DPL terminates Dynasty’s land lease

The Department of Public Lands has terminated its land lease agreement with the owner of the defunct Tinian Dynasty Hotel & Casino for failing to pay its lease rental and fees that has now allegedly reached $161,170.

DPL Secretary Teresita A. Santos issued a notice of termination to Kwan Man, president of Tinian Dynasty Hotel & Casino owner, Hong Kong Entertainment (Overseas) Investment Ltd., last Sept. 8.

Santos notified Man that he may appeal, in writing, her decision, to the DPL hearing officer within 30 days of receipt of this notice.

In response to Saipan Tribune’s inquiry yesterday, Santos said Tinian Dynasty Building & Casino sits on a private land and the only public land leased by HKE is the entryway/driveway estimated at 4.9 hectares.

According to DPL’s notice of termination, a copy of which was obtained by Saipan Tribune yesterday, the DPL Tinian Regional Office has completed its on-site inspection and audit of the premises leased by HKE and associated records.

Santos stated in the notice that DPL’s inspection and audit revealed that HKE is in default of the terms and conditions of their lease agreement dated as of March 19, 1996, as extended for an additional term of 15 years.

Santos said pursuant to the lease, HKE shall automatically be in default of the lease if the company shall fail to pay any installment of rent required to be paid within 90 days after the due date under the lease terms.

She said per Article 17 of the lease, upon the occurrence of any event of default, DPL may terminate the lease.

The secretary said HKE failed to pay annual rent required to be paid under the lease by failing to make timely payments on its lease rental account beginning June 1, 2016.

Santos said based on their records, HKE owes DPL $161,170 in annual rent and interest fees for the period beginning June 1, 2016 to Aug. 31, 2023.

“As a result, all lessee’s right under the lease (including but not necessarily limited to lessee’s right to use the premises) are terminated pursuant to Article 16 (default),” the secretary told Man.

Santos said upon termination, DPL may, upon 15 days written notice, enter into the premises and take possession of all buildings, fixtures, and improvements and evict HKE without liability of trespass.

HKE had been accused by the Financial Crimes Enforcement Network in 2013 of violating anti-money laundering protocols under the Bank Secrecy Act. The company, however, signed a non-prosecution forfeiture agreement of $3.04 million and as a result, the case was dismissed in July of 2015.

In June 2015, HKE was levied with a record $75 million in civil penalty for money laundering.

In February 2018, Chun Wai Chan, a corporate representative of both HKE and Mega Stars Overseas Ltd., informed the U.S. District Court for the NMI that Tinian Dynasty’s casino operation stopped in August 2015, and had not generated any income since its hotel halted operation in March 2016.

Mega Stars then-served as management of Tinian Dynasty.

Chan also disclosed to the court that the total outstanding liabilities of Tinian Dynasty has now climbed to over $250 million, excluding the $75 million in civil penalty assessed by the U.S. Department of the Treasury Financial Crimes Enforcement Network against the company.

Last August, Santos also terminated the lease agreement with the Macau-based Alter City Group Inc., which acquired a lease of a 152-hectare public land for its proposed $360-million casino resort on Tinian. She said Alter City Group failed to cure the defaults in the lease agreement.