MV Luta owners to repay $400K loan

SETTLEMENT: The MV Luta sits moored at the commercial port of Guam on April 24, 2016. Luta Mermaid LLC, the owner of the vessel, will repay the $400,000 in public funds it received from the CNMI government. Contributed photo

SAIPAN – Luta Mermaid LLC, the owner of the former MV Luta, will repay the $400,000 in public funds it received from the CNMI government after agreeing to settle the lawsuit filed by the Office of the Attorney General.

The settlement includes the entry of consent judgment, which requires Luta Mermaid's payment to be made in five years.

"The settlement represents a victory for the people of the commonwealth," Attorney General Edward Manibusan said in a statement.

"The Civil Division staff worked hard in obtaining a judgment and to ensure that the individuals who benefited from the loan were held personally accountable," he added.

"With the resolution of the case, the commonwealth will be able to look into their (Luta Mermaid's) personal assets in the event they breached the settlement agreement," the AG said.

"The commonwealth looks forward to the recovery of public funds and we can now put this matter behind us."

In February 2017, the AG's office, on behalf of the Department of Finance, sued Luta Mermaid LLC for receiving $400,000 in public funds without authorization, wrongful retention of public funds, unjust enrichment and using public funds for personal use.

The officials of Luta Mermaid LLC are Abelina Mendiola, Deron Mendiola, Fidel Mendiola and Fidel Mendiola Jr.

The $400,000 loan to Luta Mermaid LLC was authorized by Resolution 19-3 that was adopted by the Rota Legislative delegation on March 20, 2015.

The funding came from Rota's share of the annual exclusive Saipan casino license fee.

According to the resolution, Luta Mermaid agreed to repay the $400,000 within a year.

On June 29, 2017, the Superior Court dismissed the taxpayer lawsuit filed by John Del Rosario, who sued then-Finance Secretary Larissa Larson for releasing government funds to Luta Mermaid.

In exchange for the dismissal of the lawsuit, the commonwealth agreed that Rota Legislative Delegation Resolution 19-3 was not a proper source of authority for public funds transfer.

The commonwealth also agreed that Finance "shall adopt standard procedures to ensure that an incident like this never happens again."

Del Rosario filed his lawsuit in May 2016 against Larson and then-Lt. Gov. Victor Hocog who, as a senator, was a member of the Rota delegation that adopted Resolution 19-3.

In December 2016, the Superior Court dismissed Del Rosario's claims against Hocog, saying his conduct as a senator was covered by legislative immunity.