CNMI LAWMAKER ACQUITTED OF FRAUD

By John Ravelo

SAIPAN, CNMI (Saipan Tribune, Oct. 22) – A federal jury composed mostly of local residents acquitted former Senate president Juan S. Demapan and businessman Michael Kerschner on multiple wire fraud charges.

The jury handed down the verdict yesterday afternoon after about two weeks of deliberations. Demapan and Kerschner underwent a full-blown trial on a count of conspiracy to commit wire fraud and five wire fraud counts, among other charges.

Demapan, owner of the locally based Demapan Engineering and Construction, went into trial with Kerschner, president of Quantum International, in connection with alleged misuse of funds allotted to build 60 emergency classrooms on Saipan.

A visibly relieved Demapan went out of the courtroom with his lawyer, Pedro Atalig, and chatted with supporters. Atalig described the verdict as a "good decision."

Atalig said Demapan's camp is assessing its options as to what legal steps it would take next. Earlier this month, Demapan filed a lawsuit with the CNMI Superior Court, impleading private contractors, government officials and former official of the Board of Education in connection with the $2.7-million emergency classroom project. Demapan accused the lower court defendants of "tortuous interference of a contractual relationship" between the DECC and the DPW.

Demapan named as defendants former Department of Public Works director Andrew Smith, acting Finance Secretary Robert Schrack, former BOE chairman Anthony Pellegrino, and BOE member Marja Lee Taitano. Also named defendants in the Superior Court lawsuit were Owen Walker Mariana Pacific Inc., Fletcher Pacific Construction, Guam Pacific Power Corp., Force 10 Holdings Pty. Ltd, China Seaco, William Bush, Sally Pfund, Noel Paine, Chieng Tan, John Ward, and still unnamed defendants.

Meanwhile, U.S. prosecutor John Rice, expressed disappointment over the federal jury's decision acquitting Demapan and Kerschner.

"It's very difficult for a jury in a small community to decide the case," said Rice, insisting that he has presented sufficient evidence to convict Demapan and Kerschner. He added, though, that he respects the jury's decision.

The prosecutor had alleged that Demapan and Kerschner took steps to acquire immediate payment of a large percentage of the value of the contract by falsely representing that the money was to be used for mobilization costs and construction material deposits.

Upon acquiring $500,000 on this representation, the defendants quickly dissipated a large portion of the money on items unrelated to the classroom project, the indictment alleged.

"As further part of this scheme, the defendants attempted to secure additional monies, namely $362,293.93, from the CNMI by submitting six fraudulent bills of lading and making the false representation that construction materials for the 60 classrooms project had been shipped to Saipan," the indictment added.

The prosecution contended that Demapan and Kerschner attempted to secure additional monies from the CNMI by allegedly submitting a fraudulent accounting of their expenditures. At one point, Demapan allegedly wrote himself $30,000 checks and cashed them immediately, based on $200,000 and $300,000 payments made by the government. Less than a week after receiving the $300,000 payment, Demapan purchased three Mercedes Benz vehicles allegedly using $30,000 of the project funds.

When Kerschner received $100,000 from the classroom project money, he allegedly transferred $80,000 to his lawyers to pay off settlements on lawsuits and attorneys' fees unrelated to the project, the prosecution claimed.

October 22, 2003

Saipan Tribune: www.saipantribune.com

 

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