Also Charged Are TV Azteca’s Parent Company, Its Former CEO/Director,…

Also Charged Are TV Azteca’s Parent Company, Its Former CEO/Director, and
Another Director

Washington, D.C., Jan. 4, 2005 – LAWFUEL – Best for law news – The Securities and Exchange Commission today filed civil fraud charges against TV Azteca S.A. de C.V. (TV Azteca or the company), a Mexican issuer whose American depository receipts trade on the NYSE, its parent company, Azteca Holdings, S.A., de C.V. (Azteca
Holdings), and three current and former TV Azteca officers and directors,
Ricardo Salinas Pliego, Pedro Padilla Longoria, and Luis Echarte Fernandez.
The SEC alleges in its complaint that the defendants engaged in an elaborate
scheme to conceal Salinas’s role in a series of transactions through which
he personally profited by $109 million. The SEC complaint also alleges that
Salinas and Padilla sold millions of dollars of TV Azteca stock while
Salinas’s self-dealing remained undisclosed to the market place.

In its action, the SEC is seeking injunctions from future securities law
violations, civil money penalties, and disgorgement of Salinas’ and
Padilla’s ill-gotten gains, plus prejudgment interest. The SEC also is
seeking court-orders barring Salinas and Padilla from serving as officers or
directors of any publicly-held company with securities trading in the United
States.

Spencer C. Barasch, head of enforcement for the SEC’s Fort Worth office,
commented, “Enhanced global cooperation among securities regulators has
significantly changed the ways in which the SEC investigates and prosecutes
conduct that crosses international borders. The cooperative efforts in this
case of the SEC and the Comisión Nacional Bancaria y de Valores in Mexico
are a testament to the efficiency and effectiveness of collaborative
international enforcement. Securities regulators share a strong and mutual
resolve to combat fraud; geographic boundaries will not serve to protect
those who seek to defraud investors.” The SEC and CNBV are parties to a
bilateral memorandum of understanding as well as to the International
Organization of Securities Commissions multilateral memorandum of
understanding, both of which significantly facilitate information sharing.

The SEC’s complaint names the following entities and individuals as
defendants.

TV Azteca, a Mexican corporation headquartered in Mexico City, is the second
largest television broadcasting company in Mexico. TV Azteca’s American
depository receipts are listed on the New York Stock Exchange. The
company’s underlying ordinary participation certificates trade on the Bolsa
Mexicana de Valores, the Mexican stock exchange.

Azteca Holdings, a Mexican holding company headquartered in Mexico City,
beneficially owns 55% of the outstanding stock of TV Azteca. Azteca
Holdings is indirectly owned and controlled by the Salinas family. Azteca
Holdings’ debt securities trade on the U.S. Over-the-Counter Bulletin Board
Market.

Salinas, age 49 and a Mexican citizen, has been the chairman of the board of
directors and the controlling shareholder of TV Azteca since 1993. Salinas
also has been chairman of the board, CEO and president of Azteca Holdings
since 1997.

Padilla, age 38 and a Mexican citizen, has been a director of TV Azteca
since 1993, and was the CEO of the company from October 2001 through July
2004, when he was named CEO of Grupo Salinas, a de facto holding company for
various Salinas controlled entities.

Echarte, age 59 and a U.S. citizen, has been a director of TV Azteca since
1999. Echarte is also the president and CEO of Azteca America, a TV Azteca
subsidiary based in New York, and is the chief financial strategist for
Grupo Salinas.

According to the SEC complaint, Salinas and others caused TV Azteca or
Azteca Holdings to file periodic reports that did not disclose Salinas’s
involvement in related party transactions between Unefon, a subsidiary of TV
Azteca, and a private entity secretly co-owned by Salinas, called Codisco.
In the related party transactions, Salinas purchased from a third party-at a
steep discount-approximately $325 million of indebtedness owed by Unefon to
the third party. At the time that Salinas purchased the indebtedness, he
was aware that Unefon was in negotiations with another large telecom company
which would provide substantial cash to Unefon, and enable Unefon to pay off
the full amount of the indebtedness that Salinas had purchased at a
discount. Only three months later, when Unefon closed the deal with the
other telecom company, Salinas profited by $109 million upon Unefon’s
repayment of the debt at full value.

TV Azteca filed the false reports with the SEC, concealing Salinas’
involvement in the Unefon debt transactions, despite receiving advice from
its U.S. counsel that these transactions were material, reportable
transactions under U.S. federal securities laws. While the company provided
general disclosure of the transactions, it refused to reveal information
crucial to investors: that Salinas was behind the transactions and
personally profited from them. TV Azteca’s resistance led to the eventual
resignation of its U.S. counsel, who told the company’s board of directors
and management that it was resigning consistent with its obligations under
Section 307 of the Sarbanes-Oxley Act.

In various filings and public statements from June 2003 through January
2004, TV Azteca and its management discussed publicly the Unefon debt
transactions while either failing to disclose Salinas’s involvement, or, in
several instances, falsely denying Salinas’s involvement. For example,
Salinas publicly denied any connection to Codisco in response to a query by
the press regarding market concern that he may have been affiliated with
Codisco. TV Azteca’s U.S. legal counsel subsequently discovered the news
article containing Salinas’s false denial and advised Padilla that
corrective disclosure was necessary. Despite the falsity of the statement,
and the advice of counsel, the defendants did nothing to correct Salinas’s
false denial. Further, in communications with TV Azteca’s independent
directors, Salinas, Padilla and Echarte intentionally withheld information
from, and even lied to the directors about Salinas’s connection to the
underlying transactions and his $109 million profit. Salinas and Padilla
compounded their fraud by executing false Sarbanes-Oxley certifications.

After the resignation of TV Azteca’s U.S. legal counsel and a Dec. 24, 2003,
New York Times article concerning the matter, Echarte sent an email to
Salinas and Padilla, stating, “The damage is done and the situation that we
didn’t want to explain openly is now in the hands of the public.” Shortly
thereafter, on Jan. 9, 2004, TV Azteca issued a press release confirming
that Salinas indirectly owned half of Codisco.

The SEC alleges in its complaint that the defendants violated or aided and
abetted violations of the antifraud, reporting, concealment from auditors,
books and records, internal controls, beneficial interest disclosure and
Sarbanes-Oxley certification provisions of the federal securities laws.

In a consent filed simultaneously with the complaint, Echarte settled the
SEC’s action against him by agreeing, without admitting or denying the
complaint’s allegations, to the entry of a final judgment permanently
enjoining him from violating, and aiding and abetting violations of the
antifraud, reporting, books and records, and internal controls provisions of
the federal securities laws. Echarte also has agreed to pay a civil penalty
of $200,000 and disgorgement of $1.

# # #

For further information contact:

Harold F. Degenhardt, District Administrator, (817) 900-2607

Spencer C. Barasch, Associate District Administrator, (817) 978-6425

Jeffrey Cohen, Assistant District Administrator, (817) 978-6480

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