Jagex, Carlyle Group Hit With RICO Lawsuit

Another sale of Jagex contended as illegal.

You know back in my day a company could sell Jagex without constantly being hit with lawsuits. For those of you keeping track Jagex has been sold yet again to an American investor and yet again the sale has become the focal point of a lawsuit. This time we’re talking RICO allegations, that’s criminal racketeering. That’s the law they formed to get mob bosses on. Racketeer Influenced and Corrupt Organizations.

The lawsuit was filed by Plutos Sama Holdings, Inc., a Delaware corporation based in Irvine, California. They have filed suit against Jagex, Carlyle Group, Shanhai Hongtu Network Technologies LLC, Shanghai Hongtu Network Technologies Trust, Huarong Trust, Minsheng Trust, and John Does 1-20. I hope I’m not on that list of John Does since I own the much sought-after domain Jamflex.net. Fans of MMO Fallout theater might be asking where US Platinum Fortune is on that list, or Shanghai Fukong International, the dudes who were involved in the prior lawsuit. Great question, let’s keep reading and see if we get an answer.

The charges laid out in the lawsuit include RICO violations, conversion, tortuous interference with contract, tortious interference with prospective economic advantage, and Cal. Corp. Code §25401. That last one is about making a corporate sale based on a lie.

Plutos Sama Holdings is alleging that the sale of Jagex was a money laundering scheme to transfer ill-gotten funds through a legitimate United States business. Not only that but they claim to be the actual legitimate owner of Jagex. Here is how Plutos Sama describes defendant Huarong Trust:

On January 11, 2021, it was publicly announced on the US internet that China sentenced the former Chairman of Huarong Trust (an entity which will be identified in detail in this pleading) to death for taking over $200,000,000 USD in alleged bribes and of the loans often reported in the trade journals in China giving rise to this sentence was the loans made to SHNT. It was the firm belief of Plaintiff that Defendants would not repeat such egregious conduct; yet here we are again and this time it has impacted two US companies and damaged Plaintiff for playing by the rules.

What world is this?

I guess the easiest area to plant ourselves in is who owns Jagex right now. According to the lawsuit the prior owner was in fact Macarthur Fortune Holding LLC. Plutos Sama refers to Shanghai Network Technologies as a resident of Beijing who invests illicit bribery proceeds in legitimate US businesses. The John Does are just people who are in some way at fault.

Plutos Sama alleges that in 2018 the company had identified Jagex as a lucrative investment opportunity. In 2019 Plutos Sama successfully won an auction to acquire Jagex at the listed price of $530 million USD. The sale was not due to Jagex’s performance but instead to pay off massive debts incurred by Fukong. According to Plutos Sama, that debt was due to Fukong’s criminal fraudulent activity to which several key executives fled China to avoid prosecution.

After PSH acquired Jagex, PSH began receiving troublesome communications from third parties who alleged that SHNT’s financial distress was a result of participation in an alleged fraudulent pier to pier lending scheme in China impacting over 30,000 victims and 1,200 shell companies (the Yan “P2P Scheme”).

In order to distance itself from any potential illegal activities, Plutos Sama negotiated a Membership Unit Purchase Agreement where it sold its interest to who else but MacArthur Fortune Holdings. Plutos Sama however intended to purchase the rest of Shanghai Hongtu’s interest in Jagex, an acquisition that was halted due to a freeze in assets by one of Shanghai Hongtu’s lenders. The auction failed and in 2020 the court ordered a transfer of interest to defendants Huarong and Minsheng.

According to Plutos Sama the UK lawsuit against Platinum Fortune and MacArthur was successful, the UK Court issuing a stop notice to permanently enjoin Platnium Fortune from selling or transferring dividends of Jagex. So where does Carlyle Group come into all of this?

Plutos Sama alleges in the lawsuit that a Mr. Yan is behind all of this. Mr. Yan apparently owes $150 million USD in a loan from Shanghai Hongtu, and has been blocking the sale of Jagex on the belief that the new owners would attempt to enforce the debt. Plutos Sama alleges that Yan bribed employees of Minsheng to block the sale yet again. Mr. Yan apparently then partnered with Carlyle Group and here we are today.

Ultimately Plutos Sama is alleging that Huarong, Jagex, Minsheng, and Shanghai Hongtu each utilized funds stolen from corporate entities to maintain ownership of Shanghai Hongtu and Jagex, and that each entity knew or should have known that there were misappropriated funds being used in the transaction.

Plaintiff had a valid contract with Huarong as a result of its successful bid in the public auction for Huarong’s 55% ownership interest of SHNT and Jagex. Though Plaintiff is still investigating the influences which led to Huarong’s refusal to honor the contract, upon information and belief, SNHT and Jagex intentionally interfered with PSH’s contract with Huarong at the behest of Yen. The existence of the contract and auction results were known to all interested parties, and the failure of Huarong to honor the terms of the contract have resulted in significant financial loss to the Plaintiff, and Plaintiff will suffer additional financial loss if Huarong and Minsheng are permitted to sell or transfer assets of SHNT and Jagex.

Plutos Sama has demanded injunctive relief preventing the sale of Jagex, a declaratory judgment affirming their ownership, for damages, attorneys fees, cost of lawsuit, and more. As for me I’ll be suing to get back the sanity I lost writing this article.

As always MMO Fallout has uploaded the filing to our Google Drive for your viewing pleasure.

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