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Conyers Entrepreneur Hit with $2+ Million Judgment in Rockdale Fraud Trial

Posted by Steve Silver on Nov 4, 2015 2:10:31 PM


Conyers, GA—Jurors awarded more than $2 million in a suit against a Conyers entrepreneur and his company on an allegedly fraudulent lease guarantee. TrackFinders Music Group, Inc. d/b/a MC2 Funding Group, Inc. v. The Baoming Group, LLC et al. (2013-sv-1202)

The case arose out of a 2012 “Deed of Agreement” between an international investment company, Baoming Group (Hong Kong) Company Limited (Baoming HK) and MC2 Funding Group Inc., a subsidiary of TrackFinders Music Group, Inc. The agreement called for MC2 to pay $250,000 in exchange for a lease interest in a bank guarantee from Baoming HK.  A bank guarantee is a document under similar to a personal guarantee in which a financial institution (in this case, Barclays) guarantees payment of a financial obligation. Despite paying the money, MC2 claimed it never received anything of value. It filed the current lawsuit, naming as defendants Baoming LLC, a Georgia company the complaint alleged was formed to transact business on behalf of Baoming HK; Jefferson Blair, Baoming LLC's principal; and Jeffrey Cole, a middleman in the negotiations.

According to testimony and other documents in the case, MC2 was looking for suitable business investments and made contact with Cole, who brought a possible investment to the attention of Darek Eaves, CEO of MC2. Throughout the negotiations, Eaves corresponded with Cole, who purported to represent Blair, who was supposedly the U.S. representative of Baoming HK. The exact relationship among the various defendants and Baoming HK was a key point of dispute at trial.

New Call-to-action  Plaintiff contended, under the terms of the Deed of Agreement, Baoming HK was supposed to send a binding electronic confirmation of the bank guarantee to MacEurocem, a company that would then deliver the payment for the guarantee to MC2. At trial, Charles Schiavo, a representative of MacEurocem, testified his company had never heard of Baoming before the transaction and would not provide Baoming with its banking credentials until receiving the binding confirmation. He claimed when Baoming never delivered the confirmation, the transaction never occurred.

At trial, Blair disputed that version of the events. In his view, Baoming HK was not required to act until MacEurocem provided banking credentials allowing Baoming access to the funds. He further testified that the $250,000 paid by MC2 was for transaction initiation costs. Blair said he forwarded the $250,000 on behalf of MC2 to Baoming HK from an offshore account belonging to another one of his companies. Once he did so, he believed he was entitled to spend the money in the Baoming  LLC account for other business purposes. In Blair’s view, it was MC2 that violated the Deed of Agreement by contacting MacEurocem directly, leading to the failure of the transaction.

In its complaint, plaintiff alleged fraud, breach of contract, unjust enrichment, and moneys had and received against the defendants. The Deed of Agreement contained a liquidated damages provision, entitling plaintiff to $2 million in the event of delay or failure of performance, and plaintiff alleged that Blair and Baoming LLC were liable for the liquidated damages.

At trial, the defense called witnesses who testified Baoming HK was an actual company involved in international investments through its CEO Le Minh Tuan (referred to as “Mr. Le” during the trial). Blair’s attorney, John Andrew Nix contended the fact that neither Blair nor Baoming LLC was a party to the Deed of Agreement was dispositive.

In his closing statement, Nix stated, “Baoming Hong Kong and the plaintiff were in a contract. For whatever reason, that contract did not go the way the plaintiff wanted it. … Maybe Baoming Hong Kong breached the contract. Don’t know. But they’re not here, and of course they’re not here because … they’d have to figure out how to bring a Hong Kong company to Rockdale County.”

As far as the fraud count was concerned, Nix noted that plaintiff must prove that Blair and Baoming Group LLC satisfied all the elements of fraud. In his view, plaintiff was required to use due care to discover any fraud. He also noted that Cole, not Blair, handled all the negotiations. As far as the unjust enrichment and moneys had and received, although Blair used the $250,000 for his own interests, Blair did transmit equivalent funds from a Costa Rican account to Baoming HK, as evidenced by the testimony of the defense witnesses. Further, the only role Blair played in the entire transaction was to receive and transmit the money paid by MC2 to Baoming HK.

Nix concluded by describing the relationship between Blair and Baoming HK. “Mr. Blair had an unexpected opportunity. He was discovered somehow based on his work up until that time [by] … a patriarch, according to our first witness today, of one of the largest trust funds of privately held money in the world. Mr. Blair testified that he doesn’t know how it happened either, but that relationship developed to the degree over the last five years where Mr. Blair is conducting and transacting business in this world that after we leave here … it’s just beyond us. But he’s in that world… I can assure you at this juncture that when people that are in the know, know that he’s there on behalf of Mr. Le, … this was a real transaction.”

In her closing statement, plaintiff’s attorney Precious Felder said the transaction was a clear cut case of fraud. She pointed to testimony by Charles Schiavo that transactions involving bank guarantee leases were fraudulent because such a guarantee could not legally be leased. Further, she contended that Cole, at the direction of Blair, gave Darek Eaves the impression that Baoming had done previous transactions with MacEurocem, and that the funding for the bank guarantee was already in place. For that reason, Eaves entered into the Deed of Agreement.

Felder continued, “What [Blair] wants you to believe is that this is a big boy’s game. You’ve got to be smart enough to do this. And to get in this business with me, you’ve got to know what you’re doing. And I think that that’s all smoke. He wants to sit on the stand and put you in circles about ‘look at this paper here which you may or may not understand’… But the truth is, he’s relying on people not knowing. That’s the major issue here. That’s what fraud is all about. That’s the concealment. ‘There’s so many things I need to tell you that you need to know in order to sign, seal, and deliver this deal and I’m not going to tell you because you should know; it’s your responsibility and I don’t have the responsibility to give you your money back if you don’t.’”

Felder contended that Eaves had exercised due care before entering into the transaction by doing internet and other research into Cole, Blair, and the others involved in the transaction and was unable to find any problems. 

Felder also called the jury’s attention to the liquidated damages provision in the Deed of Agreement. She noted Blair’s testimony that he did what Mr. Le directed and that he was an agent of Baoming HK. In Felder’s view, if Blair was indeed Baoming HK’s agent, then he was liable for the liquidated damages. “[Blair] should definitely be held responsible on that breach of contract claim because remember, if we don’t, if he doesn’t have to pay all that money, then he may think, ‘well, I can go do it again… I can keep doing these contracts because that’s how I evade contract damage.’”

The jury found in favor of plaintiff on all claims. On the fraud claim, the jury found damages of $250,000 plus $5,000 expenses. They apportioned the fraud damages 100% to Blair and 0% to Cole and Baoming LLC. On the breach of contract claim, they found damages of $2,000,000 plus $5,000 expenses and interest and apportioned the damages 50% to Blair and 50% to Baoming LLC. On the unjust enrichment claim, they found damages of $250,000 (which duplicated the fraud damages) and apportioned the fault 50% to Blair and 50% to Baoming LLC. They also found in favor of plaintiff for moneys had and received.

The total verdict thus was $2,260,000 plus interest on the $2 million liquidated damages claim. 

After the trial, Felder told CVN that it felt good to finally get justice in the case. Representatives for the defense were unavailable for comment prior to the publication of this article.

Courtroom View Network will have gavel-to-gavel coverage of this trial as soon as it is available. 

Editor's Note: This story was edited to clarify that MC2 Funding Group Inc., a subsidiary of TrackFinders Music Group, Inc., and Baoming Group (Hong Kong) Company Limited were the parties of record on the underlying agreement.  The article also removes any reference to other disputes not directly a part of the trial at issue.  


Related information:

Attorneys involved in this case include Precious Felder of Atlanta for plaintiff, and John Nix of Maddox, Nix, Bowman, and Zoeckler of Conyers for Jefferson Blair and Baoming Group LLC. Jeffrey Cole appeared pro se.

Watch on-demand video of the trial as soon as it becomes available. 

 

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Topics: Fraud, Commercial Law, Georgia