`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF CONNECTICUT
`
`AWANO FOOD GROUP PTE LTD
`and BAALI INTERNATIONAL INC.,
`
`Plaintiffs,
`
`Civil No. ___________
`
`v.
`
`FAIRTRADE INTERNATIONAL, INC. and
`RODRIGO ECHEVERRIGARAY,
`
`Defendants.
`
`JURY TRIAL DEMANDED
`
`COMPLAINT
`
`Plaintiffs Awano Food Group Pte Ltd (“Awano”) and Baali International Inc. (“Baali”
`
`and together with Awano, “Plaintiffs”), by and through their undersigned counsel, hereby state
`
`their complaint against Defendants FairTrade International, Inc. (“FairTrade”) and Rodrigo
`
`Echeverrigaray (“Rodrigo” and together with FairTrade, “Defendants”), and alleges as follows:
`
`INTRODUCTION
`
`1.
`
`The backdrop for this action is the international meat importing industry, in which
`
`financiers and importers work together to acquire large quantities of meat produced in foreign
`
`countries and sell it to customers throughout the United States.
`
`2.
`
`These are large-scale transactions. The meat is shipped by boat in massive
`
`shipping containers that can contain upwards of $100,000 worth of meat, or more. The entire
`
`process—from the moment an order is placed with the “producer” to the ultimate sale to a
`
`customer—can take several months, and the supply chain involves numerous participants.
`
`3.
`
`Awano and FairTrade entered into a financing agreement whereby Awano (as the
`
`financier) agreed to extend to FairTrade (as the importer) a $10 million line of credit to purchase
`
`DB1/ 115377250.1
`
`20-1383
`
`
`
`Case 3:20-cv-01383-KAD Document 1 Filed 09/15/20 Page 2 of 13
`
`beef sourced from various countries, including Uruguay, New Zealand, Australia, Brazil and
`
`Argentina, to be imported and sold by FairTrade to U.S. customers.
`
`4.
`
`Awano also acquired 50% of FairTrade’s stock. The other 50% was owned by
`
`Rodrigo, who single-handedly controlled every aspect of FairTrade’s day-to-day operations and
`
`who had exclusive access to FairTrade’s internal business and financial records. Rodrigo also
`
`had key personal relationships with other players in the supply chain, such as the beef producers
`
`and U.S. customers.
`
`5.
`
`Under the Agreement, FairTrade would use the $10 million credit line to acquire
`
`beef. After FairTrade made a sale to a customer, Rodrigo was required to wire funds to Awano’s
`
`account so that the credit line was replenished, and so that Awano and FairTrade would split any
`
`profit or loss 50/50. For more than a year, the wire transfers from FairTrade to Awano were
`
`consistent, and the business was profitable.
`
`6.
`
`However, Rodrigo then used his complete control over FairTrade to: (a) make
`
`fraudulent transfers from FairTrade to his other company, Fairfield’s M.EAT Organic Beef, LLC
`
`(“M.EAT”); and (b) upon information and belief, used FairTrade’s funds for countless personal
`
`expenditures. Because Rodrigo had exclusive access to FairTrade’s internal records, these
`
`improper transfers and personal expenditures were hidden from Awano.
`
`7.
`
`Ultimately, the $10 million line of credit from Awano disappeared completely,
`
`despite FairTrade continuing to make sales of beef to customers in the U.S.
`
`8.
`
`Awano sought answers from Rodrigo. Eventually, in June of 2019, Rodrigo
`
`admitted that FairTrade had sold beef it had acquired with Awano’s funds, but, in breach of the
`
`Agreement, had not wired the appropriate funds to Awano’s account.
`
`DB1/ 115377250.1
`
`2
`
`
`
`Case 3:20-cv-01383-KAD Document 1 Filed 09/15/20 Page 3 of 13
`
`9.
`
`Also, upon information and belief, Rodrigo had for years been using FairTrade’s
`
`funds and corporate accounts to make personal purchases having no relationship to the business.
`
`10.
`
`The parties agreed to a payment plan whereby FairTrade would make small
`
`weekly payments to Awano with the goal of replenishing the $10 million line of credit that had
`
`been extinguished. FairTrade failed to make the agreed upon payments.
`
`11.
`
`As a direct result of FairTrade’s breach of the Agreement, Awano lost its entire
`
`$10 million line of credit, plus interest and other costs. FairTrade’s breach was perpetrated by
`
`Rodrigo as part of a fraudulent scheme that benefitted Rodrigo personally and to the detriment of
`
`Awano.
`
`PARTIES
`
`12.
`
`Awano is a Singapore Private Limited Company with a principal place of
`
`business in Singapore. Awano is in the pork/beef trading business.
`
`13.
`
`Plaintiff Baali is a Taiwan corporation with a principal place of business in
`
`Taiwan. Baali is the assignee of an accounts receivable constituting the debt owed by FairTrade
`
`to Awano.
`
`14.
`
`Defendant FairTrade is a Delaware corporation with a principal place of business
`
`in Connecticut. FairTrade is a meat importer.
`
`15.
`
`Defendant Rodrigo Echeverrigaray (“Rodrigo”), upon information and belief, is a
`
`citizen of Uruguay. Rodrigo is the part owner and President of FairTrade.
`
`JURISDICTION AND VENUE
`
`16.
`
`This Court has subject matter jurisdiction over this dispute pursuant to 28 U.S.C.
`
`§ 1332, because there is complete diversity of citizenship between Plaintiffs and Defendants and
`
`the amount in controversy exceeds $75,000, exclusive of interest and costs.
`
`DB1/ 115377250.1
`
`3
`
`
`
`Case 3:20-cv-01383-KAD Document 1 Filed 09/15/20 Page 4 of 13
`
`17.
`
`Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b)(2) because a
`
`substantial part of the events giving rise to Plaintiffs’ claims occurred in this District.
`
`Alternatively, venue is proper in this Court pursuant to 28 U.S.C. § 1391(b)(3) because
`
`Defendants are subject to this Court’s personal jurisdiction with respect to this action.
`
`OVERVIEW OF THE INTERNATIONAL MEAT IMPORTING INDUSTRY
`
`18.
`
`Awano and FairTrade operate in the United States / international meat importing
`
`industry.
`
`19.
`
`In general, that industry operates as follows:
`
`a. Meat importers place orders for meat with meat producers, which can exist
`
`anywhere in the world.
`
`b. Producers put their product in large containers to be shipped to the United States
`
`on a cargo ship.
`
`c. Because of the high cost of each order (upwards of $100,000 or more), a
`
`financier—rather than the importer itself—pays the producer for its product, and
`
`the producer releases the container to the importer.
`
`d. The importer then seeks to sell the product to various buyers in the United States.
`
`e. The importer then pays back the financier according to whatever business
`
`arrangement is made between the importer and financier.
`
`f. The entire process outlined above takes months to complete.
`
`20.
`
`Because the price of meat (such as beef or pork) fluctuates on a daily basis, the
`
`price can vary greatly between the time the importer orders the meat from the producer, and the
`
`time the importer ultimately sells the meat to customers in the United States.
`
`DB1/ 115377250.1
`
`4
`
`
`
`Case 3:20-cv-01383-KAD Document 1 Filed 09/15/20 Page 5 of 13
`
`21. Whether an order results in a profit or loss for the importer and financier,
`
`therefore, depends upon the prices paid by the United States customers several months after the
`
`initial order is placed from the producer.
`
`AWANO ENTERS INTO A FINANCING AGREEMENT
`WITH FAIRTRADE AND BECOMES A 50% SHAREHOLDER
`
`22.
`
`Awano began doing business with FairTrade (then known as Cibus North
`
`America Inc.) in 2016.
`
`23.
`
`Awano and FairTrade entered into an Agreement, pursuant to which they agreed
`
`to do business as follows:
`
`a. Awano agreed to act as financier.
`
`b. FairTrade agreed to act as importer, sourcing beef from Cibus SouthAmerica S.A.
`
`(“Cibus”), a Uruguay based broker that acquires meat from producers throughout
`
`the world.
`
`c. Awano extended to FairTrade a revolving line of credit of approximately $10
`
`million with interest at a rate of 6% per annum.
`
`d. Awano, as financier, would purchase beef from Cibus.
`
`e. FairTrade would, in turn, purchase the beef from Awano using its line of credit.
`
`f. Cibus, after being paid by Awano, would release the containers of beef to
`
`FairTrade, which would then seek to sell the product to various United States
`
`customers.
`
`g. Within 90 days after Awano’s purchase of beef from Cibus, FairTrade was
`
`required to wire to Awano’s account the funds FairTrade received from its sales
`
`to U.S. customers, replenishing the $10 million credit line.
`
`DB1/ 115377250.1
`
`5
`
`
`
`Case 3:20-cv-01383-KAD Document 1 Filed 09/15/20 Page 6 of 13
`
`h.
`
`In addition, if FairTrade was able to sell the beef at a profit, FairTrade would wire
`
`50% of the profit to Awano, and FairTrade would retain the other 50%. If
`
`FairTrade sold the beef at a loss, FairTrade would wire funds to Awano such that
`
`they split the loss evenly.
`
`i. Awano would also front payments for “handling” charges, such as costs
`
`associated with customs, cold storage of the product, or delivery of the product by
`
`truck within the United States. FairTrade was responsible for reimbursing Awano
`
`for these charges.
`
`24.
`
`The parties also agreed that Awano would acquire from Rodrigo 50% of
`
`FairTrade’s stock, with the other 50% being retained by Rodrigo.
`
`25.
`
`Because FairTrade alone negotiated the transactions with the United States
`
`customers, Awano relied entirely upon FairTrade—i.e., Rodrigo—to disclose information about
`
`all sales FairTrade made.
`
`26.
`
`Rodrigo controlled and dominated every aspect of FairTrade’s day-to-day
`
`business. For example:
`
`a. Rodrigo made all decisions for FairTrade unilaterally.
`
`b. Rodrigo maintained the personal connections and relationships with other
`
`participants in the beef supply chain, such as producers and U.S. customers.
`
`c. Rodrigo had exclusive access to FairTrade’s business and financial records, such
`
`as bank statements, invoices, and inventory records.
`
`27.
`
`For more than a year, the Agreement appeared to be successful, as wire transfers
`
`from FairTrade to Awano were consistent, reflecting a steady stream of purchases from U.S.
`
`customers.
`
`DB1/ 115377250.1
`
`6
`
`
`
`Case 3:20-cv-01383-KAD Document 1 Filed 09/15/20 Page 7 of 13
`
`FAIRTRADE’S PAYMENTS TO AWANO SLOW DRAMATICALLY IN 2018
`
`28.
`
`29.
`
`30.
`
`Beginning in January 2018, FairTrade’s wire transfers to Awano began to slow.
`
`By June 2018, payments from FairTrade to Awano had decreased dramatically.
`
`Confused as to why the payments from FairTrade to Awano had decreased so
`
`severely, Awano personnel asked Rodrigo for an explanation.
`
`31.
`
`Rodrigo gave Awano several excuses as to why the wire transfers had become
`
`infrequent. For example, Rodrigo cited the ongoing trade war between the United States and
`
`China and its negative impact upon the meat importing industry.
`
`32.
`
`Awano asked Rodrigo to provide documentation to substantiate his statements. It
`
`requested on several occasions that Rodrigo provide Awano with financial documents such as
`
`monthly expense reports and bank statements—documents to which only Rodrigo had access—
`
`in order to increase transparency with regard to FairTrade’s business. He did not do so.
`
`33.
`
`By late 2018 and into early 2019, the business relationship between Awano and
`
`FairTrade unraveled, as Awano continued to seek payment and information from Rodrigo, and
`
`Rodrigo provided only excuses and empty promises.
`
`RODRIGO ADMITS THAT FAIRTRADE OWES PAYMENTS TO AWANO
`
`34.
`
`In June 2019, Awano personnel met with Rodrigo to discuss the status of
`
`FairTrade and the significant debt owed by FairTrade to Awano.
`
`35.
`
`During this meeting, Rodrigo admitted that FairTrade had sold beef it acquired
`
`from Awano to customers in the United States, but, in breach of the parties’ Agreement, had not
`
`wired the funds it received from those customers back to Awano’s account.
`
`36.
`
`Rodrigo gave several explanations for his conduct. For example, he claimed he
`
`was having difficulty collecting funds from FairTrade’s U.S. customers because his U.S.
`
`salesperson had resigned.
`
`DB1/ 115377250.1
`
`7
`
`
`
`Case 3:20-cv-01383-KAD Document 1 Filed 09/15/20 Page 8 of 13
`
`37.
`
`Rodrigo also attempted to justify his failure to wire funds to Awano by claiming
`
`that he needed to retain the funds to “grow the business” (i.e., FairTrade).
`
`38.
`
`Also, upon information and belief, Rodrigo had for years been using FairTrade’s
`
`funds and corporate accounts to make personal purchases having no connection to the business.
`
`FAIRTRADE BREACHES PAYMENT PLAN AGREEMENT
`
`39.
`
`During the June 2019 meeting, Awano and FairTrade entered into an agreement
`
`with the goal of replenishing the $10 million credit line that had been depleted.
`
`40.
`
`The parties agreed that, beginning in July 2019, FairTrade would start paying
`
`back what it owed to Awano by wiring Awano $300,000 per week.
`
`41.
`
`42.
`
`FairTrade breached this agreement, too.
`
`Although some payments were made, they were sporadic, and smaller than the
`
`agreed upon amount.
`
`43.
`
`44.
`
`Eventually, the payments to Awano ceased altogether.
`
`Currently, the amount owed by FairTrade to Awano exceeds $11 million,
`
`including: (1) payment for the purchase and sale of beef; (2) handling charges; and (3) interest.
`
`AWANO ASSIGNS THE FAIRTRADE ACCOUNTS RECEIVABLE TO BAALI
`
`45.
`
`46.
`
`On September 27, 2019, Awano and Baali executed an Assignment agreement.
`
`Pursuant to the Assignment, Awano assigned to Baali all of Awano’s rights, titles,
`
`and interests in accounts owing, or that become owing, to Awano from FairTrade.
`
`PLAINTIFFS ARE ENTITLED TO PIERCE THE CORPORATE VEIL
`OF FAIRTRADE AND PROCEED AGAINST RODRIGO INDIVIDUALLY
`
`47.
`
`Plaintiffs are entitled to pierce the corporate veil of FairTrade and proceed with
`
`claims against Rodrigo individually.
`
`DB1/ 115377250.1
`
`8
`
`
`
`Case 3:20-cv-01383-KAD Document 1 Filed 09/15/20 Page 9 of 13
`
`48.
`
`Rodrigo exercises complete domination and control over the business and affairs
`
`of FairTrade, and has commingled the assets of FairTrade with those of his own assets, in
`
`disregard of the corporate form and for his personal benefit, such that the corporate form of
`
`FairTrade should be disregarded.
`
`49.
`
`Rodrigo controls and dominates FairTrade such that FairTrade has no separate
`
`mind.
`
`50.
`
`51.
`
`FairTrade.
`
`Rodrigo owns 50% of FairTrade’s stock.
`
`Upon information and belief, Rodrigo is currently the only employee of
`
`52.
`
`Rodrigo is the only individual with access to FairTrade’s financial records, bank
`
`accounts, and other assets.
`
`53.
`
`FairTrade does not observe corporate formalities. FairTrade does not have a
`
`board of directors, let alone regularly scheduled board meetings.
`
`54.
`
`Rodrigo makes all decisions for FairTrade unilaterally, including all decisions
`
`with respect to FairTrade’s business dealings with Awano.
`
`55.
`
`Rodrigo has operated FairTrade such that FairTrade has breached its agreement
`
`with Awano to send funds received from United States customers back to Awano.
`
`56.
`
`Upon information and belief, Rodrigo has also used FairTrade’s funds and
`
`corporate accounts to make personal purchases.
`
`57.
`
`Rodrigo has used his control and domination over FairTrade to perpetrate a fraud
`
`against Awano, and otherwise cause Awano injury, such as, upon information and belief, using
`
`FairTrade’s funds and corporate accounts for his own personal use.
`
`DB1/ 115377250.1
`
`9
`
`
`
`Case 3:20-cv-01383-KAD Document 1 Filed 09/15/20 Page 10 of 13
`
`58.
`
`Accordingly, Plaintiffs are entitled to pierce the corporate veil of FairTrade and
`
`proceed with claims as against Rodrigo individually.
`
`COUNT ONE: BREACH OF CONTRACT
`(Against FairTrade and Rodrigo Echeverrigaray)
`
`59.
`
`60.
`
`Plaintiffs repeat and reallege Paragraphs 1–58 above as if fully set forth herein.
`
`In 2016, Awano and FairTrade formed a contract to do business together in the
`
`manner set forth in Paragraph 25 above.
`
`61.
`
`Awano has performed fully under the contract, financing purchases of beef from
`
`Cibus and extending to FairTrade a revolving line of credit so that FairTrade could sell beef to
`
`United States customers. Awano has also paid the handling charges.
`
`62.
`
`FairTrade has breached the contract by acquiring the beef product using Awano’s
`
`revolving line of credit, selling the beef to customers in the United States, and failing to wire the
`
`funds received from the customers back to Awano’s account.
`
`63.
`
`FairTrade has also failed to pay Awano for handling charges, and the interest
`
`owed on its line of credit to Awano.
`
`64.
`
`As a direct and proximate cause of the above-referenced breach of contract,
`
`Plaintiffs have suffered damages.
`
`COUNT TWO: VIOLATION OF CONNECTICUT UNIFORM FRAUDULENT
`TRANSFER ACT, CONN. GEN. STAT. § 52-552, et seq.
`(Against FairTrade and Rodrigo Echeverrigaray)
`
`65.
`
`66.
`
`Plaintiffs repeat and reallege Paragraphs 1–64 above as if fully set forth herein.
`
`Rodrigo admitted that he caused FairTrade to transfer funds to M.EAT Organic
`
`Beef that should otherwise be paid to Awano per the Agreement between Awano and FairTrade.
`
`67.
`
`FairTrade’s transfers were fraudulent as to Awano.
`
`DB1/ 115377250.1
`
`10
`
`
`
`Case 3:20-cv-01383-KAD Document 1 Filed 09/15/20 Page 11 of 13
`
`68.
`
`Awano’s claims against FairTrade arose before FairTrade made the transfers to
`
`M.EAT.
`
`69.
`
`The transfers from FairTrade to M.EAT were made with the actual intent to
`
`hinder, delay, or defraud Awano.
`
`70.
`
`The transfers from FairTrade to M.EAT were made without FairTrade receiving a
`
`reasonably equivalent value in exchange for the transfer.
`
`71.
`
`FairTrade was engaged in business and transactions with Awano for which the
`
`remaining assets of FairTrade were unreasonably small in relation to such business and
`
`transactions.
`
`72.
`
`FairTrade intended to incur, or believed or reasonably should have believed that it
`
`would incur, debts beyond its ability to pay Awano as those debt became due.
`
`73.
`
`FairTrade and Rodrigo have thus violated the Connecticut Uniform Fraudulent
`
`Transfer Act, Conn. Gen. Stat. § 52-552, et seq.
`
`COUNT THREE: BREACH OF FIDUCIARY DUTY
`(Against Rodrigo Echeverrigaray)
`
`Plaintiffs repeat and reallege Paragraphs 1–73 above as if fully set forth herein
`
`FairTrade is a Delaware corporation.
`
`Rodrigo is a 50% shareholder of FairTrade.
`
`Rodrigo exercises complete control over the business affairs of FairTrade.
`
`Upon information and belief, Rodrigo is currently the only employee of
`
`74.
`
`75.
`
`76.
`
`77.
`
`78.
`
`FairTrade.
`
`79.
`
`Rodrigo is the only individual with access to FairTrade’s financial records, bank
`
`accounts, and other assets.
`
`DB1/ 115377250.1
`
`11
`
`
`
`Case 3:20-cv-01383-KAD Document 1 Filed 09/15/20 Page 12 of 13
`
`80.
`
`FairTrade does not observe corporate formalities. FairTrade does not have a
`
`board of directors, let alone regularly scheduled board meetings.
`
`81.
`
`Rodrigo makes all decisions for FairTrade unilaterally, including all decisions
`
`with respect to FairTrade’s business dealings with Awano.
`
`82.
`
`83.
`
`As such, Rodrigo owes Awano fiduciary duties under Delaware law.
`
`Rodrigo breached his fiduciary duties to Awano by: (a) operating FairTrade in
`
`such a manner that it breached its financing Agreement with Awano; (b) transferring money out
`
`of FairTrade and into M.EAT without FairTrade receiving a reasonably equivalent value in
`
`exchange for the transfers; and (c) upon information and belief, using FairTrade for his own
`
`personal expenses.
`
`DB1/ 115377250.1
`
`12
`
`
`
`Case 3:20-cv-01383-KAD Document 1 Filed 09/15/20 Page 13 of 13
`
`PRAYER FOR RELIEF
`
`WHEREFORE, Plaintiffs respectfully seek:
`
`1. Money damages;
`
`2. Punitive damages;
`
`3. Attorneys’ fees;
`
`4. Prejudgment interest;
`
`5. Post-judgment interest;
`
`6. Costs; and
`
`7. Such other and further relief as this Court deems just and proper.
`
`DEMAND FOR JURY TRIAL
`
`Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiffs demand a jury
`
`trial as to all issues triable by a jury.
`
`Dated: September 15, 2020
`
`Respectfully submitted,
`
`/s/ Wayne E. George
`Michael D. Blanchard (ct25891)
`Christopher M. Wasil (ct28578)
`Wayne E. George (ct30754)
`MORGAN, LEWIS & BOCKIUS LLP
`One State Street
`Hartford, CT 06103
`Phone: (860) 240-2700
`Fax: (860) 240-2701
`michael.blanchard@morganlewis.com
`christopher.wasil@morganlewis.com
`wayne.george@morganlewis.com
`Counsel for Plaintiffs Awano Food Group Pte Ltd
`and Baali International Inc.
`
`DB1/ 115377250.1
`
`13
`
`