Aaron Halegua
“THE timing of Imperial Pacific International’s (Chapter 11 bankruptcy) petition makes clear that it is a blatant attempt to delay both the revocation of its license by the Commonwealth Casino Commission and a finding of contempt by this court,” attorney Aaron Halegua said.
His client, Joshua Gray, has requested the District Court for the NMI to issue an order to show cause why it should not enter an order holding IPI and its executive director, Howyo Chi, in contempt for not complying with a previous order.
IPI’s former director of operations, Gray successfully sued the company for racial discrimination and wrongful termination.
Represented by Halegua and attorney Bruce Berline, Gray was awarded by the federal court a total of $5.68 million in compensatory and punitive damages.
After the court allowed Gray to participate in the receivership proceedings, he applied for a writ of execution, which the court granted.
Gray wants an order to show cause directing IPI to compensate Gray for the liquor stolen from the casino; imposing a daily fine of $10,000 until IPI complies; incarcerating Chi if IPI’s noncompliance persists; and directing IPI to pay Gray reasonable attorneys’ fees and costs resulting from its disobedience.
In response, IPI, through attorney Michael Chen, told the court that his client has no income and has no funds in its bank accounts. He asked the court to deny Gray’s petition.
Chen also filed a notice of automatic stay in the lawsuit as IPI has filed for Chapter 11 bankruptcy.
But according to Halegua in a motion filed on Wednesday, the court’s order to show cause is not subject to automatic stay.
“The [order to show cause] is not an effort by Plaintiff to perfect his security interest or enforce his judgment; rather, it is an action by the Court to enforce compliance with its orders. Ninth Circuit has long held that civil contempt proceedings are exempt from the automatic stay pursuant to the government regulatory exemption,” Halegua said.
“The only argument that IPI seems to be making is that it lacks the funds to provide adequate security,” he added.
“However, IPI does not meet its burden to show that it is unable to comply,” Halegua said.
He noted that “IPI does not include a single financial statement or any other financial document with its opposition.”
He also said that IPI has a recent $20 million cash infusion, “but IPI does not mention it.”
“Similarly, while IPI tells this court that it has no money to protect IPI’s vehicles, liquor or other assets, Mr. Chi submitted a bid of $159,000 on a Rolls Royce in the auction of IPI’s vehicles, and then bid a combined $55,750 on two other vehicles. IPI also offered to pay CCC more than $49 million to avoid the revocation of its license. As always, it appears that IPI has money for certain things, but conveniently does not have money for others,” Halegua told the court.
“Howyo Chi is effectively in control of IPI. Mr. Chi’s own declaration establishes that he is the executive director of IPI, and that he oversees security at the casino and the security guards report to [him],” Halegua said.
Chi is also the person who allegedly sought a quotation from a professional security company, the lawyer added.
“While Mr. Chi claims that he has no funds under his control to pay for the security of IPI’s vehicles or other property, the reality is that Mr. Chi has at least $159,000 at his disposal that he was using to bid in the auction of IPI’s vehicles. Thus, Mr. Chi does have authority and control over IPI’s security as well as how it spends its funds. Therefore, Mr. Chi should also be held in contempt for violating the [previous] order,” Halegua said.
He said IPI failed to comply with an Oct. 23, 2023 order directing the casino operator to “ensure and fund the security of IPI’s Personal Property until it is sold by the Limited Receiver and delivered to the buyer. Within fourteen days of the filing of the inventory list by the Receiver, IPI shall file with the Court a sworn declaration and supporting evidence demonstrating its compliance with this provision.”
