2 in UMDA lawsuit convicted in NY trial

Robert Pfaff and John Larson, two primary defendants in an ongoing civil case brought by United Micronesia Development Corp. on Saipan, were convicted on multiple counts of tax evasion by a federal jury in New York in a verdict announced Dec. 16, 2008.

Jose Lifoifoi, chairman of the UMDA board of directors, said: “UMDA is pleased to see that the jury held Mr. Pfaff and Mr. Larson accountable for their federal crimes. These two men also have caused millions of dollars in harm to UMDA, to its shareholders, and to the people of Micronesia, and we look forward to the upcoming trial for these acts [on] Saipan. “

Pfaff and Larson had been on trial in federal court in New York for the past two months on charges of fraud, tax evasion and conspiracy in U.S. v. Stein—a case that was once characterized as the largest criminal inquiry into tax fraud in the history of the United States.

In April of 2007 UMDA filed a civil suit against Pfaff, Larson, and a number of their associates in Superior Court of the of the Commonwealth of the Northern Mariana Islands to recover millions of dollars for harm done to the company over a 10-year period ending in 2006. The court recently scheduled trial to begin in August 2009.

Pfaff is also under separate criminal indictment in the New York federal court in a case that is not yet scheduled for trial. This second indictment relates to Pfaff’s alleged global criminal activities that include the misuse of UMDA accounts and assets. It corroborates many of the key allegations made by UMDA against Pfaff and his co-defendants in the civil suit.

“UMDA looks forward to going to trial next year and recovering the assets that rightly belong to UMDA shareholders,” said Lifoifoi. “[The] defendants’ attempts to delay the trial based on Mr. Pfaff’s and Mr. Larson’s criminal problems are a smokescreen to keep the truth from coming out and to avoid being held accountable for their actions.”

UMDA was founded in 1966 in Saipan. Over the years, UMDA has been involved in a wide range of businesses, including airlines, cable systems, shipping, and resort properties. UMDA’s shareholders include the government or governmental entities of the CNMI, Palau, Federated States of Micronesia, and thousands of individual Micronesians and their families. In December 2007 UMDA announced the purchase from JAL Group of the Hotel Nikko Saipan, a 313-room luxury hotel in Saipan. (UMDA)