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LIHUE — A partial motion to dismiss claims in a case against a Kauai medical marijuana dispensary licensee and Green Aloha Ltd. was granted in the Fifth Circuit Court last week.

The case, which alleges that Justin Britt — the founder of Green Aloha — illegally drew funds from a separate business account, is still alive in court due to a motion to amend the complaint filed by Winston Welborn and Wasabi Design, Inc. That motion was granted.

Katherine Caswell, attorney for Welborn, said in court Tuesday her client had been trying to adjust the pleadings with new evidence to show bank records that prove Britt — the sole managing officer of the marijuana dispensary — defrauded him and acted on behalf of Green Aloha.

“In fact, we have majorly papered this file with bank records showing that the money was transferred in and out of various accounts immediately prior to a cash withdrawal right at the exact time that Green Aloha was required to show proof of funds for its application to the state of Hawaii,” Caswell said Tuesday. “Now, you have an entity that has been granted the sole license to distribute a controlled substance on the island of Kauai and that entity was formed with stolen money.”

Welborn, who is the president and treasurer of Wasabi Design, alleges Britt removed a total of $375,628.64 from Wasabi Design’s corporate bank account and moved the money to a separate bank account under Britt’s DBA, according to court records filed by Welborn.

Britt then allegedly withdrew $125,000 from that account and deposited the money into his personal account, according to a filed opposition to the motion to dismiss.

Welborn said in the opposition that bank records showed that Britt then allegedly withdrew $675,000 from his personal checking account.

He further alleges that Britt paid several Green Aloha business expenses from the separate bank account, records showed.

“Our concern is that Justin Britt is Green Aloha and that the corporation acted by and through its founder, and sole managing officer,” Caswell said in open court. “When Justin Britt took the money, Green Aloha took the money.”

Richard Wilson, attorney for Britt and Green Aloha, told the court the entities are not one and the same.

“You’re suing Mr. Britt, who you’re saying stole all this money, and didn’t have a right to the money, which of course he disagrees with and you somehow want to get to Green Aloha. Then come up with the authority,” Wilson said in open court. “(They’ve said) Justin Britt took the money. He used it for Green Aloha. Ergo, we get to Green Aloha. That’s not what the law is.”

Fifth Circuit Court Chief Judge Randal Valenciano said Welborn had remedies at law to claim and the case “would not be shut down.”

The partial motion to dismiss granted by the court Tuesday removed the claim of unjust enrichment in the complaint against Green Aloha and allowed Welborn to add a fraud and conversion claim against the marijuana dispensary.

In the filed opposition to the motion to dismiss, Welborn alleges Green Aloha used the stolen money “to fund a grow lab in Washington State and apply to the Department of Health for the sole medical marijuana dispensary license for the island of Kauai” which is “the evidence that Green Aloha intentionally defrauded Plaintiffs to obtain the stolen funds to fund the startup of its business.”

“For Mr. Welborn, this court proceeding was a last resort,” Caswell told The Garden Island. “He would much prefer to resolve the matter amicably. We are sorry it’s been made so public. That was never our intention. We never contacted the media. Mr. Welborn just wants resolution so that he can pay Wasabi company debts and taxes, then dissolve the company.”

In an email, Britt wrote Tuesday that he would forward TGI’s request for comment to his attorneys. Wilson could not be reached for comment.

In April, Green Aloha announced an agreement with the United Food and Commercial Workers Union Local 480. It was also chosen as the sole medical marijuana dispensary on Kauai by the DOH.

To qualify for a license, dispensary applicants were required to pay a $75,000 licensing fee to the DOH within seven days of receiving written notice of their selection. They were also required to have $1 million cash, plus $100,000 for each dispensary location.

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