BACKGROUND FACTS
24. In April 2020, Plaintiff was authorized by the State of
Arkansas/University of Arkansas for Medical Sciences (UAMS) to act as its
representative to acquire certain personal protective equipment, namely 3M
Company produced masks in quantities of one and two million.
25. Plaintiff Boss sought the assistance of Defendant McKown and/or
Defendant McKown P.A. and the escrow services of Defendant Redstone, to
handle the transaction and funds transfers. To allow Defendant Redstone to easily
assist in the transaction, UAMS also authorized Defendant Redstone to “source,
and secure ongoing [3M N95 1860 masks] on our behalf.”
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26. Initially, Defendant McKown and/or Defendant McKown P.A. set up
an escrow, appointing his law firm, Navarro McKown, as escrow agent, to hold
$6,688,000 of funds transferred from the buyer, UAMS, for a purchase from a
seller known as Phoenix Endoscopy Products, located in Florida. On April 24,
2020, Plaintiff wired the $6,688,000 in funds she had received from UAMS to the
escrow held on account by Navarro McKown. Unfortunately, that deal fell
through.
27. In June 2020, Defendant Bourque represented to Defendant Redstone
that Defendant Bourque’s company, Defendant Terminator, had secured exclusive
production rights from a manufacturer licensed by the 3M Company of Minnesota.
28. Defendant Bourque represented that the production rights were for
3M-brand masks and the manufacturer had said masks ready for shipment at a
Chinese state-owned facility approximately two hours south of Shanghai.
29. Defendant Redstone informed Defendant Bourque that it had a buyer
(Plaintiff Boss), but there was concern that the products were not genuine, but
Defendant Bourque represented that Defendant Terminator had paid for an
inspection team (an SGS team) to travel, lodge, and conduct an inspection of the
facility.
30. Defendant Bourque suggested commencing with an initial run of one
million units and, if performance was satisfactory, the quantity could be increased
to 20 to 40 million units per week on transport controlled by Defendant Bourque.
31. After some time had passed, Defendant Bourque represented that the
SGS team had inspected the entire facility and provided a report that Defendant
Bourque claimed confirmed that the state-owned manufacturer was an authorized
3M Company distributor.
32. Defendant Bourque provided to Defendant Redstone a video of the
product, but review of the video showed at least some product was expired.
33. In response to Defendant Redstone’s discovery, Defendant Bourque
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further represented that the masks delivered would not be expired.
34. When Defendant Redstone submitted the claimed SGS report to SGS
for verification, Defendant Redstone was informed by SGS that the report was
fraudulent.
35. In response to inquiries by Defendant Redstone, Defendant Bourque
represented that the SGS team was under a 14-day quarantine and not been able to
upload their report to SGS’ computer system. Defendant Bourque represented that
the issue had been raised at the highest level of the Chinse government and that
confirmation would be received from SGS that their initial information was
inaccurate. The confirmation was never provided to Defendant Redstone or
Plaintiff Boss. Instead, Defendant Bourque claimed that an SGS team member had
engaged in corporate espionage, been taken by the Chinse military while trying to
flee to Taiwan, and was being “dealt with.” All these representations and claims
were false, and Defendant Bourque knew them to be false when he made them.
36. Defendant Bourque next advised Defendant Redstone that another
exclusive relationship had been secured, this time with a Thai company,
Timbermate, that was licensed by the 3M Company. Defendant Bourque provided
a copy of a purported 3M Company distributor certificate and a video and
photographs of the purported products showing all units in 3M cartons displaying
“made in Thailand” with matching lot numbers. Defendant Bourque represented
that, to make its weekly production of 10 million units, Defendant Terminator had
to sell another 1 million units already produced and available for immediate
purchase and delivery.
37. Defendant Bourque was informed by Defendant Redstone that the
information, certificate, photographs, and videos were being provided to Plaintiff
Boss, who would be relying on this proof in making an agreement to purchase the
3M Company products sourced from Thailand.
38. Defendant Bourque represented to Defendant Redstone that
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immediate action was required to secure the long-term contract, that there was
insufficient time to conduct an SGS onsite inspection, and that an SGS inspection
could be conducted after the product arrived in the United States. Defendant
Bourque stated he would guarantee the authenticity of the product.
39. The deadline set for Plaintiff Boss to accept the contract was June 23,
2020, 11:00 a.m. PST, by which time Plaintiff Boss had to wire funds to Defendant
Terminator to secure the 1 million lot.
40. Defendant Bourque represented that the product would ship
immediately after funds had cleared.
41. At the recommendation of Defendant McKown and/or Defendant
McKown P.A., the transaction was set up as a purchase of goods between
Defendant Redstone, as seller, and Plaintiff, as buyer. The purchase agreement was
signed on June 23, 2020.
42. On June 23, 2020, Plaintiff Boss wired $2 million directly to
Defendant Terminator in compliance with the terms of the June 22 purchase
agreement.
43. On June 23, 3030, Plaintiff Boss also transferred a total of $400,000
to Defendant McKown P.A. in two installments: $40,000 and $360,000. The
purpose of these deposits was to pay commissions for the acquisition from
Defendant Terminator of the personal protective equipment products ordered by
UAMS. Defendant McKown subsequently had these commission funds transferred
to an account at Defendant Ohana based on other potential purchases, but then
returned them to his IOLTA trust account.
44. Defendant Bourque acknowledged receipt of funds, but stated that
Plaintiff Boss had “just missed” the 11:00 a.m. deadline, and as a result there
would be a delay in clearing the funds. This delay continued for days.
45. On Friday, June 26, 2020, Defendant Bourque claimed that the funds
had finally cleared, and shipping would commence the following week with initial
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delivery to the Bangkok Airport. Up to that time, Defendant Bourque had given
various explanations for the delay, including a typographical error in the wire
transmittal causing it to be rejected.
46. The following week, Defendant Bourque failed to provide an airway
bill or other proof of transport, but claimed the 1 million units had been loaded and
sent to Bangkok. However, he then claimed all cargo shipments of protective
personal equipment from Bangkok to the United States had been temporarily
suspended and the shipment had to be diverted to Hong Kong.
47. Plaintiff Boss and Defendant Redstone made repeated demands for
proof of shipment documentation. On July 8, 2020, Defendant Bourque provided
them with photographs of a transportation contract, claiming he had incurred
additional expense to ship the goods to Hong Kong. Said purported shipping
contract did not have any provisions stating whether the product had actually
shipped, its destination, or the timing of the shipment
