The complaint was filed by AHPW Inc., Robert C. Arthur, Patricia Arthur Bethwell Henry and Marihne Henry against the State of Pohnpei, the Federated States of of Micronesia Development Bank, Secretary of State Hillary Clinton and Secretary of the Interior Ken Salazar.
The plaintiffs, through their counsel Douglas F. Cushnie, are asking the federal court for judgment for damages over and against the FSMDB and Pohnpei in such amounts that will be equivalent to all principal and interest payments made by plaintiff during the loan period and accrued hereafter, for prejudgment interest, for attorney’s fees, costs of suit and other relief the court may deem proper.
The plaintiffs are also asking the court to enter a mandatory injunction to debar Pohnpei to receive any grant funds or other economic assistance from the United States, or alternately give the enjoin the U.S. from providing any further economic assistance to Pohnpei.
The plaintiffs further ask the federal court to enter judgment against the Pohnpei based upon the judgment of the Supreme Court in Civil Action No. 1999-053, issue a writ of execution or garnishment against all assets held in the U.S. by Pohnpei or on its behalf by any other government or private entity.
They are also asking the court to issue a temporary restraining order, preliminary and permanent injunction enjoining defendant from seizing or taking any shares of plaintiff, or receiving any funds from plaintiff’s judgment against Pohnpei, to compel FSMDB and Pohnpei to return all money and other assets received from the plaintiffs as a result of the collection proceedings, and finally to enter judgment against the FSMDB and Pohnpei for damages for expenses and attorney’s fees incurred, loss of credit ratings, and intentional and negligent infliction of emotional distress in such amount that may be proved at trial.
The plaintiff, residents of Pohnpei, FSM filed five causes of action against the defendants for breach of covenant/third party contract, breach of compact/debarment, collection of judgment, unjust enrichment/restitution and damages.
Cushnie stated that plaintiff AHPW, a corporation that processes and exports pepper and manufactures buttons from trochus for exporting applied for Investment Development Fund from the state-earmarked sub-account for Pohnpei in the amount of $620,000. The loan was granted by the Federated Development Authority and FSMDB was authorized to prepare the loan documents.
Cushnie said FSMDB did not prepare the loan documents in accord with the FDA’s instructions but instead made four individuals, including plaintiffs Arthurs and Jenrys the primary borrowers on the loan. Cushnie said the individuals, including the plaintiffs have never applied for the loan and did not satisfy the requirements to receive the loan funds.
The lawyer added that Pohnpei then engaged in a course of conduct that resulted to the destruction of plaintiff AHPW’s business.
As a result, AHPW was not able to pay the FDA loan administered by the defendant on time. FSMDB then filed a suit against the four individuals but they did not sue AHPW.
Cushnie said AHPW told defendant FSMDB that the four individual plaintiffs were not granted the loan, had not paid on the loan and had no right to receive IDF loan funds.
Cushnie said during trial, the defendant changed its position and asserted that AHPW was the borrower.
He added FSMDB failed to prepare the loan documents.
The lawyer added that when AHPW was still conducting business operations, it requested FSMDB’s assistance in preventing Pohnpei from destroying its business so they could continue repaying the loan, but FSMDB refused to take any action.
“In light of the violations, the Secretary of State and Secretary of the Interior should be enjoined from releasing any further funds to Pohnpei or FSM for its benefit or any purpose,” Cushnie said.
Cushnie said plaintiff AHPW has been awarded a judgment against Pohnpei in Civil Action No. 1999-053 in amount in excess of $700,000 but only part of it has been paid.
He said Pohnpei refused to pay the balance although they have sufficient funds to pay, and that Pohnpei has funds within FSM accounts held within the United States which may be subject to execution, garnishment or seizure.
Cushnie said plaintiff Arthur have paid FSMDB $10,000 and have been held in contempt of court for failing to liquidate other assets to satisfy the judgment entered against them in the civil action.
Cushnie said FSMDB has threatened to seize the shares owned by Patricia Arthur and Marihne Henry in the AHPW and threatened to secure control of AHPW, a conduct which is a direct violation of the agreement.
