CDA wants trustee to take over Pacific Gardenia

The Commonwealth Development Authority has asked the Superior Court to appoint a trustee to manage and collect the profits of Pacific Gardenia Hotel until the case against the hotel’s owners is resolved.

As of last Jan. 20, Sy’s Corporation and its officers Ronald, Maria Ana, and Jeannette Sablan owe CDA over $2.4 million, and are more than five years delinquent in their payment, according to CDA’s legal counsel.

“CDA’s rights and interests…will be irreparably injured unless a receiver [or trustee] is appointed to take charge of the business affairs of Sy’s [Corporation] and to take possession of its property until a final decision or order from this court is issued following foreclosure, selling the assets or otherwise disposing of this action,” attorney F. Matthew Smith said.

Court records showed that Jeannette Sablan—the sister of hotel general manager Ronald Sablan—has already agreed to the proposed appointment of a trustee on June 17.

In the motion he filed last week, Smith claimed that spouses Ronald and Maria Ann Sablan have been mismanaging the assets of Pacific Gardenia Hotel and Sunset Bar and Grill.

CDA, Smith said, has been informed that the Sablans are maintaining separate sets of accounting books and had presented fictitious books to CDA in the past. Sy’s Corporation is reportedly operating without a CNMI business license due to unpaid taxes, and owes employees over $100,000 in back wages. Further, all checks payable to Sy’s Corporation are being diverted and deposited directly into the personal accounts of the Sablan couple, Smith said.

“Because the defendants have not provided CDA with the reports required under their loan document, it is impossible to know the level of potential profitability of these businesses; however, CDA has been told that annual hotel revenues are in excess of $1 million,” CDA’s lawyer maintained.

He noted that if the court appoints a receiver, that trustee could collect, account for and place all proceeds from the hotel operations into a secure account, readily available for the court to distribute to entitled persons at the end of the case.

Smith also expressed doubt that any injunctive remedy available in the court would be enough and effective, given the “deceptive, past acts” of the Sablan couple.

Last month, the lawyer said, Ronald Sablan allegedly moved important accounting records from the accounting office to the purchasing stockroom “knowing that the stockroom was infested with termites that would make short work of the records.”

Nevertheless, Smith hoped that the Sablan couple would not oppose the motion, since the mortgages between them and CDA expressly provide that CDA is entitled to the appointment of a trustee.

CDA filed the case against the Pacific Gardenia owners after they failed to make required payments for several loans they obtained from the authority.