Note: MVP Lanes, LLC ("Victim") contracted with RI Hispanic Group ("Fraudster") through its director, Martien Eerhart, for Fraudster to provide a standby LC in the amount of US$ 65 million. This standby LC was supposedly to be issued by The Bank of Nova Scotia to finance the development and construction of a new bowling and entertainment complex. During negotiations, the Fraudster made several representations about the standby LC to Victim, including that Fraudster had the standby LC immediately available, and that the Bank of Nova Scotia would issue the standby LC.

As required by the agreement, Victim deposited $ 90,000 into an Interest Only Lawyer's Trust Account created by Cape Canaveral Investments Corporation, controlled by Jose R. Yanez, and designated by Fraudster. After the deposit was made by Victim, Fraudster insisted that the standby LC had been issued and sent to Victim's Funding Party. When Victim and the Funding Party demanded that Fraudster "provide actual confirmation through a copy of the SWIFT", Fraudster did not comply. Additionally, the individual holding the trust account, Yanez, and the deposit of its $90,000 could not be located.

Victim sued Fraudster for specific performance of the standby LC. Fraudster moved to dismiss for lack of personal jurisdiction. The United States District Court of Maryland, Bennett J., denied Fraudster's motion.

The Judge ruled that since Fraudster had directed communication and business to Victim, a Maryland corporation, for a Maryland development project and received $ 90,000 from Victim, Maryland did have jurisdiction over Victim's suit for specific performance of the standby LC. Fraudster's director admitted that:

The entirety of RI Hispanic's assets amounted to less than $1,500, and that his personal bank contain[ed] approximately $1,700. Eerhart conceded that, contrary to his previous representations to MVP in their SBLC Agreement negotiations, he had no direct relationship with Scotia Bank and had never spoken to any Scotia Bank employees. Furthermore, Eerhart claims that he has never personally met his "partner," James Pierce, the person who initially led Eerhart to designate Cape Canaveral as the escrow agent in the SBLC transaction. Needless to say, there has been no accounting for the $90,000.



The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.