Court asserts jurisdiction over BoS defendants

The CNMI Superior Court asserted its jurisdiction over the civil action filed by the Bank of Saipan against convicted businessman Bert Douglas Montgomery, Michael Wilson and other parties involved in transactions that resulted in the bank’s near-closure more than three years ago.

Associate Judge Juan T. Lizama denied the request of Daniel Martens and Moseley Martens, LLP of Texas to dismiss the case against them, asserting his court’s jurisdiction over those defendants. He said requiring those defendants to defend themselves in the case does not violate their right to due process.

The bank has accused Martens and his company of assisting Wilson in improperly obtaining $5 million loans from it. It has also accused Martens and his company of assisting Wilson in forming two companies—Sweven Systems, LLC of Texas and FFS Transaction Corp., LLC of Delaware. Wilson formed the companies to acquire two credit card processing companies in Texas, his basis for acquiring the BoS loan.

The bank first disbursed a $500,000 loan in November 2001, and then $4.5 million in January 2002. The bank wired the money to an account managed by Moseley Martens.

“Mr. Martens and the firm Moseley Martens received between them approximately $200,000 out of the $5 million provided by BoS, allegedly to cover current and past legal fees,” the judge noted.

He also noted that Martens admitted in pre-trial deposition that his office had contacts with a bank personnel in connection with the loan, and that someone from his firm sent information to the bank about the firm account that was used to receive the loan proceeds that he disbursed on instructions by Wilson.

Although Martens and his company are from Texas, Lizama declared that his court has jurisdiction over those defendants, citing that they purposefully availed themselves of the privilege of conducting activities in the CNMI.

“In this case, [the bank] alleges that [Martens and his company] intentionally defrauded it, knowing that it was located in the Commonwealth, and knowing that it would mean harm to [the bank], but would benefit [them]. If these allegations are taken as true, and they must be at this point in the proceedings, this alone would be sufficient to support a finding of purposeful availment,” the judge explained.

The judge also said that, while Martens and his company received the loan proceeds and disbursed them in Texas, those activities were forum-related.

The judge said that the Texas court could exercise jurisdiction in the case against Martens and his company because those defendants are from Texas and their activities happened in that state. However, he stressed that the bank has its residency in the CNMI and the harm allegedly caused to it happened in the Commonwealth.

“Indeed, all depositors in the bank were hurt by the scheme [that Martens and his company] allegedly participated in. Because the principal harm occurred in the CNMI, the court concludes that this forum has the greater interest in hearing this matter,” the judge said.

Of the defendants, Montgomery has been sentenced to 20 years in prison by Saipan’s federal court after convicting him on criminal wire fraud and money laundering charges. Another defendant in the Superior Court civil action, former BoS president Tomas Aldan, has been sentenced to 10 years on wire fraud and conspiracy to commit wire fraud by the federal court.

Besides Montgomery, Aldan, Wilson, Martens and his company, the bank has also impleaded the following defendants in the CNMI court civil action: James Nava; the estate of Blankenship, Vincent, and Pool; David Spencer; Stoel, Rives LLP; D.A. Davison & Co,; Kirk Reichel; Olan Beard; Charles De Los Santos, also known as Charlie De Los Santos; and other unknown defendants.