Double Boondoggle Alleged Under Shadow of El Chapo’s Drug Cartel

LOS ANGELES (CN) — A Los Angeles private equity firm sold a manufacturing plant in the Mexican border city of Reynosa without revealing that cartel boss “El Chapo” Guzman controlled it — and without disclosing that it was suing the previous owner for exactly that, the latest buyer claims in Federal Court.

Plaintiff FINSA Portfolios, a Mexican real estate company, claims lead defendant OpenGate Capital has “a long-documented history of illegal, unethical and unscrupulous business practices.”

Four years ago, OpenGate Capital sued Thermo Fisher in Los Angeles Federal Court on similar charges, as Courthouse News reported at the time.

That CNS report began: “Thermo Fisher Scientific sold a Mexican manufacturing plant to investors without telling them a Mexican drug cartel had taken over the factory in Reynosa, a private equity firm claims in court. OpenGate Capital Group and three RoundRock entities sued Thermo Fisher in Federal Court.”

In its Monday lawsuit, FINSA Portfolios says it paid OpenGate Capital $15 million for the same manufacturing plant in Reynosa, just across the border from McAllen, Texas. FINSA also sued three RoundRock entities and Hamilton Scientific. It claims that OpenGate sold it the plant without mentioning its own lawsuit against Thermo Fisher.

Both lawsuits, four years apart, describe similar terrorism from El Chapo’s Sinaloa cartel.

FINSA says in its complaint: “On a daily basis, at all hours of the day, the Reynosa facility was infiltrated by senior local leaders of the drug cartel. On an ongoing basis, El Chapo’s armed ‘soldiers’ terrorized the employees at the Reynosa facility, and treated the Reynosa facility as their own private refuge from rival cartels and law enforcement. El Chapo himself maintained a personal residence behind the Reynosa facility.”

OpenGate Capital said in its May 2013 lawsuit against Thermo Fisher: “Thermo Fisher acted in bad faith to induce plaintiffs to purchase its Lab Workstation Business in October 2012, by, among other things, fraudulently concealing critical information related to the safety, security, viability and operation of the business, including the fact that its primary manufacturing facility has been overrun by a reputably violent and hostile Mexican drug cartel.”

OpenGate said in its lawsuit that it paid Thermo Fisher $40 million for the plant, which makes laboratory furniture.

Now FINSA says: “OpenGate perpetrated the same fraud on FINSA that it was in the midst of prosecuting against Thermo Fisher.”

As part of its $15 million sale to FINSA, OpenGate leased back the property to Hamilton Scientific, which acted as a guarantor of a $120,881 a month lease, FINSA says. But OpenGate failed to disclose that Hamilton Scientific was on the cusp of collapse. “Then, as soon as OpenGate’s first full rental payment to FINSA became due, less than one month after entering into the 10-year lease, OpenGate failed to pay rent and immediately shut down the guarantor, Hamilton Scientific,” the new complaint states.

OpenGate sold Hamilton Scientific and it was folded into a new business called Hamilton Laboratory Solutions to avoid its creditors, FINSA says. Hamilton Laboratory Solutions is the final defendant in the new lawsuit.

FINSA seeks compensatory and punitive damages for fraud, fraudulent concealment, promissory fraud and breach of contract. It is represented by James Spertus with Spertus, Landes & Umhofer.

El Chapo, the “lord of the tunnels,” was extradited to the United States this year after he was captured during a gun battle with Mexican authorities. El Chapo, whose real name is Joaquín Guzmán Loera, is renowned for his two tunnel escapes from supposedly high-security Mexican prisons. He is awaiting trial in New York.

OpenGate Capital did not immediately respond to an emailed request for comment.

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