Yamamoto: Hocog promised to use his position, influence

Japanese investor Takahisa Yamamoto has directly named Lt. Gov. Victor Hocog, saying the former Rota senator allegedly promised to use his political position and influence to ensure that Yamamoto’s investment in M/V Luta would be profitable.

Yamamoto, through counsel George Lloyd Hasselback, specified Hocog in an amended lawsuit he filed in federal court on Thursday against Hocog and some owners of M/V Luta for allegedly refusing to pay back the $3.399 million that he contributed for the vessel.

Yamamoto’s original complaint only used the term “certain defendants” to describe those engaged in the deals.

Yamamoto’s amended complaint has the same set of defendants and claims—breach of contract, fraud, and unjust enrichment.

Aside from Hocog, Yamamoto is also suing M/V Luta, Luta Mermaid LLC, Abelina T. Mendiola, Deron T. Mendiola, Fidel S. Mendiola III, Fidel Mendiola Jr., and Robert Toelkes. Luta Mermaid LLC owns M/V Luta.

According to Hasselback in the lawsuit, Abelina Mendiola, Deron Mendiola, and Fidel Mendiola III are managers/shareholders of Luta Mermaid.

Toelkes is a resident of Berrytown, Kansas.

Yamamoto’s amended complaint has the same court requests: that the vessel, her engines, tackle, furniture, apparel, appurtenances, bunkers, and other necessaries be condemned and sold to pay his demands, including interest and costs.

Yamamoto also requested the court to recover his attorney’s fees, expenses, and court costs.

The plaintiff asked the court to order defendants provide a complete and accurate accounting of the disposition of any and all funds he contributed to them for the purchase and operation of M/V Luta.

Yamamoto began visiting Rota as a tourist in 2013. Over the course of several trips, he became acquainted with then-senator Hocog and F. Mendiola Jr.

According to Hasselback in the complaint, Hocog would encourage Yamamoto to invest personally in business opportunities on Rota.

Hasselback said Hocog assured Yamamoto that his position as a CNMI senator and prominent member of the community would benefit Yamamoto, making assurances that Yamamoto would be well looked after in his business dealings on Rota.

Hasselback said in late 2013, Hocog and F. Mendiola Jr. approached Yamamoto about funding the purchase and operation of a commercial shipping vessel to be used to service Rota.

Hasselback said Hocog and F. Mendiola Jr. told Yamamoto that the Rota municipal government would also be funding the ship’s purchase and operation.

Hasselback said Hocog and F. Mendiola Jr. promised Yamamoto that if he were to provide $600,000, the Rota local government would provide a matching amount. Hocog and F. Mendiola Jr. reportedly assured Yamamoto that the amount would be enough for the purchase and operation of the vessel.

“These statements made by Hocog and F. Mendiola Jr. were materially false and intended to induce plaintiff to provide money,” Hasselback said.

Hasselback said that in January 2014, Yamamoto first funded the business by providing $700,000 to Kizuna Marine Inc., an entity that was initially formed by certain business associates of Yamamoto.

Yamamoto wired $700,000 into an account held by Kizuna Marine Inc.

Hasselback said F. Mendiola Jr. subsequently told Yamamoto that to comply with various laws and regulations regarding the operation of commercial shipping vessels, control over the entity funding these activities (Kizuna Marine Inc.) would have to be turned over to persons who were U.S. citizens. Hasselback said F. Mendiola convinced Yamamoto that he should put F. Mendiola Jr. in partial control of Kizuna Marine Inc.

Yamamoto’s initial funding of $700,000 was not used for the acquisition of a vessel. Instead, F. Mendiola Jr. and A. Mendiola withdrew some, if not all, of the funds for their own personal benefit, Hasselback said.

This personal benefit, Hasselback said, included purchase of goods online for personal use, payment of personal credit card bills, and payment of educational expenses.

Hasselback said these expenditures of funds for personal benefit were done by, for the benefit of and/or with the knowledge and complicity of F. Mendiola III and D. Mendiola. Hasselback said F. Mendiola Jr. and A. Mendiola then told Yamamoto that another company, Luta Mermaid LLC, had to be formed to purchase the vessel.

Hasselback said these statements were made to induce Yamamoto to provide financial support for the business entity while furthering their fraudulent scheme.

Hasselback said Hocog spoke separately with Yamamoto and assured him that he could trust the word of F. Mendiola Jr. and A. Mendiola regarding these matters.

In March 2014, F. Mendiola Jr. and A. Mendiola again allegedly represented to Yamamoto that the Rota municipal government was poised to fund the business.

Again, Hasselback said, Hocog spoke separately to Yamamoto, telling him that he could trust the word of F. Mendiola Jr. and A. Mendiola, confirming that the Rota municipal government was poised to contribute to funding the shipping business and assuring him that his political and social status would ensure that the proposed business was successful.

Despite these assurances, the Rota municipal government did not contribute to the business as promised, Hasselback said.

At the urging of Hocog, F. Mendiola Jr. and A. Mendiola, Yamamoto advanced another $600,000 to the Luta Mermaid LLC in June 2014, Hasselback said.

Subsequently, Yamamoto went to Rota to meet with Hocog, F. Mendiola Jr., and A. Mendiola. During this trip, Hocog, F. Mendiola Jr. and A. Mendiola introduced Yamamoto to Toelkes.

Yamamoto was told that Toelkes was a “financial expert” that could help with financial management of the company, applying for loans and otherwise generating capital for the operation of the shipping business.

Hasselback said none of the defendants told Yamamoto that Toelkes had been involved in several failed business ventures.

Hasselback said Toelkes was intended to put Yamamoto at ease so that he would continue to provide money to the enterprise.

During this trip to Rota, Yamamoto demanded that someone produce some sort of financial status report to explain to him where his over a million dollars had gone, or was going.

In September 2014, F. Mendiola Jr. and A. Mendiola provided Yamamoto a document called “Luta Mermaid Expense Report,” which was prepared by Toelkes.

Hasselback said this document acknowledged Yamamoto’s funding of $1.2 million and also purported to provide an accounting of how that money was spent.

Hasselback said the accounting was fundamentally flawed, incomplete, and misleading.

The lawyer said based upon the conclusions reached in this questionable document, F. Mendiola Jr. and A. Mendiola begged Yamamoto to loan to Luta Mermaid an additional $682,000 that would be repaid in six months.

Hasselback said Hocog communicated separately with Yamamoto and, again, vouched for F. Mendiola Jr. and A. Mendiola, supported their claims and told Yamamoto he should trust them and continue to provide money to the company.

Based upon these statements and promises, Yamamoto advanced another $690,000 over the next two months to Luta Mermaid.

In January 2015, Toelkes allegedly promised Yamamoto that the latter would have a “ship mortgage” in the M/V Luta and that interest payments on Yamamoto’s investment would begin in July of that year.

Toelkes further promised that Yamamoto would be paid 50 percent of any profit realized from this business as a “salary.”

Finally, Toelkes promised to get a loan from the Bank of Guam to raise more money for the business.

In January 2015, F. Mendiola Jr. and A. Mendiola told Yamamoto that the business need more money and that based upon these promises and assurances, he advanced another $1.3 million.

Hasselback said as before, Hocog separately communicated with Yamamoto, vouching for F. Mendiola Jr. and A. Mendiola and making separate promises to Yamamoto that he (Hocog) would use his political position and influence in the community to ensure that Yamamoto’s investment was returned with profit.

In July 2015, Hocog told Yamamoto directly that as soon as M/V Luta arrived on Rota and began operations, Yamamoto’s funds would be repaid as a secured creditor “in a short period” as there were many commercial customers lined up and waiting.

Hocog asked plaintiff for his patience and support.

In January 2016, based upon assurances that he would be repaid in March of 2016, Yamamoto transferred another $109,000 to Luta Mermaid.

Hasselback said F. Mendiola Jr. and A. Mendiola asked Yamamoto again for more money last May, but he declined to give any more.

The lawyer said to date, Yamamoto has never been paid any of the money he has been promised nor has he been provided an accurate accounting of the funds that he provided for the business.

Hasselback said M/V Luta has not been operated in a commercially reasonable manner in order to maximize the potential for commercial gain in order to reimburse Yamamoto for his contributions to the purchase, outfitting, and operation of the ship.

Hasselback said the defendants have not reasonably maintained the ship and have not paid the wages of the sailors assigned to the vessel.

Hasselback said as of February 2016, of the $3,414,000 in advances and/or loans that Yamamoto contributed, approximately $1,982,000 was provided to the ship for necessaries.

Hasselback said to the best of Yamamoto’s estimation, approximately $1,982,000 was provided to M/V Luta for necessaries.

Last Oct. 25, the U.S. Marshals Service seized M/V Luta after Yamamoto filed the lawsuit and U.S. District Court for the NMI Chief Judge Ramona V. Manglona directed the U.S. Marshals Service to arrest the 146.5’ by 38’ 237 gross ton cargo ship.

Manglona also commanded the U.S. Marshal Service to arrest the ship’s engines, furniture, tackle, appurtenances, and other necessaries.

Last week, U.S. District Court for the NMI designated Judge Frances M. Tydingco-Gatewood authorized another warrant for the maritime arrest of M/V Luta.