The total outstanding liabilities of the owner of the defunct Tinian Dynasty Hotel & Casino has now climbed to over $250 million, excluding the $75 million in civil penalties assessed by the U.S. Department of the Treasury Financial Crimes Enforcement Network.
Hong Kong Entertainment (Overseas) Investments Ltd. chair Chun Wai Chan disclosed that this increasing amount is due to late payment penalties and interest.
Chan disclosed Tinian Dynasty’s outstanding liabilities Wednesday in response to the federal court’s show cause order directing HKE to explain why sanctions should not be imposed against it for failure to obtain a lawyer in connection with a lawsuit filed by foreign workers over the denial of their CNMI-Only Transitional Worker petitions.
U.S. District Court for the NMI Magistrate Judge Heather Kennedy had given HKE and Mega Stars Overseas Limited until yesterday to respond to the show-cause order.
Kennedy gave the order after Chan, who appeared by telephone at the last hearing, informed the court that they have not retained a lawyer and do not intend to do so because of financial inability.
In HKE’s response, Chan said the casino operation stopped in August 2015. When the hotel operation also halted in March 2016, the income stream dried up.
“We ran out of money,” he said.
That meant they could not pay the government, employees, suppliers, shareholders, and the lawyers the company used to hire.
Chan said they acquired HKE in 2013 and has invested over $40 million to cure all legal and financial difficulties of the previous owner. That included paying back wages of employees and taxes owed the government.
In 2014, Chan said, the company’s net loss was at $10.8 million and the total deficit was at $121.9 million.
In 2015, he said, the net loss was at $11.2 million and the total deficit was at $133 million.
Chan said the company tried hard to survive after paying the U.S. government $3 million in July 2015 to settle a criminal case.
He said HKE filed for Chapter 11 bankruptcy protection in December 2015, but the federal court dismissed it in January 2016.
Since they could not pay their lawyer, Daniel T. Guidotti, the lawyer withdrew, Chan said.
“We cannot find another one to represent us,” he said.
“We want to state the fact that we have run out of money, but we are not abusing our staff,” said Chan, adding that they expended a lot of effort in trying to get all their foreign workers back to their countries.
Chan said that Samuel Mok, the lawyer for the plaintiffs in this case, is taking advantage of the fact that they have no money to hire a lawyer.
Chan said it does not, however, make Mok right in the plaintiffs’ claims in this case.
“I am willing to come forward to explain in person before the judge without an attorney,” he said.
Kennedy, in her show-cause order, reiterated that failure to obtain a lawyer may result in a district court judge striking HKE’s and Mega Stars’ answer to the lawsuit and entering a default judgment against them.
At the Jan. 16 hearing, Guidotti withdrew as counsel for HKE and Mega Stars after the companies failed to pay his attorney’s fees.
Kennedy informed HKE and Mega Stars that the corporations may appear in court only through an attorney. She also explained that failure to obtain a lawyer may result in sanctions, including entry of a default judgment.
Mok is counsel for Eric F. Dona and six other co-plaintiffs. There are 15 named plaintiffs in this case.
In their lawsuit, Dona and co-plaintiffs alleged that the owners and management of Tinian Dynasty lied to them about their immigration legal status, that they were legally authorized to work despite the denial of their CW-1 petitions.
In June 2015, FinCen assessed HKE with a $75 million civil penalty for “willful and egregious violations” of the Bank Secrecy Act.
In February 2016, the district court authorized the U.S. Internal Revenue Service to dispose the $2.5 million that HKE has agreed to pay as part of a $3.03-million settlement of a criminal case.
In May 2017, the District Court ordered HKE to pay $191,400 in civil penalty to the U.S. Labor secretary for willful and repeat violations of the overtime provision of the Fair Labor Standards Act.