A federal bankruptcy judge has fined former operators of the Queen Mary $ 250 per day who are accused of stealing $ 2.4 million from a COVID-19 relief loan intended to pay their employees during the pandemic.
The judge’s order arrives Tuesday amid bankruptcy proceedings over how a real estate company maintained the aging ship under a lease agreement with the city of Long Beach, which owns the ship and a plot of land around the port. Urban Commons set a goal of revamping the retired British liner as a tourist destination, but within five years of the company taking over the lease, a real estate investment trust it had set up filed for bankruptcy. balance sheet, leaving behind a trail of debt.
As of 2016, Urban Commons held a 66-year lease to operate the Queen Mary and develop the surrounding land. He set up Eagle Hospitality Real Estate Trust as an investment entity to generate income from the Queen Mary’s role as a hotel and other hotel businesses, but in January of this year the trust filed for an application. bankruptcy with approximately $ 500 million in debt.
The Queen Mary is in terrible shape. This year, the city of Long Beach regained control of the ship after the Eagle Hospitality Trust filed for bankruptcy. A recent report estimated that it could cost the city $ 175 million to preserve the ship and $ 190 million to demolish or sink it. A 2017 report estimated $ 289 million in renovations and upgrades needed to keep the ship afloat.
At the center of the bankruptcy proceedings are Urban Commons executives Howard Wu and Taylor Woods. In court records, US bankruptcy judge Christopher S. Sontchi called the two “fraudsters.”
Documents filed in the bankruptcy proceedings allege that Woods and Wu requested two federal loans intended for the payroll of employees of the Queen Mary. Instead, according to the documents, executives emptied their company’s bank account as soon as they received the loan and transferred the money to several other accounts.
Wu and Woods argued that they made a mistake in the loan application and, in court documents, said they did not intend to apply to the Urban Commons Queensway company, which ‘they no longer represent.
In November, Sontchi looked down on Woods and Wu for failing to properly account for the roughly $ 2.4 million received from the federal paycheck protection program loan and for failing to freeze their holdings.
On Tuesday, in a 13-page sanction order, Sontchi ordered the men to pay $ 250 a day starting Jan. 1. The fine is intended to force the men to comply with the previous court order regarding their financial accounts.
The court order notes that Woods has been “opaque” about his bank accounts and that Wu made transfers to his wife’s bank account through the Zelle payment tool, although the two men claimed to have been candid about their assets. Several other financial projections on men’s assets were considered by the court.
“One would have thought that the issuance of the contempt order and the sanction order would serve to convey to Mr. Woods and Mr. Wu that further fraudulent behavior would not be tolerated by the Court and that it was time to make a full and straightforward accounting statement, “Sontchi wrote.” Obviously, the defendants did not get the message. “
Lawyers for Wu and Woods did not immediately respond to requests for comment.