UMDA responds to ‘diversionary lawsuit’

On April 4, Judge Juan Lizama of the Superior Court of the Commonwealth of the Mariana Islands issued a written order in the lawsuit brought by United Micronesia Development Association against former director Robert Pfaff and a number of associates and corporate entities, finding that based on the evidence presented so far “it is clear that there is some wrongdoing that occurred” and that the action alleging fraud, misappropriation of funds and breach of fiduciary duty among other charges, should proceed.

Three days later, on April 7, a previously unknown entity called Laramie Fealty LLC, as trustee for G.E.T. Realty Trust (G.E.T. is one of the corporate entities named in the UMDA lawsuit and subject to Judge Lizama’s order) filed a suit against UMDA, and some of its directors, in CNMI Superior Court. That lawsuit has asked the court to believe that Pfaff and his associates are innocent victims of a plot by UMDA to abscond with the proceeds from the sale of the LaoLao golf property, which is one of the subjects of UMDA’s original suit filed a year ago in April of 2007.

On March 19, 2008, Pfaff, who has been under a criminal tax indictment in New York for several years, was the subject of a new criminal indictment brought by the U.S. Attorney in the Southern District of New York that involves his activities while a director of UMDA.

UMDA president and CEO Russell Snow said: “After all the damage that has been done to the shareholders of UMDA by Mr. Pfaff and his associates over the past 10 years, I find it amazing that they have the nerve to create yet another shell company to make baseless accusations and brazenly take another run at the proceeds from the LaoLao golf course sale. We sued Mr. Pfaff and his associates in the first place to keep them from taking the LaoLao money, which is currently being held under the stewardship of the Superior Court.”

Snow went on to say that “the court will decide who is entitled to the proceeds from the LaoLao sale. I really see the claim filed by Laramie Trust, whoever this entity is, as an unsophisticated attempt to divert attention from the wrongdoing of Mr. Pfaff and his cronies. These are meritless claims which I am confident will be addressed and resolved in the course of the litigation.”

In April of 2007 UMDA filed a civil suit against Deloitte & Touche, along with Pfaff, John Larson, and a number of their associates and corporate entities, in Superior Court of the CNMI to recover tens of millions of dollars in damages (plus punitive damages) for harm done to the company over a 10-year period ending in 2006. A preliminary injunction has been granted against the defendants to preserve assets rightfully belonging to UMDA. A trial date has not yet been set.

UMDA was founded in 1966 in Saipan. Over the years, UMDA has been involved in a wide range of businesses, including airlines, cable systems, and resort properties. UMDA’s shareholders include the government or governmental entities of the CNMI, Palau, the 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. [B][I](UMDA)[/I][/B]