(Update on 4/22/2019: After granting a motion on behalf of the defendants to dismiss the claims in the lawsuit outlined below, U.S. District Court Northern California Judge Haywood Gilliam issued a final judgement on this case on April 9, 2019, dismissing all claims brought against the defendants.)
Mokhtar Alkhanshali, the charismatic protagonist of Dave Eggers’ new nonfiction book “Monk of Mokha,” has been named in a United States District Court lawsuit filed yesterday by his former company Mocha Mill that alleges widespread racketeering, including fraud, conspiracy, money laundering, extortion and embezzlement.
The plaintiffs say the alleged illegal business activities resulted in what amounts to a corporate takeover of the Mocha Mill company, resulting in potentially tens or hundreds of millions of dollars lost, while giving Alkhanshali and his current company, Port of Mokha, great notoriety and fortune through the sale of premium coffees sourced from Yemen that were previously owned by Mocha Mill.
Yemen is one of coffee’s original places of origin, yet it made a spectacular reemergence in the coffee industry in 2015 when a delegation of new coffee professionals from the war-torn country made headlines following a tumultuous journey to the annual Specialty Coffee Association Expo to showcase newly marketed specialty-grade Yemeni coffees. At the fore of that delegation was Alkhanshali, who has since been painted in Eggers’ book as well as in mainstream media as a hero of Yemeni coffee’s market reemergence.
The U.S. District Court lawsuit paints a very different picture, alleging that Alkhanshali was embezzling money from Mocha Mill — where he was serving as CEO and part owner — as far back as 2014 in order to begin to fund what was a separate, competing enterprise. The suit invokes the Racketeer Influenced and Corrupt Organizations Act (RICO), while naming Alkhanshali, Port of Mokha, Blue Bottle Coffee, two computer companies and Port of Mokha’s operations and finance director Ahmad Ibrahim as organized conspirators.
The lawsuit was filed on behalf of Mocha Mill by former Assistant U.S. Attorneys Yasin M. Almadani and Terrence M. Jones. Neither Port of Mokha nor Blue Bottle Coffee have replied to Daily Coffee News’s requests for comment.
(Update 5/01/2018: A spokesperson from a public relations agency representing Blue Bottle Coffee responded that the agency does not have a comment at this time.)
“Defendant Port of Mokha, in a RICO conspiracy using Mokhtar’s position of trust as Mocha Mill CEO, defrauded Mocha Mill out of its best coffee and sold it under the Port of Mokha brand just as Mocha Mill was about to launch,” the suit states. “In the same conspiracy, Port of Mokha stole all of Mocha Mill’s farmer and distributor relationships cutting Mocha Mill at the knees.”
According to the suit, Mocha Mill was officially established in 2014, with each of the four partners — three of whom are now plaintiffs and the fourth being Alkhanshali — controlling a 25 percent stake in the Bay Area company. From late 2013 through 2016, the plaintiffs invested more than $500,000 to educate Alkhanshali and pay for his travel abroad to develop business and infrastructure relationships, while also building coffee infrastructure and development programs for quality Yemeni coffee, according to the suit, which says Alkhanshali received wire transfers of more than $140,000 that were not justified as company expenses.
“Upon information and belief, Mokhtar used some or all of the stolen and embezzled funds to finance his RICO Enterprise, including Port of Mokha, and carry out the schemes described below that ultimately allowed Port of Mokha to usurp Mocha Mill’s business through a continuous pattern of racketeering activity,” the suit claims.
One of the primary racketeering allegations in the suit is that Alkhanshali leveraged his relationship with author Dave Eggers to essentially remove any mentions of the Mocha Mill company from the book, while using the book to promote existing relationships with companies like Blue Bottle to benefit the Port of Mokha company, of which the plaintiffs say they were unaware at the time.
The suit also suggests Alkhanshali and business associates conspired to convince Mocha Mill’s other leadership that Yemeni Coffee was not being highly valued in the green coffee marketplace, while also falsifying quality scores to further suggest low value of the current inventory. In April of 2016, Alkhanshali resigned as CEO of Mocha Mill saying he was “no longer interested in selling coffee,” according to the suit. Yet at the same time, the plaintiffs argue, Alkhanshali and his associates were establishing another company in concert with companies called T&H Computers and Metra Computer Group to create a new company called T&H Imports that could serve as a “straw buyer” that was posing as a Dubai-based buyer for the Middle East market.
The suit says the plaintiffs were desperate to sell the allegedly fraudulently undervalued coffee and entered into negotiations with T&H Imports, selling 862 kilograms of coffee for $50,000, or $58 per kilogram.
“Immediately thereafter T&H Computers sold the same coffee to Port of Mocha [sic.] for $51,000, taking a $1,000 commission for its part in the fraud scheme,” the suit states. “On May 17, 2016, Port of Mokha sold under its own brand 390 kilograms of the fraudulently obtained Mocha Mill coffee to Blue Bottle for $135 per kilogram. The coffee was also sold for a similar price to Coutume, and other high-end distributors.”
The lawsuit calls for a jury trial. RICO suits are most commonly filed against organized crime groups such as mafia organizations or gangs. According to Above the Law, civil RICO suits set a high bar for the plaintiffs, as conspiracy would need to be substantially proven through evidence.