MARIANAS Consultancy Services and its sole member Alfred Yue, though attorney Mark Hanson, are asking the federal court to dismiss the verified complaint for forfeiture in rem regarding funds seized from two Bank of Saipan accounts in 2019 for wire fraud and money laundering totaling $310,276.26.
MCS and Alfred Yue have claimed ownership of the seized funds.
Forfeiture in rem is a legal term that refers to the government’s seizure of property without a criminal conviction. Forfeiture in rem is a civil action, and the government must prove that the property was used in or derived from criminal activity.
In his motion to dismiss, Hanson said, “The complaint fails to allege any viable predicate criminal offense that would provide grounds to forfeit the defendant’s property (fund), in whole or in part, as either proceeds of any specified unlawful activity or as an instrument of international promotional money laundering.”
In January, District Court for the NMI Magistrate Judge Heather Kennedy issued a warrant of arrest in rem following a complaint from the U.S. Attorney’s Office for the Districts of Guam and the NMI which sought to forfeit funds seized from two Bank of Saipan accounts in 2019 for wire fraud and money laundering totaling $ 310,276.26.
The complaint was a civil forfeiture action and did not provide names of any defendants but refers to two bank accounts of “MCS” in Bank of Saipan.
According to the complaint, $271,087.88 was seized from “MCS account 1,” and $39,188.38 was seized from “MCS account 2.”
A resident of the CNMI, “A.Y.” is the sole owner and operator of MCS, the complaint added.
The seized funds are currently in the custody of the U.S. Department of the Treasury.
The complaint arises out of an investigation of the Federal Bureau of Investigation and the U.S. Internal Revenue Service of a suspected conspiracy by foreign entities and entities and individuals in the CNMI to commit wire fraud and money laundering.
“The suspected conspiracy involved the transfer of funds, including by international wire transfer, for the purpose of promoting two schemes to defraud: first, to promote the misrepresentation of material facts to, and the concealment of material information from CNMI regulatory authorities, in violation of Title 18, United States Code, Section 1343; and second, to illegally influence government officials in exchange for preferential treatment, thereby depriving the citizens of the CNMI of their intangible right to honest services of those CNMI government officials, in violation of Title 18, United States Code, Sections 1343 and 1346,” the complaint stated.
The suspected conspiracy involved a third scheme “to evade the payment of the proper amount of income taxes owed to the CNMI government, in violation of Title 18, United States Code, Section 1343.”
In the case of the first two schemes, “conspirators used international wire transfers made with the intent to promote the carrying on of any one or more of these wire fraud schemes, each of which constituted specified unlawful activity,” the complaint stated.
“The wire transfers therefore constituted acts of international promotional money laundering,” it added.
In response, Hanson said: “The allegations of Scheme 1 (defrauding the [Commonwealth Casino Commission]) do not constitute wire fraud nor otherwise constitute international promotional money laundering.”
He said “while the United States alleges that claimants’ deceitful conduct ‘avoided’ annual license fees and had ‘the effect of depriving the CCC of fees to which it was entitled,’ there are no allegations that the object of the alleged scheme to defraud was to avoid the payment of licensing fees.”
Likewise, Hanson said the complaint failed to allege a quid pro quo related to its allegation of honest services fraud.
He said the complaint does not allege that any particular “official acts” were undertaken by any particular public official that was the direct or indirect beneficiary of any illicit payments for any particular purpose.
Instead, Hanson said, the complaint “avers in broad, conclusory terms a scheme to provide ‘a stream of benefits to, for, or on behalf of CNMI public officials for the purpose of gaining preferential treatment’ for the Casino Licensee,” referring to Imperial Pacific International.
“While the complaint piles on more conclusory, non-specific allegations and never actually names a single public official (even the ‘Doe’ individuals of the complaint are identified only as two ‘political figures’), none of the allegations of the complaint satisfy the United States’ obligation to plead non-conclusory, sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial.”
Hanson added, “None of the allegations of the complaint plausibly plead the requisite ‘clear and unambiguous’ quid pro quo between claimants and any particular public official with a fiduciary duty to the CNMI government that was in a position to influence an official act and that explicitly promised to do so in exchange for an illicit payment — none of the allegations of the facts support a reasonable belief that the government will be able to meet its burden of proof at trial.”
Essentially, Hanson added, the complaint is devoid of any specific allegations of the terms of an illicit bargain.
“The United States’ allegations are, at most, a perverse recharacterization of money that claimants used to develop general good within the community as a whole towards the Casino Licensee and its controversial business plan,” he said.
“There are simply no plausible allegations in the complaint identifying any public officials, nor their positions, nor their receipt of influence money, nor of any agreement by a specific public official to take or to influence any ‘official act’ in exchange for campaign contributions and ‘unethical gifts’ to the public official, his or her family, associates, campaign or political party. It is not enough for the United States to plead only that several unnamed public officials, directly or indirectly, received illegal contributions and gifts and that these unnamed public officials may or may not have had some unspecified influence over some unidentified public agency in a position to provide non-specific ‘preferential treatment.’ ”
As for the allegations of wire fraud, Hanson said, “It cannot be proven that any of the defendant funds are the proceeds of any fraudulent avoidance of CNMI taxation on funds allegedly spent and later reimbursed with separate funds from one foreign account to another foreign account.”
“The United States cannot make out a claim for forfeiture grounded on the allegations of Scheme 3 with wire fraud as the predicate offense because: (1) there was no wire communication in interstate or foreign commerce, (2) no part of the defendant funds are ‘proceeds’ of or otherwise traceable to Scheme 3, and (3) the civil forfeiture proceeding to collect claimants’ alleged tax liability to the CNMI is barred by the common-law revenue rule,” Hanson said.
Accordingly, the United States’ claim of forfeiture based on Scheme 3 must be dismissed, he added.
According to the 21-page complaint, A.Y., a resident of the CNMI, is the sole owner and operator of MCS.
MCS maintained MCS Account 1 and MCS Account 2 for which A.Y. was the sole signatory.
A.Y. incorporated MCS for the stated purpose of “banking and financial services, real estate development, and business management.”
The complaint also stated that “a Chinese investment holding company (Foreign Parent Company) is registered in Bermuda and headquartered in Hong Kong, People’s Republic of China. Foreign Parent Company owns a company registered in the British Virgin Islands. In turn, the company registered in the British Virgin Islands owns a company registered and incorporated in the CNMI (Domestic Subsidiary Company).”
The Foreign Parent Company maintained a China Minsheng Banking Corp Ltd. bank account in Hong Kong, People’s Republic of China, the complaint stated.
It added that a domestic subsidiary company maintained a Bank of Saipan account in the CNMI. “The Company (Foreign and Domestic company) was building a resort and casino in the CNMI,” the complaint stated.
Imperial Pacific International, a Hong Kong-based company, is the sole casino licensee on Saipan.
On Nov. 7, 2019, the FBI executed search warrants at the Office of the Governor, IPI and the office of Alfred Yue of Marianas Consultancy Services LLC, among other offices. Marianas Consultancy Services LLC was a consultant for IPI.
