Businessman files racketeering suit vs ex-DPL secretary

A Korean businessman and his former company filed yesterday in federal court a racketeering lawsuit against former lawmaker and Department of Lands secretary Oscar M. Babauta and several others who allegedly conspired to steal millions of dollars from him for his hotel resort and casino project on Saipan.

KSA Corp. and Il Hwan Kim are suing Babauta, former DPL employee Ramon S. Salas, Hun Jin An, Jeong Eun Taek, Joann P. Hensley, and 10 unnamed co-defendants pursuant to Racketeer Influence and Corrupt Organizations Act (RICO) and other causes of action.

KSA Corp. and Kim, through counsel Pamela Brown, are suing the defendants for RICO violation, conspiracy to violate RICO, fraud, and for aiding and abetting a fraud.

Saipan Tribune tried but failed to contact Babauta and other defendants for comments.

The plaintiffs asked the U.S. District Court for the NMI to hold the defendants liable to pay them damages, court costs, and attorney’s fees.

According to Brown, from December 2006 to April 2014, the defendants conspired to steal millions of dollars from plaintiffs through wire fraud, mail fraud, forgery, theft, and extortion.

Brown said Kim came to Saipan as a tourist on Dec. 16, 2006 and decided that Saipan would be an ideal location for a tourist destination investment, which he expected to finance from his own assets in the amount between $30 million and $50 million.

During this time, Kim met An, who assured him that he would assist him in making his investment into a resort hotel and amenities.

An was the chief executive officer of a tourist company on Saipan and claimed that he was involved in many other business enterprises.

In 2006, An introduced Kim to Taek, who he said had lived on Saipan for over 30 years.

An claimed that Taek enjoyed a very close relationship with local government officials, including the mayor.

Kim did not speak or read English so he welcomed the assistance of An and Taek.

An and Taek explained how the financing and permitting of Kim’s project would be handled by them since they knew all of the key players and would need money to grease the wheels of the process.

An and Taek instructed Kim to wire transfer all of the funds for the project to them at the San Jose Market and they would then handle the cash for the project.

Brown said An and Taek introduced Kim to the then-governor, the then-mayor of Saipan, and many other government officials, including Salas, and An’s wife, Hensley.

An and Taek instructed Kim to first invest $100,000 in an Internet café operation called KS PC in order to establish himself in the community.

Either both An and Taek or one of them, owned KS PC.

When Kim returned to Korea, An called him and told him that KS PC was losing money and said he had a buyer that would pay $50,000 for it.

The buyer, however, determined that KS PC Internet café was located in an economic dead zone and offered only $20,000 for Kim’s $100,000 investment.

In February 2007, Kim returned to Saipan to commence his resort destination project. Upon arrival, An and Taek asked for payment of $5,000 for incorporation documents for KSA Corp.

Kim paid the amount.

After organizing KSA and opening an office, An and Taek took Kim to a parcel of government-owned property in San Antonio, which Taek explained was for lease and that he had already spoken to then DPL employee Salas regarding it.

Kim returned to Korea and established a KSA office there to conduct business on the Saipan project and to have Korean engineers and architects design the hotel resort project.

On June 18, 2007, An and Taek called Kim in Korea to inform him that since he and KSA were “special investors” that the ground breaking was planned by the CNMI government prior to negotiation of the permitting for KSA’s hotel/casino resort project.

The following day, Kim returned to Saipan, which was when Taek and An contacted him regarding a ground-breaking ceremony with the governor and other government dignitaries on June 22, 2007.

Concerned about his immigration status, Kim asked how he could obtain a visa. Taek told him that with a $150,000 deposit he and a bank could handle the arrangements for his investor visa.

On June 25, 2007, on recommendation of An and Taek, Kim opened a KSA business account at the Bank of Saipan in order to deposit funds necessary for an investor visa.

Taek told Kim that in order to expedite the investor visa that he should wire transfer the funds to him at the San Jose Market so that Taek could deposit it into the bank.

On Aug. 1, 2007, DPL contacted Kim to proceed with the lease agreement. Kim asked Salas how long KSA had to get financially organized KSA’s project and construct his resort.

Salas told him that KSA had two years from the date of the execution of the lease agreement.

Kim signed the lease agreement despite wanting to have it thoroughly reviewed by his attorneys in Korea based on Taek’s assurances that everything was fine with the lease agreement.

Under the terms of the lease agreement, KSA was to pay $2,500 in rent to the CNMI government, specifically DPL. In total, KSA paid $8,160 to DPL.

After executing the lease agreement, An contacted Kim regarding the likely passage of the casino law, making casino gambling legal on Saipan.

An and Taek convinced Kim to change the scope of KSA’s project from just a resort hotel with amenities to a casino resort operation.

Brown said that in September 2007, Taek and a team of CNMI government officials traveled to Korea to verify Kim’s and KSA’s financial capabilities for the project.

Upon return to the CNMI, Taek told Kim that he personally gave the governor a report regarding KSA’s financial capabilities.

Upon completion of the casino resort project blue prints and plans, Kim submitted them to DPL.

On Dec. 3, 2007, KSA got its construction permit for the project and in January 2008, KSA commenced construction of its casino resort.

In February 2008, Taek again requested more funds from Kim for project expenses. Kim went to the Bank of Saipan to withdraw funds from KSA’s account.

At the bank, Kim was informed that the account had zero balance.

Asked about the zero balance, Taek told Kim that the funds were depleted in order to begin KSA’s project and assured Kim that he had receipts for all expenditures.

Taek then stopped communicating with Kim, which led to his replacement as an officer in KSA with Hensley.

An then contacted Kim regarding DPL’s concern that the project construction should commence.

Since it had been commenced, Kim could not understand what DPL wanted that was not being done at the project site on KSA’s casino resort project.

An called Kim in Korea to inform him that KSA’s office was burglarized and all of the furniture and equipment were stolen. KSA had to replace all of it at large expense.

Fencing surrounding KSA’s project construction site was also stolen and had to be replaced in order to comply with DPL’s requirement.

Kim had KSA funds wired to An at the San Jose Market to replace the stolen equipment, furnishing, and fencing in order to continue the project.

In June 2008, An contacted Kim to inform him that KSA’s leasehold was cancelled for failure to make payments on the lease and for failing to secure construction permits.

An told Kim that in order to restore the lease agreement, DPL wanted a consulting contract for the project.

In September 2008, Kim met with Salas and executed a consulting contract for which KSA paid $5,000 per month.

Kim wire-transferred KSA’s funds to An at the San Jose Market to pay Salas.

On Oct. 16, 2009, An called Kim in Korea to inform him that the governor would consider restoring KSA’s lease agreement for KSA’s hotel/casino resort project for $140,000.

Kim wire-transferred the amount to An at the San Jose Market for An’s payment to Salas allegedly for the governor.

Brown said on information and belief, neither An nor Salas ever paid the governor the $140,000 to restore KSA’s lease agreement.

Brown said KSA’s lease agreement for the San Antonio parcel for its casino resort project was not restored.

In March 2010, An again contacted Kim explaining that, according to Babauta, KSA should change its name and return to operating on Saipan in order for it to be given a lease for land in the Marpi area, on which to construct its casino resort project.

Utilizing the blueprints for the casino resort project originally negotiated for San Antonio, KSA was eager to commence the project. In May 2010, it re-established its office on Saipan and changed its corporate name to IH Corporation.

An and Hensley handled all of the purported negotiations with Babauta and Salas for the lease agreement.

After five months, An called Kim in Korea to inform him that Babauta and Salas were ready to proceed with the lease agreement for KSA’s hotel/casino resort project but that KSA must pay $150,000 for the land lease.

Brown said Babauta and Salas demanded that KSA again change its corporate name prior to execution of the lease, which KSA accommodated by changing its name from IH Corp. to Leasure Planner Corporation.

KSA sent funds to An and Hensley for payment to DPL for the land lease.

Upon Kim’s return to Saipan a few months later, he learned that KSA’s lease agreement for the Marpi land had again been cancelled and that KSA’s office on Saipan was closed.

KSA and Kim abandoned the casino resort project and left Saipan.

On Feb. 7, 2012, Kim returned to Saipan and began to investigate what happened to the hundreds of thousands of dollars that he and KSA had sent to An, Taek, and Hensley that were demanded by DPL agents, including Babauta and Salas for land leases for its hotel/casino resort projects.

Brown said Kim discovered that the bank account was depleted even though he was the sole signatory on the account and had never executed any checks from this account.

Brown said bank records evidenced that all of the checks had a forge signature of Kim on it which were each allegedly forged by Taek, An, or Hensley.

Brown said none of the checks reflected DPL or the CNMI Treasury as the payee and none of the checks reflected U.S. Department of Homeland Security as the payee.

Brown said that, in 2010, a competitor for the San Antonio land lease obtained KSA’s blueprints and construction plans for its casino resort project from DPL personnel, which was either Babauta, Salas, or both.

In June 2013, An and Hensley telephoned Kim to inform him that DPL was again interested in reviving KSA’s hotel/casino project on the same land in San Antonio.

When Kim returned to Saipan on June 13, 2013, An and Hensley blamed Taek for all of the actions taken to defraud KSA and Kim.

Brown said based on the statements of An and Hensley and his desire to recoup his prior losses, Kim again allowed An and Hensley to assist him again.

On June 18, 2013, Kim gave $35,000 to An and Hensley for payment to DPL for a land lease on the same San Antonio land.

On Hensley’s instructions, Kim went to the DHS Application Services Center in Garapan to submit a E2 CNMI investor petition as well as to pay the processing fee of $325.

On Oct. 3, 2013, DPL cancelled KSA’s casino resort project and land lease proposal for the San Antonio property without any basis for its actions.

Salas again came to Kim to convince him that he could assist KSA in obtaining a land lease for property in Marpi, but Kim no longer believed any of the co-conspirators’ intentions or lies.

On May 21, 2014, Kim received an I-797 form from DHS informing him that his E2C was denied for failure to answer the request for evidence sent to Hensley on Jan. 17, 2014.

On July 3, 2014, after seeking legal services regarding denial of his E2C, Kim departed the CNMI for Japan.

The following day, Kim attempted to return to further his pursuit of legal action against Taek, An, Hensley, Babauta, and Salas, but was detained at the Francisco C. Ada-Saipan International Airport by DHS.

DHS interviewed Kim and determined that he had over stayed his immigration status and deported him from the U.S. with a 10-year bar for re-entry.

Brown said Kim is attempting to have his 10-year re-entry bar lifted so that he can return to prosecute this action.