Hypnotic brothel under fire

POSTED: 04/18/16 4:25 PM

 

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Sign of the Hypnotic brothel in Sucker Garden. Photo Today / Hilbert Haar

Permit holder demands payment

St. Maarten News / By Hilbert Haar – “Duncan, Duncan, Duncan. I am not the defendant here, I stand here as an attorney for my clients,” former Minister of Justice Roland Duncan muttered yesterday morning during the handling of a lawsuit Richbenzwan NV initiated against Hypnotic Hotel and Entertainment, JMC Investments and Holdings NV and Mayoline Joan Peterson, the director of the Hypnotic brothel in Sucker Garden.

Richbenzwan holds the permit for the Seaman’s Club that has now been renamed Hypnotic. In 2009, Hypnotic signed a contract for 10 years with Richbenzwan to exploit the brothel, against a monthly payment of $18,000. Because Hypnotic could not – or did not want to – keep up with the payments, parties decided to in 2013 to end the contract; Hypnotic had run up arrears to the tune of $1.,8 million, but with the new contract it bought off its obligations for $575,000.

Because the company stopped abiding by the terms of this contract, Richbenzwan went (again) to court to settle the matter. It now demands not only the outstanding payment of $125,000, but also a fine of $150,000 and $500,000 for penalties Hypnotic incurred from a court ruling dated November 13, 2012.

Richbenzwan’s attorney Roeland Zwanikken furthermore demands that Hypnotic signs a notarial deed as a guarantee for these payments. Signing this deed was part of the agreement that terminated the contract between parties, but Hypnotic never followed up.

“As soon as that deed is signed, I will put a lien on the property of JMC Investments and take steps to execute the lien. That would mean that the real estate belonging to JMC will be sold,” Zwanikken said in the Court in First Instance yesterday morning.

The attorney established that Duncan and Brandon Management and the Foundation Duncan Pension Fund were listed as the directors of Hypnotic from the date this company was established on February 6, 2009 until May 13, 2013. “Roland Duncan was during that time indirectly a director,” Zwanikken said.

But in 2013, the two registered directors stepped down. “The reason they did this was that they knew Hypnotic was managed inappropriately by the actual director James Martin Carti,” the attorney said. “By stepping down they wanted to prevent that they would be held personally responsible.”

In 2012, Hypnotic defaulted for six months on its payments to Richbenzwan. After the November court ruling, payments started again, but in the course of 2013 the company defaulted again. “The objective was to force an arrangement down the throat of Richbenzwan,” the attorney said.
He noted that D&B Management is the only director of JMC Investments (JMC stands for James Martin Carti), established on May 9, 2007, and that Duncan – as the director of D&B Management – is an indirect director.

Hypnotic has presented a decision of its shareholders, dated July 16, 2008 to fire D&B Management and to appoint Carty as JMC’s director. “Richbenzwan highly doubts the authenticity (particularly the date) of this decision,” Zwanikken said.

He referred to an email dated September 23, 2013, wherein Duncan writes that he will sign “as the director of D&B Management on behalf of JMC Holding.”

“The real main players in the dispute between Richbenzwan and Hypnotic are Duncan and Carti,” the attorney said. “They are close friends and business partners. Duncan has set up the network of companies and he was an indirect director of Hypnotic and JMC. Richbenzwan suspects that Duncan has shares in these companies. From October 10, 2010 until May 5, 2013, Duncan was also minister of justice.”

In 2009 Duncan and Carti went into the prostitution business through a 10-year contract with Richbenzwan for the exploitation of what was then the Seaman’s Club.

For 18 months, Hypnotic stuck to the contract “because it needed Richbenzwan,” Zwanikken said. But on November 3, 2011, Hypnotic obtained its own exploitation permit for a brothel thereby weakening Richbenzwan’s negotiating position. In a letter dated October 31, 2012, Justice Minister Duncan confirmed that Hypnotic had obtained this permit,

“The incompatible conflict of interest and the abuse of power Duncan is apparently guilty of has damages the interests of Richbenzwan and benefited those of his Hypnotic,” Zwanikken stated to the court. Duncan gave Hypnotic a permit for 25 prostitutes and he also interfered as a minister in a dispute between Hypnotic and Richbenzwan.

In June 2012, Hypnotic started rebelling against its contract by paying Richbenzwan during six months only $5,000 instead of the contractual $18,000. Hypnotic lost a court case about the dispute on November 13, 2012.

Payments restarted after the court ruling, but they stopped again in June 2013. Richbenzwan held the actual managers of Hypnotic – Carti, Duncan, D&B Management and the Duncan Pension Fund) – personally liable in a lawsuit. That worked: “suddenly Duncan and Carti were eagerly prepared to find an arrangement.”

Under the settlement agreement, Hypnotic would buy out of the contract against payment of $575,000. Its arrears amounted to $1.8 million, so Richbenzwan gave up $1.2 million.

Hypnotic was to provide a guarantee for these payments through a mortgage construction and when that proved impossible, parties agreed on a notarial deed that would enable Richbenzwan to put a lien on the assets of JMC. Up to now, that deed has not been signed by JMC, and Hypnotic stopped paying its monthly installments of $15,000 in February.

Richbenzwan asked the court to order Hypnotic to pay an advance of $45,000 on its claim that amounts with the inclusion of $500,000 in penalties to $775,000.

Duncan objected in his plea against the attempt by his opponents to drag him personally into the dispute. “D&B Management and Collection Services and the Foundation Duncan Pension Fund are no longer directors of Hypnotic or JMC. I have never been personally director or manager of Hypnotic or JMC.”

The attorney furthermore dismissed the allegation of an incompatible conflict of interest. “Duncan’s function as minister has nothing to do with Hypnotic, JMC or Richbenzwan. How I abused my power and damaged the interests of Richbenzwan has not been substantiated either. It is only slander, mainly caused by Richbenzwan and its shareholders.”

Duncan furthermore dismissed that he had anything to do with the permit for Hypnotic, saying that the company had already requested it from the Executive Council in 2009.

That Hypnotic attempted to get out of the contract, Duncan said, is not because of its permits, “but because of consistent operational losses that have been explained extensively and in vain to Richbenzwan.”

He repeated that all references to his person are irrelevant in the case at hand. The attorney said that Joan Peterson, the director of Hypnotic, is not liable for the debt of Hypnotic.

Duncan furthermore accused Richbenzwan of “serious abuse of litigation, harassment and slanderous imputation.” The statements made about Duncan “only serve to make him look bad,” the attorney said.

Getting to the meat of the matter, Duncan referred to the change in the government’s prostitution policy whereby it no longer grants permits for prostitutes to the clubs. Based on an article in the contract, Duncan said, Hypnotic could end it if the government changes the prostitution policy.

“The permits to operate a brothel are no longer valid or are not acknowledged by the government and the girls are no longer admitted since December 2015. The defendants are no longer able to operate their company properly.”

Duncan asked the court to mitigate the monthly payments to $5,000.

The court pronounces its verdict on April 29.

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