A group of 29 Hardin, Harris and Jefferson County residents claim five men duped them out of millions in an elaborate investment scheme.
The plaintiffs claim defendants Hai Cao, Phil Cao, Hoang Anh Cawley, Thomas R. Cawley and Alan Renfroe enticed them into entering into an accredited investor subscription agreement with their alleged company, TriCentury, by purporting that TriCentury had plans to open a bank in Beaumont.
In addition, the defendants led the plaintiffs to believe TriCentury was financially sound and substantial other investors were involved in the project, according to the complaint filed May 5 in Jefferson County District Court.
Plaintiffs include Mary Lee, Bryan Lee, LaMendola Family Limited Partnership, Sue Ann Ma, Li-Chien Ma, Sterling Trust Co., Susan Grable, Rick Grable, Grable Investments, TD Ameritrade Clearing, Stephen C. Weatherford, Stephen C. Weatherford trustee, LOYU Family Partnership, Kathleen Roche, Jerry Roche, Jacqueline Ryall, Joseph Ryall, Sterling Trust Co. custodian FBO Jacqueline Ryall, Theresa Palang, Ronald Palang, Sterling Trust Co. custodian FBO Ronald Palang, Scot Sheldon, Robert B. Durham, Citigroup Global Markets, Hongbo Shi, Restituto Baluyot, Griselda Baluyot and Michael Oszczakiewicz.
TriCentury, a Kansas-based company formed in 2004, was attempting to become a holding company focused on serving the financial needs of more than 50,000 Asians residing in the Houston metropolitan area.
It had been trying to acquire an Oklahoma bank, the Bank of Quapaw, for years before approaching the plaintiffs about investing, the suit states.
According to the complaint, TriCentury's long-term plan was to acquire the bank, open a loan production office and then open a full-service branch in Texas.
TriCentury could not open the bank, though, without raising an additional $5 million that the Federal Reserve Board recommended it acquire, the plaintiffs claim. The company had until Dec. 31, 2007, to raise the money, according to the complaint.
After failing to secure sufficient funds in the Houston area by the summer of 2007, TriCentury decided to go after the market in Beaumont, believing its competitive environment was better suited for expansion and provided the best opportunity for success, the suit states.
The defendants, who serve as TriCentury's board of directors, officers and control group, authorized Clifford Roth to do whatever was necessary to purchase the bank, the complaint says. That's when the company began pursuing the plaintiffs, asking for their money.
"Roth, Abalos and Renfroe traveled to Beaumont on behalf of TriCentury and the other Defendants to meet with Plaintiffs to persuade them to participate in this new offering and represented that all proceeds from the offering would be placed in an interest-bearing escrow account and would be returned with interest if regulatory approval was not acquired," the suit states.
Believing the defendants' claims, the plaintiffs each invested anywhere from $50,000 to $200,000, which, pooled together, equaled $1,307,950, the complaint says.
Meanwhile, TriCentury hired Renfroe as president of the bank it planned to build in Beaumont and paid him for services through three separate accounts, the plaintiffs say.
Still, TriCentury's bank had not received the Federal Reserve Board's approval, and the Board cautioned against hiring employees for a non-existent bank, according to the complaint.
Despite the Federal Reserve Board's warnings, Renfroe moved to Beaumont in 2008, and TriCentury helped him to purchase a home, the suit states.
Throughout the ordeal, TriCentury failed to raise the $5 million needed for Federal Reserve Board approval, and Roth negotiated an additional extension of the approval date to May 5, 2008, the complaint says.
By May 5, 2008, TriCentury failed to secure approval for the bank, the plaintiffs claim. The plaintiffs began demanding the return of their money with interest as promised, according to the complaint.
However, TriCentury refused to return their funds to them, the suit states.
"The designated funds/monies of the Plaintiffs were wrongfully possessed and taken by TriCentury and the Control Group," the complaint says.
"These funds in the Benson/TRN-TMK designated account number 102 278 348 were either delivered to Far Seas or to members of the Control Group personally and/or to entities owned by the Control Group or other Defendants."
The plaintiffs allege breach of fiduciary duty, fraud, violations under the Texas Theft Liability Act, civil conspiracy and violations under the Texas Uniform Fraudulent Transfer Act.
They are seeking actual, punitive and exemplary damages, plus attorneys' fees, pre- and post-judgment interest, costs and other relief to which they may be entitled.
David E. Bernson of Moore Landrey in Beaumont and Heather L. Blackwell of Sheldon and Dunham will be representing them.
The case has been assigned to Judge Gary Sanderson, 60th District Court.
Jefferson County District Court case number: B186-796.