UMDA settles case against Deloitte & Touche

The United Micronesia Development Association, Inc. announced yesterday that it has reached a settlement with Deloitte & Touche in a civil suit in the CNMI Superior Court relating to harm done to UMDA by company insiders during a time when Deloitte served as auditor and accountant. UMDA has received a mid seven-figure settlement from Deloitte and Deloitte & Touche entities on both Saipan and in Guam have been dismissed from the case.

In April 2007 UMDA filed a civil suit against Robert Pfaff, John Larson, and a number of their associates and corporate entities in the CNMI Superior Court 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. Deloitte & Touche was named in the complaint at that time.

Pfaff and Larson are currently on trial in federal court in New York on charges of fraud, tax evasion and conspiracy in U.S. v. Stein—a case that has been characterized as the largest criminal inquiry into abusive tax shelters in the history of the United States. The trial is expected to conclude later this month.

Pfaff is also under separate criminal indictment in the same federal court in a case that is not yet scheduled for trial. This second indictment, relating to Pfaff’s alleged global criminal activities, corroborates many of the key allegations made by UMDA against Pfaff and his co-defendants in the civil suit pending in Superior Court in the CNMI.

“UMDA is pleased to have reached such a beneficial settlement with our former auditor and accountant in this matter, so that we can aggressively pursue our claims against Mr. Pfaff and Mr. Larson,” said UMDA president and CEO Russell Snow. “If the allegations in our civil complaint and the federal criminal indictment are true, then these men betrayed the trust of the people of Micronesia by enriching themselves at the expense of UMDA shareholders. UMDA will continue to cooperate with both the U.S. Attorney in New York and CNMI governmental authorities to ensure that the truth comes out and that those responsible for damaging UMDA are held accountable for their actions.”

UMDA was founded in 1966 on Saipan. 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, 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]