"2. The Loral Directors
Loral had eight directors on its board at the time the “Securities Purchase Agreement” that documented the MHR Financing was signed. The Chairman of Loral’s Board of Directors was defendant Rachesky, who was Carl Icahn’s chief investment advisor before he co-founded MHR with defendant Hal Goldstein, now a Managing
7 Tr. at 866 (Targoff).
9
"Director at MHR. Goldstein joined Rachesky on Loral’s board, as did MHR’s other Managing Director, defendant Sal Devabhaktuni. In addition, two other Loral directors, CEO and Vice-Chairman Michael B. Targoff and Special Committee Chairman John D. Harkey, Jr., were affiliated with MHR. MHR listed Targoff and Harkey as two of its five “Selected Investment Advisors” in its marketing materials.8 MHR boasted about its majority representation on Loral’s board in a December 2005 letter to its investors explaining:

"Post the bankruptcy [in which Rachesky was the chair of Loral’s unsecured creditor’s committee], MHR has maintained its position of influence and control in Loral in order to maximize value to its investors. MHR is the largest holder of Loral’s common stock, preferred stock and notes. In addition, Mark Rachesky, Hal Goldstein, and Sai Devabhaktuni, the three MHR managing principals, and John D. Harkey, Jr., and Michael B. Targoff, both MHR advisors, constitute 5 of the 9 members of Loral’s new board of directors.9

"Targoff, who had previously been a partner at a large New York law firm, joined Loral’s predecessor in 1982 and served in various executive positions until 1998, when he left to pursue his own business as a telecommunications investor and entrepreneur. Targoff assisted MHR in making its first investment in Loral’s predecessor in 2001. After that, Targoff and his assistant were allowed to set up shop in MHR’s midtown Manhattan offices rent-free. In exchange for free rent in one of America’s most expensive office locations, Targoff provided advice to MHR on potential transactions and business opportunities.
8 JX 1222 at 21.
9 JX 45 at 1-2.
1 0
"Targoff became directly involved again with Loral during the bankruptcy process. MHR had been appointed as the head of the unsecured creditors committee, and relations between the creditors committee and Loral’s management were 'dysfunctional.'10 Targoff stepped in and served as an intermediary between the creditors’ committee, primarily its Chairman Rachesky, and Loral’s management, primarily Loral’s then-CEO Bernard Schwartz. Targoff continued that intermediary role post-bankruptcy when he was named as the Vice-Chairman of Loral’s board of directors. Within a few months after Loral emerged from bankruptcy, Schwartz resigned his role as Loral’s Chairman and CEO. Schwartz’s resignation was the result of the dysfunctional relationship he had with the MHR directors. Indeed, it came at a time when Rachesky and Targoff had started to hire a headhunter to replace Schwartz. Rachesky and Targoff then agreed that Targoff would become CEO at the beginning of March 2006. Thus, Targoff was named Loral’s new CEO and retained his role as Vice-Chairman. Rachesky replaced Schwartz as Chairman.

Harkey, who was named chairman of the Special Committee, is the Chairman and CEO of Consolidated Restaurant Companies, Inc., a Dallas-based restaurant company with approximately 130 restaurants. Harkey and Rachesky were business school classmates at Stanford, have maintained a 'long-time friendship,'11 and serve as business resources and references for each other. Based on Rachesky’s recommendation, Harkey serves as a director on three boards — Loral, Leap Wireless International, Inc., and
10 Tr. at 760 (Targoff).
11 Tr. at 286 (Simon).
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Emisphere Technologies, Inc.12
"Unsurprisingly, MHR holds large blocks of stock in each of those companies.13"