CNMI Cargo Ship MV Luta Arrested; Held Until Dispute Between Partners Resolved

Intended to service Rota, vessel owners reportedly refuse to pay back Japanese investor

By Cherrie Anne E. Villahermosa

SAIPAN, CNMI (Marianas Variety, Oct. 26, 2016) – The Japanese investor who brought MV Luta to the commonwealth has sued his former partners on Rota, including Lt. Gov. Victor B. Hocog for fraud.

Through his counsel George Hasselback, Takahisa Yamamoto filed his complaint in the District Court for the NMI against MV Luta, Luta Mermaid LLC, Abelina T. Mendiola Deron T. Mendiola, Fidel S. Mendiola III, Fidel Mendiola Jr. and Hocog.

Yamamoto also asked the court to issue a warrant of arrest against MV Luta.

Magistrate Judge Heather Kennedy, in her capacity as a clerk of court, signed and granted the warrant which was served Tuesday afternoon by U.S. Marshals and Hasselback as an observant.

The warrant was served on the MV Luta which was anchored in the waters off Smiling Cove Marina.

Hasselback said there was one person on board the ship when they served the warrant, adding that MV Luta is now in the custody of the federal court.

The American Maritime Services was appointed as the custodian of the ship until the matter is resolved between the parties.

“We’ve just arrested the vessel,” Hasselback told reporters. “The U.S. Marshal arrested the vessel. Early this morning I filed a civil complaint and asked the court to issue a warrant of arrest against MV Luta and all of its cargo and things on board. The court has taken the vessel…and will hold onto it until the civil claims are disposed of.”

He said the ship is not going anywhere and will be under the watch of the custodian.

Variety was told that the vessel had ceased operations for two and a half weeks already, and that the captain and other crewmembers were not being paid by the Mendiolas.

Another source said the captain and the crewmembers have already returned to the mainland U.S.

Yamamoto sued the defendants for breach of contract, fraud and unjust enrichment.

He said he is owed over $3 million for the purchase of the ship and has not been paid back by the defendants.

The complaint stated that Yamamoto started visiting Rota in 2013. In that same year, he said he was approached by the defendants and they discussed the purchase and operation of a commercial shipping vessel for Rota which was in dire need of shipping services.

Yamamoto said he was told by the defendants that the municipality of Rota would be funding the purchase and the operation of the vessel.

Yamamoto said he was promised that if he were to provide $600,000, the local government would match the amount by providing $600,000 aa well.

In Jan. 2014, Yamamoto provided money to Kizuna Marine Inc. an entity under the control of the defendants, wiring approximately $700,000.

But Yamamoto’s initial funding was not used for the acquisition of a vessel, the complaint stated, adding that some of the defendants withdrew some, if not all, of the funds for their own personal benefit.

Yamamoto was also told by the defendants that another entity, MV Luta Mermaid LLC, had to be formed to purchase the vessel.

“These statements were made by certain of the defendants in order to induce the plaintiff to provide financial support for the business entity while furthering their fraudulent scheme to provide additional funding,” the complaint stated.

It added that the Rota Municipal government did not contribute to the business as Yamamoto had been promised by the defendants.

In June 2014, the defendants asked for another $600,000 which Yamamoto provided as he was made to believe that the project would fail if he did not contribute financially, his complaint stated.

Between Sept. 2014 and Jan. 2016, Yamamoto said he again sent money to the defendants to assist them in the operation of the vessel. These were loans and Yamamoto said he was made to believe that the money would be returned to him after six months.

All in all, Yamamoto said he spent over $3 million for loans to the defendants and when they again asked for money in May 2016, he declined.

In his complaint, Yamamoto said that, to date, he has not been paid the money he was promised nor has he been provided an accurate accounting of the funds he provided to the defendants for the business.

Yamamoto said, to date, MV Luta has not been operated in a commercially reasonable manner in order to maximize the potential for commercial gain in order to reimburse Yamamoto for his contributions to the purchase, outfitting and operation of MV Luta.

The complaint also stated that MV Luta has not paid the wages of the sailors and that the defendants wasted an undetermined amount by personally enriching themselves.

The money Yamamoto contributed has been misspent and diverted for the defendants’ own personal gain and enrichment, the complaint added.

Yamamoto is seeking judgment and wants MV Luta sold so he can be paid with interest and costs, and for other punitive damages.

Asked for comment, Lt. Gov. Victor B. Hocog said: “I was surprised to hear that I am being sued again because of MV Luta. I am surprised that I am included in the lawsuit when I don’t have much of a role in the operations and running of the company. I was asked to help and that’s the only thing I did. I came in to help them get into the process but everything — the discussion about how it would be done — was discussed by the owner and the investor, Mr. Yamamoto and Fidel Mendiola. I assisted in the facilitation of the meeting between them and the then-governor [the late Eloy Inos] to discuss the project, but that’s my only role. I am not even part of the company. My only participation was assisting them get through the process so the plans and project could move forward. Other than acting as mediator between the parties so that the project would materialize, I have no further knowledge of the agreement Fidel and Yamamoto had. I supported the idea of providing transportation services to the people of Rota and to the commonwealth because I believe that providing shipping services will help our people and the economy of Rota and our commonwealth. That’s why I helped Mr. Yamamoto in his plan to bring in a shipping vessel to help the people of Rota. But I am not involved in any way in the operations of the ship. I have to look first at the complaint and see how my name was dragged into this.”

In May, CNMI taxpayer John Del Rosario sued Hocog and Finance Secretary Larrisa C. Larson, in their official capacities, for the release of $400,000 in government funds to Luta Mermaid LLC which operates MV Luta.

Del Rosario’s complaint stated that the private corporation is owned by Hocog’s relatives and the $400,000 was released to the company without introducing it in the House of Representatives for proper appropriation.

Marianas Variety
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