March 31, 2010

By Bill Jaynes
The Kaselehlie Press

Chuuk, FSM - Chuuk State Associate Justice Ready E. Johnny ruled on a motion to show cause why defendants and their attorney of record in a TransCo stock dispute should not be held in contempt for issuing a dividend check in the name of the FSM Supreme Court instead of issuing that check to the plaintiff in the case, FSM President Manny Mori. The motion was filed by President Mori's attorney Sabino Asor.

Associate Justice Johnny said in his ruling, "the court cannot fault the defendants or their attorney for trying to take steps to avoid potential multiple liability for the same dividend payment," and denied the motion for an order to show cause.

Essentially the dividends were for earnings on shares of TransCo stocks whose ownership is still under dispute.

TransCo held its shareholder's meeting in Chuuk on Saturday, March 13. Shareholders who were present received their dividend checks at that time. President Mori did not. Since at least a portion of his shares are under dispute, TransCo issued the check instead in the name of the FSM Supreme Court where a portion of that dispute is being heard.

At 6:30 on Sunday morning, the day following the shareholder's meeting, President Mori called Steve Finnen, TransCo's attorney in his hotel room. Finnen explained to President Mori several times that he was not allowed to talk to him but that he would be glad to talk with his lawyer.

30 minutes later, Chuuk State Police officers arrived at Finnen's hotel room and told him that he needed to accompany them to the police station. The officers were responding to a charge by President

Mori that his dividend check had been essentially stolen from him.

Upon arrival at the police station Finnen explained the situation to the officers and told them that Chuuk Attorney General Joses Gallen could clear the matter up. The officers confiscated the $1620 dividend check payable to the FSM Supreme Court and asked Finnen what his plans had been for that day. He told them that friends had planned to take him out in a boat and that he was scheduled to depart Chuuk on the late flight that night. Although police did allow Finnen to leave the police station they instructed him to cancel his boating plans and to be available to return to the Police Station.

It took some time to contact the Chuuk Attorney General but after he was reached he immediately wrote a memo to the Director of the Department of Public Safety advising the Director to return the check to Finnen. The memo said that he could find no probable cause to charge Finnen with any crime in relation to his possession of the check. The AG also wrote a letter to Finnen telling him that he was returning the check to him and apologizing for any inconvenience the department's response to President Mori's charge may have caused him.

Finnen was allowed to leave the island as he had scheduled with the check in hand.

On Thursday, March 18, Mori's attorney, Sabino Asor fi led the contempt charges. On the same day the court received a Notice of Deposit of the Dividend Payment.

Before Finnen could file any response to the charges, Associate Justice Johnny ruled that neither TransCo nor Finnen were in contempt. He also directed that the $1620 dividend payment should be deposited in the court's registry in an interest-bearing account. The court has also asked the defendants in the ongoing lawsuit to fi le a brief by April 1, 2010 regarding the issue of whether Mori is a bona fide purchaser for value of the shares for which the dividends are being paid. Mori's attorney will have until April 13, 2010 to respond to the brief and on April 14, 2010 there will be an evidentiary hearing on the issue if any parties involved in the law suit believe that such a hearing is needed.

If the court determines that Mori is a bona fide purchaser for value of the shares, then the dividends, with interest, will be promptly paid to Mori. If the court determines otherwise, the funds will remain on deposit earning interest until a further court order.

Associate Justice Johnny's ruling was issued on March 25, 2010.