In a strongly worded letter, US Bankruptcy Court Judge Christopher Sontchi in Delaware said Woods “misrepresented or lied” to the US government to obtain $ 2.4 million in federal program loans paycheck protection.
Sontchi granted a preliminary injunction freezing assets to ensure repayment of the allegedly ill-gotten money. “Woods and Wu have a history of wrongdoing and have proven to be able to mix assets,” the judge said.
In late May, the judge said he was considering referring the issue of PPP loans to the US attorney’s office. “The behavior of these defendants is beyond pallor,” he said at the time. “It was reprehensible. It was a betrayal of public trust.
The asset freeze order was sought by attorneys for a company, Urban Commons Queensway, LLC, who argue that Woods and Wu falsely applied for the PPP loan without the company’s consent.
Woods told the Long Beach Post in May that the loan application was made in error and that they were working to resolve the issue. “There was never any intention to do anything inappropriate by any of the parties involved,” Woods and Wu said in a statement.
But in the letter released Friday, Sontchi said “Woods knowingly or recklessly made false statements” to get the Small Business Administration PPP loan. After “wrongly obtaining the funds,” the judge wrote, Woods and Wu transferred the money to another company they owned and “then wiped out the funds.”
“These facts show the defendants’ willingness to break the law, to use entities and transfers to avoid paying wrongly obtained money, and a lack of remorse for it,” Sontchi said.
The judge also noted that lawyers for Urban Commons Queensway had submitted to bankruptcy court evidence of several lawsuits and judgments against Woods and Wu for “fraud, default on repayment and other defaults.”
In November 2016, Long Beach City Council granted Urban Commons a 66-year lease on the city-owned Queen Mary. To secure the lease, Woods and Wu made bold pledges to develop a $ 250 million hotel and entertainment complex called Queen Mary Island on waterfront land next to the ship. These plans were never realized.
On the same day, the majority of city council ignored warnings from City Auditor Laura Doud and approved bonds of $ 23 million to jump-start repairs to the deteriorating ship. Doud conducted an audit to determine if Urban Commons spent the money appropriately.
Urban Commons then wrapped up the Queen Mary’s lease and a host of US hotel properties and sold them to Eagle Hospitality Trust. In May 2019, Eagle went public on the Singapore Stock Exchange. Plagued by financial problems, the company went bankrupt in January of this year. Sontchi supervises the bankruptcy case.
All of the hotel’s other properties were sold in a bankruptcy court auction, but the Queen Mary’s lease was not. There were no bidders. The Queen Mary is now back in city hands. The ship is closed due to the pandemic and the need for urgent repairs to the ship.
“A betrayal you can’t even put into words”