone, Plaintiff met with Cohrs and told him of his anxiety over not having had an opportunity to speak with Perrone. Cohrs said that Perrone had been busy but that he would have Perrone call him. At the time, Cohrs was working on a press release. Given that the first quarter had been difficult, Plaintiff asked whether the press release was to reduce guidance for the rest of the year. Cohrs stated in substance that he could not revise Global Crossing Ltd.’s guidance forecasts downward because defendant Winnick had recently sold approximately 10 million shares of stock. Cohrs also told Plaintiff that Global Crossing Ltd.’s management had advised the Board of Directors in June that Global Crossing Ltd. was considering lowering its guidance forecasts for the year. Cohrs further told Plaintiff that Global Crossing Ltd.’s Board of Directors had decided to indirectly guarantee or “back-stop” margin loans to certain officers of Global Crossing Ltd., and that he hoped the price of Global Crossing Ltd.’s stock would increase because the guarantee of the margin loans would have to be disclosed in Global Crossing Ltd.’s next proxy statement. 27. During the months of June and July 2001, Plaintiff began to further investigate his concerns about the accounting practices of Global Crossing Ltd., and particularly these swap transactions that seemed to be occurring more and more frequently. He determined, among other things, that it appeared that a significant number of swap transactions had occurred during the last few days of the second quarter where (a) the exchanges occurred almost simultaneously, and (b) identical or substantially identical sums of money were being exchanged along with an exchange of IRU capacity. 28. On August 1, 2001, after the close of trading, Global Crossing Ltd. publicly announced its results for the second quarter and also announced that it was reducing earnings expectations. Also at about this same time, Plaintiff is informed and believes and thereupon alleges that Global Crossing Ltd. scheduled a conference call with its analysts and the investing public to discuss its results for the second quarter. During this conference call, defendants Casey and Cohrs again indicated that there had been no “swap” transactions in the prior quarter. 29. On August 3, 2001, Global Crossing Ltd.’s CFO, defendant Cohrs, circulated an e-mail to defendant Casey and others commenting on a press story regarding Qwest Communications. In that e-mail, Cohrs not only acknowledges the fact that Global Crossing Ltd.’s revenue recognition policies were suspect but he specifically indicated that he was concerned that related issues at Global Crossing Ltd.’s customer, Qwest Communications, was drawing attention to the issue. Cohrs’ e-mail stated: “Qwest is booking sales type lease revenue as GAAP revenue and not breaking it out. At least we get credit for breaking it out. The bad news is that this is raising visibility on the swaps issue.” A true and correct copy of the e-mail is attached hereto as Exhibit A. 30. Plaintiff is informed and believes and thereupon alleges that Cohrs’ fear of visibility of the “swap issue” reflects his concern that a possible investigation of Qwest’s accounting practices would reveal, inter alia, that Qwest and Global Crossing Ltd. had swapped approximately $100 million of capacity in each of the first two quarters, some of which had not even been defined at the time of sale, that each company accounted for the transactions differently despite having the same firm of outside auditors (Andersen), and that further investigation could lead to the conclusion that these transactions were non-monetary exchanges of capacity that should not have been booked as revenue at all. In other words, Cohrs and by implication Global Crossing Ltd. feared that the public would be made aware that through this and related transactions, Global Crossing Ltd. was giving the impression that it was generating cash revenues when, in actuality, these transactions did not increase the cash position of Global Crossing Ltd. in any material sense. Furthermore, Global Crossing Ltd. was listing the payments to Qwest as a capital expenditure, which allowed Global Crossing Ltd. to report none of the expense (or at most a very small portion) in the current period. To the extent any expense was reported, it was reported on the income statement after EBITDA or Adjusted EBITDA which again falsely inflated the EBITDA figures. This was particularly problematic for the average investor who has come to equate EBITDA with cash flow from operations. Thus, these investors were given the false impression that these Qwest transactions were generating hundreds of millions of dollars in revenues when, in actuality, Global Crossing Ltd.’s cash position had not changed in any meaningful sense. 31. From the time Plaintiff first voiced his concerns through late July 2001, Plaintiff was given no work and was essentially cut off from any meaningful participation in the affairs of either Global Crossing Ltd. or Global Crossing Development Company. Neither Perrone nor anyone else within Global Crossing Ltd. ever questioned Plaintiff about his concerns and Plaintiff realized that Perrone had decided not to take any action. Accordingly, Plaintiff consulted Global Crossing Ltd.’s ethics policy and decided to contact Global Crossing Ltd.’s Chief Ethics Officer James Gorton (“Gorton”). 32. On June 6, 2001, Plaintiff wrote to Gorton detailing the bases for his concerns. The letter stated, among other things, that Plaintiff was concerned that Global Crossing Ltd. may have intentionally misled investors and commercial bankers about Global Crossing Ltd.’s financial performance during the three quarters ending June 30, 2001; that the terms used by Global Crossing Ltd. to report results were misleading; that revenue figures may have been inflated; and that expenses had not been properly accounted for in the financial statements. A true and correct copy of the August 6, 2001 letter is attached hereto as Exhibit B. 33. The August 6, 2001 letter specifically addressed Global Crossing Ltd.’s use of the term “Cash Revenues.” Starting with its financial statements in the fall of 1999, Global Crossing Ltd. began reporting revenues in two different ways – as GAAP revenues and as “Cash Revenues.” Global Crossing Ltd. defines Cash Revenue as “GAAP revenue plus the cash portion of the change in deferred revenue.” Global Crossing Ltd. began utilizing the term “Cash Revenues” in response to a rule change of the Financial Accounting Standards Board (“FASB”). Effective July 1, 1999, companies could no longer book a sale of IRU capacity as GAAP revenue. Instead, the FASB required companies to defer the revenue over the term of the lease (typically twenty to twenty-five years) and recognize only a pro rata portion over the lease period. 34. This rule change presented an immediate problem because Global Crossing Ltd.’s GAAP revenues would now appear to be substantially smaller (compared to prior periods) when, all things being equal, the only change was the accounting treatment of revenues. Global Crossing Ltd. therefore decided to report its financial statements two ways — according to GAAP and according to the newly created “Cash Revenues” category. This dual treatment allowed Global Crossing Ltd. to report Cash Revenues as if the FASB rule was never implemented. Global Crossing Ltd. justified the dual reporting on the ground that it gave investors the ability to compare “apples to apples” with revenue figures from prior periods. Global Crossing Ltd. was essentially telling the public that the revenues included in its new definition of “Cash Revenue” were exactly the same revenues that Global Crossing Ltd. included in GAAP revenue prior to the FASB rule change. As explained more fully below, however, this was not the case. Instead, over time, Global Crossing Ltd. characterized transactions as “Cash Revenue” that would never have been included in GAAP revenue prior to the FASB rule change. This gave the investing public the false impression that Global Crossing Ltd.’s revenues were higher than was actually the case. 35. Plaintiff ended his April 6, 2001 letter with a request that the matters be investigated. Because Plaintiff believed defendants Perrone and Cohrs had already “signed off” on these questionable transactions, Plaintiff believed they had a conflict of interest. He therefore requested that persons other than defendants Perrone and Cohrs take responsibility for the investigation. Nevertheless, Plaintiff is informed and believes that copies of his letter were sent to each of the named defendants. Global Crossing Ltd.’s Failure to Respond 36. On August 8, 2001, Plaintiff received by hand a letter from Gorton (dated August 7, 2001) acknowledging receipt of the August 6, 2001 letter and stating that Global Crossing Ltd. took seriously the issues raised and would investigate them. Gorton demanded that Plaintiff keep these issues confidential. A true and correct copy of the August 7, 2001 letter is attached hereto as Exhibit C. 37. Plaintiff is informed and believes that defendants had made the decision to cause or encourage Global Crossing Ltd. Development Company to terminate Plaintiff in retaliation for his having expressed concern about accounting and reporting issues in his June 1st conversation with Perrone. Plaintiff is specifically informed and believes that he was initially included on a layoff list circulated amongst various terminated employees during July or August 2001. In response to Plaintiff’s letter of August 6, 2001, defendants apparently became fearful that the motives behind their attempts to get Global Crossing Development Company to terminate Plaintiff would be laid bare if Plaintiff was actually terminated. Accordingly, defendants encouraged Global Crossing Development Company to temporarily shelve its decision to terminate Plaintiff. Defendants then falsely advised Plaintiff that Global Crossing Development Company never intended to terminate Plaintiff and that Plaintiff had “made the cut” in terms of Global Crossing Development Company’s planned layoffs. 38. Within weeks of receiving Plaintiff’s letter, Gorton resigned from Global Crossing Ltd. To date, neither Gorton nor anyone else on behalf of Global Crossing Ltd. or Global Crossing Development Company has responded to the August 6, 2001 letter, nor has anyone representing Global Crossing Development Company, Global Crossing Ltd., its audit committee, Andersen or Simpson Thacher contacted or interviewed Plaintiff regarding the issues raised in his August 6, 2001 letter. Global Crossing Ltd.’s Financial Irregularities And Misrepresentations 39. While the August 6, 2001 letter sets forth in general detail questions about the financial reporting of Global Crossing Ltd., Plaintiff sets out more fully below the factual basis for his letter. Overview of Six Months Ended June 30, 2001 40. For the first two quarters of 2001, Global Crossing Ltd. reported non-GAAP “Cash Revenues” of $3.2 billion, including “Cash Revenues” from the sale of IRU capacity of $1.1 billion. In announcing its financial results for the first six months, Global Crossing Ltd. reported to investors that its “carrier IRU revenue remains very strong and we have already reported over $1.1 billion of such sales in the first two quarters, representing over 50% of our full year targets.” Global Crossing Ltd. represented that the $1.1 billion of IRU sales included $720 million of IRU sales to customers from whom Global Crossing Ltd. had made commitments to purchase capacity. In discussions with security analysts, Global Crossing Ltd. represented that none of these transactions were “swaps” and that the purchased capacity was needed to enhance Global Crossing Ltd.’s network. 41. Global Crossing Ltd.’s financing agreements require the maintenance of certain financial ratios and compliance with other covenants. Global Crossing Ltd. uses “Adjusted” EBITDA (another non-GAAP term) to monitor compliance with its financial covenants. Plaintiff is informed and believes, and thereupon alleges, that the financial covenants include a test for the ratio of debt to Adjusted EBITDA, and that Global Crossing Ltd.’s lenders monitor Adjusted EBITDA and other results to determine whether Global Crossing Ltd. is in compliance with its financial covenants. 42. Plaintiff is informed and believes, and thereupon alleges, that Global Crossing Ltd. reported amounts as Cash Revenues from the sale of capacity in the form of IRU’s (“IRU Sales”) and Adjusted EBITDA that were materially misleading and/or false in at least the following respects: a. Global Crossing Ltd. substantially inflated its Cash Revenues and Adjusted EBITDA by including $150 million in IRU sales for which Global Crossing Ltd. never received the $150 million in cash. b. In announcing its financial results, Global Crossing Ltd. substantially inflated its Cash Revenues, Adjusted EBITDA, and IRU Sales because a substantial portion of the approximately $507 million of exchanges of capacity and services occurred where identical or substantially similar amounts of cash was exchanged at approximately the same time (“roundtripping” the cash). c. In announcing its financial results, Global Crossing Ltd. substantially inflated amounts reported in “Cash Revenues” as IRU Sales, by including $63 million received as prepayment for future services where the cash received was “roundtripped” by Global Crossing Ltd. at approximately the same time. These prepayments would never have been included in GAAP revenues prior to the FASB rule change and therefore did not reflect a proper “apples to apples” comparison and should not have been included in “Cash Revenues.” d. In announcing its results, Global Crossing Ltd. substantially inflated amounts reported in “Cash Revenue” as IRU Sales for the period, by including $170 million of cash receipts for a sale of capacity that had occurred in the third quarter of 2000. First Quarter of 2001 43. For the first quarter of 2001, Global Crossing Ltd. reported Cash Revenue of $1.613 billion and Adjusted EBITDA of $441 million. With respect to sales of capacity, Global Crossing Ltd. stated in announcing its financial results: Cash Revenue from the sale of capacity in the form of IRU’s was $567 million for the quarter . … Included in this amount and in Adjusted EBITDA, was $375 million received from significant carrier customers who signed contracts during the quarter to purchase $500 million of capacity on the Global Crossing Ltd. network, and to whom Global Crossing Ltd. made substantial capital commitments during the quarter. Press Release, May 9, 2001. In its Form 10-Q, Global Crossing Ltd. further explained its receipts from customers. During the three months ended March 31, 2001, $375 [million] in consideration, which is included in the $441 [million] of Recurring Adjusted EBITDA below and in the $1,613 [million] of Cash Revenue above, was received from significant Carrier customers who signed contracts during the quarter to purchase $500 [million] of capacity on the Global Crossing Network, and to whom Global Crossing [Ltd.] made substantial capital commitments during the quarter. Form 10-Q, dated May 15, 2001. 44. In both the announcement of results and the Form 10-Q, Global Crossing Ltd. described the transactions with Carrier customers as arrangements in the ordinary course of business to enhance Global Crossing Ltd.’s network. During the quarter, Global Crossing [Ltd.] also entered into several agreements with various Carrier customers for the purchase of capacity and co-location space. These transactions were implemented in order to acquire cost-effective local network expansions; to provide for cost-effective alternatives to new construction in certain markets in which Global Crossing [Ltd.] anticipates shortages of capacity; and to provide additional levels of physical diversity in the network as Global Crossing [Ltd.] implements its global mesh architecture. Press Release, May 9, 2001; Form 10-Q, dated May 15, 2001. 45. The announcements were grossly misleading because they failed to detail the nature of the transactions, misrepresented the purpose of the transactions, and otherwise gave the false impression that these transactions were ordinary and served to benefit the company in some material sense. For example, in the first quarter of 2001, Global Crossing Ltd. recorded a $150 million exchange of capacity with 360 Networks as Deferred Revenue. Global Crossing Ltd. included the $150 million in the change in Cash Deferred Revenue in arriving at amounts reported as Cash Revenue and Adjusted EBITDA in announcing its financial results and in its Form 10-Q. In fact, Global Crossing Ltd. never received the cash from 360 Networks, and improperly included this amount in the “change in cash deferred revenue.” A summary of the journal entries for this transaction shows that Global Crossing Ltd. acquired $200 million of capacity (including prepaid operations, administration and maintenance) from 360 Networks on its North America and Atlantic networks in exchange for $50 million in cash and $150 million of capacity ($100 million Asia and $50 million Global Network Offer). A Global Network Offer or GNO is a transaction where a customer pays a substantially discounted fee in return for a commitment to supply the customer at some later date capacity anywhere on Global Crossing Ltd.’s network (at the customer’s choosing). Global Crossing Ltd. did not receive any cash from the transaction and improperly included the $150 million in Cash Revenue and Adjusted EBITDA. 46. In the first quarter of 2001, Global Crossing Ltd. recorded a $23 million non-monetary exchange of capacity with Emergia as a “purchase” and “sale” of capacity. A summary of the journal entries for this transaction shows that Global Crossing Ltd. and Emergia exchanged the same amount of cash at approximately the same time (i.e., “roundtripping”). Although the exchange of cash occurred on April 4, 2001, in the second quarter, Global Crossing Ltd. improperly included the $23 million in Cash Revenue and Adjusted EBITDA for the first quarter. 47. Plaintiff is informed and believes, and thereupon alleges, that Global Crossing Ltd. recorded approximately $100 million in cash revenue for sales of capacity to Qwest, and that Global Crossing Ltd. “roundtripped” the cash by purchasing a similar amount of undefined capacity from Qwest. Second Quarter of 2001 48. For the second quarter of 2001, Global Crossing Ltd. reported Cash Revenue of $1.62 billion and Adjusted EBITDA of $472 million. With respect to sales of capacity, Global Crossing Ltd. stated in its announcement of results: Cash Revenue from the sale of capacity in the form of IRU’s was $567 million for the quarter. … Included in this amount and in Recurring Adjusted EBITDA, was $345 million received from significant carrier customers who signed contracts during the quarter to purchase $381 million of capacity on the Global Crossing [Ltd.] network, and to whom Global Crossing [Ltd.] made substantial capital commitments during the quarter. … Press Release, August 1, 2001. In its Form 10-Q, Global Crossing Ltd. further explained its receipts from customers. Consideration received during the three and six months ended June 30, 2001 of $345 [million] and $720 [million], respectively, which is included in the $472 [million] and $913 [million] of Recurring Adjusted EBITDA below and in the $1,620 [million] and $3,233 [million] of cash revenue above, was received from significant carrier customers who signed contracts to purchase $381 [million] and $881 [million] of capacity during the three and six months ended June 30, 2001, respectively. In addition, Global Crossing [Ltd.] has made cash commitments to these carrier customers of $358 [million] and $625 [million] for the three months ended June 30, 2001 and March 31, 2001, respectively. … Form 10-Q, dated August 14, 2001. 49. In both the announcement of second quarter results and the Form 10-Q, Global Crossing Ltd. described the transactions with Carrier customers as arrangements in the ordinary course of business to enhance Global Crossing Ltd.’s network. The Form 10-Q stated: During the quarter, Global Crossing [Ltd.] entered into several agreements with various carrier customers for the purchase or lease of capacity and co-location space. These transactions were implemented in order to acquire cost-effective local network expansions; to provide for cost-effective alternatives to new construction in certain markets in which Global Crossing [Ltd.] anticipates shortages of capacity; and to provide additional levels of physical diversity in the network as Global Crossing [Ltd.] implements its global mesh architecture. The cash commitments totaled $358 [million] and $625 [million] for the three months ended June 30, 2001 and March 31, 2001, respectively. … Form 10-Q, dated August 14, 2001, Note 10 to Financial Statements. A similar statement was in Global Crossing Ltd.’s announcement of results. Press Release, August 1, 2001. 50. These announcements were, again, grossly misleading. For example, in the second quarter of 2001, Global Crossing Ltd. recorded approximately $345 million in Cash Revenues from sales of capacity and services (carrier IRU revenue) for which the cash was “roundtripped” between the parties. Plaintiff is informed and believes, and thereupon alleges that these transactions include the following transactions that occurred on the last day or two of the second quarter of 2001 and involved identical or similar exchanges of cash so that cash balances were fictionally enhanced, but in reality did not change in any material sense. a. Global Crossing Ltd. recorded $81 million for sales of capacity to Qwest (No. 1) in the second quarter ($73 million and $8 million), with $81 million of cash “roundtripped” between the companies. b. Global Crossing Ltd. recorded $19.2 million for sales of capacity to Qwest (No. 2) in the second quarter, with Global Crossing Ltd. paying $7 million to Qwest (No. 2) and committing to pay the remaining $13 million in the future. c. Global Crossing Ltd. recorded a GNO sale of $45 million to ChinaNet.com, with $45 million of cash “roundtripped” between the companies. d. Global Crossing Ltd. recorded $40 million of IRU sales to Epik, with $40 million of cash “roundtripped” between the companies. e. Global Crossing Ltd. recorded a sale of wavelengths to Velocita for $33.6 million, with $33.6 million of cash “roundtripped” between the companies. f. Global Crossing Ltd. recorded GNO sales to Flag Telecom (No. 2) for $32.5 million, with Global Crossing Ltd. sending $40 million to Flag and committing to send Flag an additional $3.35 million in the future. g. Global Crossing Ltd. recorded $13.5 million of IRU sales to Telecom New Zealand, with $13.5 million of cash “roundtripped” between the companies. h. Global Crossing Ltd. recorded GNO sales of $10 million to Nortel, with Global Crossing Ltd. sending Nortel $15 million and committing to send Nortel an additional $7.5 million in the future, with Nortel’s commitment to pay Global Crossing Ltd. an additional $10 million in the future. i. Global Crossing Ltd. recorded sales to Techtel, Versatel and Dacom in the amounts of $9 million ($8 million plus $1 million), $4.4 million and $4 million respectively, with amounts of $9 million, $4.6 million and $4.36 million, respectively “roundtripped.” j. Global Crossing Ltd. recorded sales of $32.5 million to Flag Telecom (No. 1), with $32.5 million cash in and $32.5 million cash out. This was not an IRU sale, but involved the prepayment of a one year lease of capacity in exchange for a prepayment of another one year lease of capacity. Global Crossing Ltd. improperly included the $32.5 million in “Cash Revenues” as an IRU Sale when it was not an IRU Sale and never would have been included in GAAP revenues prior to the FASB rule change. k. Global Crossing Ltd. recorded sales of $30.8 million to C&W PLC, with $30.8 million cash in and $30.8 million cash out. The payment by C&W PLC was not an IRU Sale, but was a prepayment for the service of operations, administration and maintenance (“OA&M”) on capacity purchased previously. Global Crossing Ltd. improperly included the $30.8 million in “Cash Revenues” as an IRU Sales when it was not an IRU sale and never would have been included in GAAP revenues prior to the FASB rule change. 51. Plaintiff is informed and believes, and thereupon alleges, that in the second quarter of 2001 approximately 13 of the 18 largest transactions occurred on the last day or two of the quarter, with the parties exchanging identical or substantially similar amounts of cash. 52. In announcing its second quarter 2001 results, Global Crossing Ltd. stated that it had $1.1 billion in carrier IRU sales in the first six months, including $567 million in the second quarter. In fact, $170 million of such sales was not IRU sales for these periods, but was an installment payment for capacity sold to Telecom Italia in the third quarter of 2000. Fourth Quarter of 2000 53. For the fourth quarter of 2000, Global Crossing Ltd. reported Cash Revenue of $1.54 billion and Adjusted EBITDA of $418 million. Global Crossing Ltd. reported cash revenue from IRU sales of $543 million. 54. Plaintiff is informed and believes, and thereupon alleges, that on the last few days of the fourth quarter of 2000, Exodus Communications paid Global Crossing Ltd. $200 million as prepayment for future network services, that Global Crossing Ltd. did not disclose the Exodus payment as a related party transaction (although a merger agreement between Global Center and Exodus Communications was executed on September 28, 2000), and that such amount materially inflated IRU sales, Cash Revenue and Adjusted EBITDA for the quarter. 55. Plaintiff is informed and believes, and thereupon alleges, that in the fourth quarter of 2000, Global Crossing Ltd. recorded a prior period adjustment of approximately $60 million relating to 1999 costs of access, and that Global Crossing Ltd. offset this adjustment by reversing a $45 million reserve established in the third quarter in connection with a sale to Telecom Italia and with $15 million of other revenue. 56. Plaintiff is informed and believes, and thereupon alleges, that during the last three quarters of 2000 Global Crossing Ltd. capitalized $68 million of expenses as “Frontier IS Integration,” that the expenses lacked descriptions, that $25 million was capitalized in the month of December 2000, and that no amortization of these expenses was recorded in 2000, all of which had the effect of “smoothing” Global Crossing Ltd.’s earnings. Other Related Accounting Treatment Issues 57. Plaintiff is informed and believes, and thereupon alleges, that Global Crossing Ltd. recognized certain exchanges of similar capacity as sales and purchases of capacity solely because the cash was “roundtripped” between the parties to the transactions. This accounting treatment is a sham, is false and misleading to investors, and violates GAAP including APB Opinion No. 29 as interpreted by Andersen in a memorandum dated February 10, 1999. A true and correct copy of that memorandum is attached hereto as Exhibit D. Certain transactions were documented in Global Crossing Ltd.’s summary of IRU revenues for the second quarter which shows that cash was “roundtripped” between the parties. The effect of recognizing these transactions as sales and purchases increases Property and equipment, Deferred Revenue, Cash Revenue, and Adjusted EBITDA. Also, GAAP earnings in future periods will be inflated as the excess revenue is amortized into income. To the extent that these transactions should have been recorded as non-monetary exchanges, it would reduce Deferred Revenue and Property and Equipment to the extent fair value exceeded historical cost basis, and Cash Revenue and Adjusted EBITDA for the full amount of the transaction. Plaintiff is informed and believes that these transactions also violated both the letter and the spirit of the February 10, 1999 memorandum and other memoranda that were issued by Global Crossing Ltd. and/or Global Crossing Development Company thereafter. 58. Plaintiff is informed and believes, and thereupon alleges, that of the purchase commitments disclosed by Global Crossing Ltd., virtually all of the transactions that include “roundtripping” of cash occurred on the last day or two of the quarters, that they involved sending and receiving identical or substantially similar amounts of cash that added no economic substance to the transactions, that in some instances Global Crossing Ltd. exchanged valuable capacity for unneeded or essentially worthless capacity, that in effect capacity was exchanged and cash balances remained substantially the same, that investors were misled into believing that Global Crossing Ltd. was generating substantial cash to fund its business when it was not, and that accounting for these transactions as sales by Global Crossing Ltd. is a sham. 59. Plaintiff is informed and believes, and thereupon alleges, that some of the parties purchasing Global Crossing Ltd.’s capacity, discussed above, may not have had the financial resources to purchase the capacity from Global Crossing Ltd. without the “roundtripping” of cash, that 360 Networks and others had limited liquidity and were on the verge of bankruptcy on March 31, 2001, and that they likely would not independently have paid cash for capacity, particularly for Global Network Offers where the capacity was not defined. 60. Plaintiff is informed and believes and based thereon alleges that the above-referenced transactions in the fourth quarter of 2000 and the first two quarters of 2001 were reported and/or described by Global Crossing Ltd. in order to fraudulently inflate cash revenue and adjusted EBITDA. In so doing, Global Crossing Ltd. misled investors as to the company’s true financial condition. For companies such as Global Crossing Ltd. that have negative earnings, analysts and the public often use a multiple of Cash Revenues and/or EBITDA to evaluate the proper price of a stock. Plaintiff is further informed and believes and thereupon alleges that, despite defendant Winnick’s descriptions of these types of transactions as “bad business,” Perrone authorized the accounting treatment for these transactions, and that Casey, Cohrs and Winnick either affirmatively authorized the accounting treatment for these transactions or knowingly or recklessly turned a blind eye to how the transactions were being treated because they were more concerned with ensuring that the price of Global Crossing Ltd.’s stock remained high. Defendants’ Scheme Is Furthered By Andersen’s Conflicts Of Interest 61. As outside auditor for Global Crossing Ltd., the accounting firm of Andersen, was required to serve as the “watch dog” of Global Crossing Ltd.’s financial condition and particularly the accuracy of Global Crossing Ltd.’s representations to the public about its financial condition. As a result, Andersen was required to be truly independent of Global Crossing Ltd. such that it could render complete and unbiased opinions to Global Crossing Ltd. and to the public. Unfortunately, Andersen suffered from conflicts of interest created when Andersen’s former partner in charge of auditing Global Crossing Ltd., defendant Perrone, was subsequently hired by Global Crossing Ltd. to serve as its Executive Vice President, Finance. This meant Perrone had essentially switched sides and was now the front person responsible for Global Crossing Ltd.’s audit relationship with Andersen. 62. Thus, when the time came for Andersen to review and sign off on the contested transactions, Plaintiff is informed and believes that Andersen signed-off on some or all of these transactions and irregularities due, in part, to the pressure Perrone brought to bear upon Andersen and his former colleagues. As a result of the foregoing, Andersen failed in its role as independent auditor. Rather than being Global Crossing Ltd.’s corporate “watch dog,” Andersen’s conflicts of interest caused it to behave more like a “lap dog.” Defendants were then able to capitalize on these conflicts of interest to further their own goals, including interfering with Plaintiff’s contract and prospective economic relations as herein alleged. Defendants’ Scheme Is Furthered By Simpson Thacher’s Conflicts Of Interest 63. As outside counsel for Global Crossing Ltd., Simpson Thacher was required to diligently investigate any issues brought to its attention. Plaintiff is informed and believes that at some point, Global Crossing Ltd. asked Simpson Thacher to investigate the issues raised in Plaintiff’s letter. Plaintiff is further informed and believes that Simpson Thacher did not properly investigate the issues raised in the letter, did not interview Plaintiff, did not interview Andersen (or even reveal the letter’s existence to Andersen), and did not notify all of the members of Global Crossing Ltd.’s Board of Directors. Plaintiff is further informed and believes that Simpson Thacher’s failure to properly investigate the letter and failure to otherwise give appropriate parties notice of the issues raised in the letter was caused at least in part by the conflicts of interest between Simpson Thacher and Gorton. Gorton was a former partner at Simpson Thacher as was the General Counsel of Global Crossing Ltd.’s subsidiary, Asia Global Crossing. Plaintiff is further informed and believes that Simpson Thacher was paid millions of dollars for legal services to Global Crossing Ltd. on an annual basis and that certain partners at Simpson Thacher owned stock in Global Crossing Ltd. Thus, Simpson Thacher’s partiality was at least impaired and its “investigation,” if any, was cursory at best. As with Andersen, defendants were also able to capitalize on Simpson Thacher’s conflict of interest to further their own goals, including interfering with Plaintiff’s contract and prospective economic relations as herein alleged. Developments Since Plaintiff’s Letter of August 6, 2001 64. On August 15, 2001, Gorton notified Plaintiff that an investigation had been commenced. In that letter, as with subsequent correspondence, Global Crossing Ltd. demanded that Plaintiff formally notify Global Crossing Development Company whether or not he would continue his employment at the company. Global Crossing Ltd. demanded this notification while at the same time refusing to provide Plaintiff with any proof whatsoever that Global Crossing Ltd. or Global Crossing Development Company was actually going to investigate, let alone change any of its accounting practices. Essentially, defendants gave Plaintiff the option of either leaving or joining the conspiracy. 65. Plaintiff formally notified defendants that he would not participate in and/or have any complicity in a continuation of the conduct described in the August 6, 2001 letter. Plaintiff was then immediately placed on paid administrative leave and subsequently terminated under the guise of a “planned” reduction in force. While all other employees terminated as part of the “planned” reduction received a severance package or some other form of termination benefits, Plaintiff received nothing. 66. Plaintiff is informed and believes and thereupon alleges that on February 15, 2002, after the August 6, 2001 letter had become public knowledge, Global Crossing Ltd. convened a “town hall” meeting at its offices in Beverly Hills. This meeting occurred after Global Crossing Ltd. had already filed for bankruptcy protection. In attendance were approximately 60-70 employees who worked at the Beverly Hills offices of Global Crossing Ltd. and Global Crossing Development Company. During that meeting, defendant Winnick stood up and accused Plaintiff of extortion. Defendant Winnick stated in sum or substance that, “The definition of an extortionist is Roy Olofson.” This statement was and is false, defamatory and constitutes slander per se. Plaintiff is informed and believes that defendant Winnick and others have made similar defamatory statements to third parties, including the press. Plaintiff will amend his complaint to include additional parties and additional statements after further discovery is completed in this case. 67. Plaintiff is informed and believes that, to date, Global Crossing Ltd. has never conducted an adequate investigation of any kind into the questions raised in Plaintiff’s August 6, 2001 letter. Neither Simpson Thacher nor anyone at Global Crossing Ltd. ever gave Andersen a copy of Plaintiff’s letter until months after he had been fired and only in response to intense media scrutiny following Global Crossing Ltd.’s declaration of bankruptcy. While the current audit committee is reportedly looking into the questions raised by Plaintiff, no one from the audit committee has ever contacted Plaintiff or his counsel. Thus, rather than investigating the issues in good faith, Global Crossing Ltd. continues not merely to stonewall but to make unjustified and libelous statements about Plaintiff to its employees and to the press. As late as February 20, 2002, Global Crossing Ltd. was insisting that Plaintiff’s letter was privileged and was demanding that Plaintiff return all copies of the letter to it, even though it had already provided a copy of the letter to the FBI and the SEC. This pattern of misconduct was directed and managed by defendants and is further evidence of their joint efforts to keep the true financial condition of Global Crossing Ltd. (not to mention their own misconduct) hidden from the investing public and federal criminal and regulatory investigators. FIRST CAUSE OF ACTION Breaches of Fiduciary and Co-Fiduciary Duties in Violation of ERISA 29 U.S.C. � 1104(a)(1)(A)-(D), 29 U.S.C. � 11050 (Against All Defendants) 68. Plaintiff hereby incorporates by reference and realleges paragraphs 1 through 67 as though fully set forth herein. 69. Pursuant to 29 U.S.C. � 1002(21)(A), defendants acted as fiduciaries with respect to advice relating to the purchase of Global Crossing Ltd. stock by plan participants and beneficiaries. These purchases directly impacted the Global Crossing Ltd. Savings Plan (the “Savings Plan”) and the beneficiaries of the Savings Plan. 70. Pursuant to 29 U.S.C. � 1105, each of the defendants was also a co-fiduciary of the other defendants with respect to the promotion of Global Crossing Ltd. stock to plan participants and beneficiaries, which was an action that was directed at and directly impacted the Savings Plan and the beneficiaries of the Savings Plan. 71. In addition to their other fiduciary duties, ERISA fiduciaries also have a duty not to mislead participants, and a duty to voluntarily disclose truthful information in order to ensure that participants have all information needed to exercise rights under the Savings Plan. 72. The defendants repeatedly breached the fiduciary duties they owed Plaintiff when they (i) offered Global Crossing Ltd. stock as an investment option for employee contributions to the Savings Plan; (ii) encouraged and induced employees to invest their plan contributions and Global Crossing Ltd. stock including a matching program that, as of January 1, 2001, was limited to Global Crossing Ltd. stock; and (iii) made both intentional and negligent misrepresentations regarding the value of the stock, the prospects of Global Crossing Ltd., and in particular misrepresentations and omissions regarding the purpose and value of various transactions as herein alleged, which had the effect of overstating “Cash Revenues” and “Adjusted EBITDA.” As a consequence, Global Crossing Ltd. stock was not a prudent investment and defendants knew that. 73. Each of the defendants knowingly participated in these fiduciary breaches, enabled their co-fiduciaries to commit such fiduciary breaches by their own failure to comply with the provisions of 29 U.S.C. � 1104(a). Each defendant had knowledge of the breaches of their co-fiduciaries and failed to make reasonable efforts to remedy such breaches. 74. The above-described breaches of fiduciary duty give rise to the presumption that, but for the breaches of fiduciary duty, the participants and beneficiaries in the Savings Plan including Plaintiff would not have maintained their investment in Global Crossing Ltd. and would have instead moved their plan assets to the most profitable alternative investment available. 75. As a direct and proximate result of the defendants’ wrongful conduct as herein alleged, Plaintiff has been damaged in the form of lost value of his Global Crossing Ltd. stock in the Savings Plan. 76. Pursuant to 29 U.S.C. � 1132(a)(2) and 29 U.S.C. � 1109(a), defendants are liable to restore the losses to Plaintiff’s Savings Plan caused by defendants’ breaches of their fiduciary duties. SECOND CAUSE OF ACTION Defamation (Against Defendant Winnick) 77. Plaintiff hereby incorporates by reference and realleges paragraphs 1 though 67 as though set forth fully herein. 78. Plaintiff is informed and believes that on February 15, 2002, Global Crossing Ltd. convened a “town hall” meeting at its offices in Beverly Hills. In attendance were approximately 60-70 employees who worked at the Beverly Hills offices of Global Crossing Ltd. and Global Crossing Development Company. During that meeting, defendant Winnick publicly accused Plaintiff of extortion. Winnick stated in sum or substance that, “The definition of an extortionist is Roy Olofson.” 79. This statement is false, defamatory and constitutes slander per se. 80. As a direct and proximate result of the above-described slanderous statement, Plaintiff has suffered harm to his reputation, shame, mortification and hurt feelings all to his general and specific damage in an amount to be proven at trial. 81. The aforementioned conduct was done with the intent to deprive Plaintiff of his legal rights and property, and to otherwise cause injury to Plaintiff, all of which constitutes despicable conduct which subjected Plaintiff to cruel and unjust hardship in conscious disregard of his rights. This malicious and oppressive conduct warrants the imposition of exemplary and punitive damages. THIRD CAUSE OF ACTION Intentional Interference with Contract (Against All Defendants) 82. Plaintiff hereby incorporates by reference and realleges paragraphs 1 through 67 as though set forth fully herein. 83. On or about April 14, 1998, Plaintiff and Global Crossing Development Company entered into a written contract of employment (the “Employment Contract”). A true and correct copy of that Employment Contract is attached hereto as Exhibit E. 84. Defendants knew that the Employment Contract existed between Plaintiff and Global Crossing Development Company. 85. Beginning on or after Plaintiff’s conversation on June 1, 2001 with Perrone and continuing through December 2001, defendants intentionally interfered with the Employment Contract by, inter alia, falsely advising management that Plaintiff’s allegation was unjustified and had been raised for an improper purpose. Defendants’ intentional interference with the Employment Contract was done to facilitate their plan and scheme to keep the price of Global Crossing Ltd.’s stock artificially high and with the knowledge and intent that their actions would actually interfere with Plaintiff’s Employment Contract. 86. In December 2001, defendants actually interfered with the Employment Contract by causing Global Crossing Development Company to terminate Plaintiff retroactive to November 30, 2001. This termination occurred as a direct and proximate result of defendants’ intentional interference with Employment Contract as herein alleged. 87. As a direct and proximate result of defendants’ intentional interference, Plaintiff has been damaged in the form of lost salary, lost bonuses, and other lost employment benefits, the full value of which will be determined at trial. 88. The aforementioned conduct was done with the intent to deprive Plaintiff of his legal rights and property, and to otherwise cause injury to Plaintiff, all of which constitutes despicable conduct which subjected Plaintiff to cruel and unjust hardship in conscious disregard of his rights. This malicious and oppressive conduct warrants the imposition of exemplary and punitive damages. FOURTH CAUSE OF ACTION Negligent Interference with Contract (Against All Defendants) 89. Plaintiff hereby incorporates by reference and realleges paragraphs 1 through 67 as though set forth fully herein. 90. On or about April 14, 1998, Plaintiff and Global Crossing Development Company entered into the Employment Contract. 91. Defendants knew that the Employment Contract existed between Plaintiff and Global Crossing Development Company. 92. Beginning on or after Plaintiff’s conversation on June 1, 2001 with Perrone and continuing through December 2001, defendants negligently failed to investigate the concerns raised in Plaintiff’s letter and they made statements or took actions which led management to conclude that Plaintiff’s concerns were unjustified and were being raised for an improper purpose. Defendants actions had the effect of directly and proximately interfering with Plaintiff’s Employment Contract. 93. In December 2001, defendants caused Global Crossing Development Company to formally terminate Plaintiff retroactive to November 30, 2001. This termination occurred as a direct and proximate result of defendants’ negligent interference as herein alleged. 94. As a direct and proximate result of defendants’ negligent interference, Plaintiff has been damaged in the form of lost salary, lost bonuses, and other lost employment benefits, the full value of which will be determined at trial. FIFTH CAUSE OF ACTION Intentional Interference with Prospective Economic Advantage (Against All Defendants) 95. Plaintiff hereby incorporates by reference and realleges paragraphs 1 through 67 as though set forth fully herein. 96. Beginning on or about April 14, 1998, Plaintiff and Global Crossing Development Company entered into an economic relationship, which economic relationship had the probability of future economic benefits to Plaintiff. 97. Defendants had knowledge of the existence of the foregoing economic relationship. 98. Beginning on or after Plaintiff’s conversation on June 1, 2001 with Perrone and continuing through December 2001, defendants intentionally attempted to disrupt the economic relationship between Plaintiff and Global Crossing Development Company in the manner hereinabove alleged. Defendants’ actions were independently wrongful because they were false and fraudulent, constituted securities fraud, and otherwise constituted unfair competition in violation of Business and Professions Code section 17200, et seq. 99. In December 2001, defendants succeeded in actually disrupting the economic relationship alleged above by causing Plaintiff to be terminated retroactive to November 30, 2001. This disruption was a direct and proximate result of defendants’ intentional interference as herein alleged. 100. As a direct and proximate result of defendants’ intentional interference, Plaintiff has been damaged in the form of lost salary, lost bonuses, and other lost employment benefits, the full value of which will be determined at trial. 101. The aforementioned conduct was done with the intent to deprive Plaintiff of his legal rights and property, and to otherwise cause injury to Plaintiff, all of which constitutes despicable conduct which subjected Plaintiff to cruel and unjust hardship in conscious disregard of his rights. This malicious and oppressive conduct warrants the imposition of exemplary and punitive damages. 102. Unless restrained, defendants threaten to continue to disrupt Plaintiff’s business relationships with Global Crossing Development Company and with other prospective employers to Plaintiff’s great and irreparable injury, for which damages would not afford adequate relief, in that they would not completely compensate for the injury to Plaintiff’s business reputation and goodwill. SIXTH CAUSE OF ACTION Negligent Interference with Prospective Economic Advantage (Against All Defendants) 103. Plaintiff hereby incorporates by reference and realleges paragraphs 1 through 67 as though set forth fully herein. 104. Beginning on or about April 14, 1998, Plaintiff and Global Crossing Development Company entered into an economic relationship, which economic relationship had the probability of future economic benefits to Plaintiff. 105. Defendants had knowledge of the existence of the foregoing economic relationship. 106. Beginning on or after Plaintiff’s conversation on June 1, 2001 with Perrone and continuing through December 2001, defendants negligently attempted to disrupt the economic relationship between Plaintiff and Global Crossing Development Company in the manner hereinabove alleged. Defendants’ actions were independently wrongful because they were false and fraudulent, constituted securities fraud, and otherwise constituted unfair competition in violation of Business and Professions Code section 17200, et seq. 107. In December 2001, defendants succeeded in actually disrupting the economic relationship alleged above by causing Plaintiff to be terminated retroactive to November 30, 2001. This disruption was a direct and proximate result of defendants’ negligent interference as herein alleged. 108. As a direct and proximate result of defendants’ negligent interference, Plaintiff has been damaged in the form of lost salary, lost bonuses, and other lost employment benefits, the full value of which will be determined at trial. 109. Unless restrained, defendants threaten to continue to disrupt Plaintiff’s business relationships with Global Crossing Development Company and with other prospective employers to Plaintiff’s great and irreparable injury, for which damages would not afford adequate relief, in that they would not completely compensate for the injury to Plaintiff’s business reputation and goodwill. PRAYER FOR RELIEF A. WHEREFORE, Plaintiff prays for judgment against defendants as follows: For general compensatory damages against all defendants in an amount to be determined at trial. B. For special damages against defendant Winnick for defamation. C. For presumed damages against defendant Winnick for defamation. D. For exemplary and punitive damages against all defendants in an amount appropriate to punish defendants and deter others from engaging in similar misconduct. E. For equitable relief including a temporary restraining order, a preliminary injunction, and a permanent injunction, all enjoining defendants from continuing the course of conduct herein alleged, for freeze and injunction orders preventing defendants for engaging in document destruction, and for the freeze of unlawfully acquired funds from stock sales, as well as any real property acquired with said unlawfully acquired funds. F. For equitable relief under 29 U.S.C. �� 1132(a)(2) and 1109(a) in the form of an order directing defendants to restore the losses to Plaintiff’s Savings Plan which were a consequence of defendants’ misconduct. G. For attorneys’ fees and costs of suit herein incurred by Plaintiff. H. For such other and further relief as the Court deems just and proper. DATED: February 26, 2002 BRIAN C. LYSAGHT PAUL D. MURPHY O’NEILL, LYSAGHT & SUN LLP By: Brian C. Lysaght Attorneys for Plaintiff Roy L. Olofson JURY DEMAND Plaintiff Roy L. Olofson demands a trial by jury on all issues so triable. DATED: February 26, 2002 BRIAN C. LYSAGHT PAUL D. MURPHY O’NEILL, LYSAGHT & SUN LLP By: Brian C. Lysaght Attorneys for Plaintiff Roy L. Olofson

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