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Law360 (September 3, 2020, 8:32 PM EDT) -- A San Antonio lawyer and his law firm have been accused in federal court of withholding more than $3 million from a Mexican pharmaceutical and medical equipment supply company for more than 5 million masks it provided for a Texas Department of Emergency Management deal.
Enrique Serna and his firm Serna & Associates PLLC, along with two other businesses, were hit Tuesday with claims of fraud, conspiracy and violating Texas' Uniform Fraudulent Transfer Act for allegedly double-crossing Mexico-based Happy Healthcare SA de CV by selling masks acquired by Happy Healthcare for more than double the amount the Mexican company was paid.
Serna paid Happy Healthcare $0.55 per mask and then allegedly turned around and sold them through Florida-based Online Transport International LLC and Texas-based Taylor Bio Armor to the Texas Department of Emergency Management for $1.25 each. Serna had promised to split profits from the sale 50/50 with Happy Healthcare, but the Mexican company hasn't seen any profits, according to the complaint
"What Happy Healthcare did not know — and what Serna failed to disclose — was that Serna was playing both sides," Happy Healthcare said. "In addition to sharing in Happy Healthcare's profits, Serna was getting paid by OTI and actually held a partnership interest in the company's protective mask venture."
Happy Healthcare's complaint said Serna, an attorney the company trusted and who had represented some of its U.S. affiliates in the past, approached the supply company in March with a business venture that would capitalize on the COVID-19 pandemic by selling large quantities of protective face masks to the Lone Star State.
Happy Healthcare supplied the masks in five different transactions.
The first three shipments were on a pay-in-advance basis. Happy Healthcare received its accrual costs for the masks beforehand and was allegedly told by Serna it would receive its share of the profits once the Texas Department of Emergency Management paid him.
For the fourth shipment, however, which contained slightly more than 1 million masks, Serna convinced Happy Healthcare to provide the masks on a credit basis. Serna agreed to pay Happy Healthcare $475,000 for the shipment within 30 days, according to the complaint.
The fifth shipment, which contained 5 million masks, was valued at $3 million, which Serna allegedly told Happy Healthcare that OTI and Taylor Bio would pay for. OTI invoiced the state of Texas $6.225 million for the same shipment, according to the complaint.
Happy Healthcare said that despite several communications and demands for payment, it hasn't received any of the money owed.
In mid-August, OTI and its executive Joseph Lassen blamed the delayed payments on the state of Texas, accusing the department of emergency management of not paying OTI its invoice amount. But Happy Healthcare recently found this not to be true, according to the complaint.
Attorneys for Happy Healthcare and representatives for Serna, his firm and the named companies didn't immediately respond to requests for comment Thursday.
Happy Healthcare is represented by Jason M. Davis and Jay Haulings of Davis & Santos PC.
Counsel information for the defendants wasn't immediately available Thursday.
The case is Happy Healthcare SA de CV v. Online Transport International LLC et al., case number 5:20-cv-01038, in the U.S. District Court for the Western District of Texas.
--Editing by Marygrace Murphy.
For a reprint of this article, please contact reprints@law360.com.
