The former operators of the Queen Mary were facing federal fraud charges Wednesday, with regulators alleging they bilked investors out of millions of dollars through schemes tied to their ownership of more than a dozen hotels, including the iconic ship in Long Beach.
Taylor Woods and Howard Wu were charged Tuesday by the Securities and Exchange Commission with two counts of securities fraud. The complaint was filed in federal court in downtown Los Angeles.
According to the SEC, the pair — doing business as Urban Commons LLC — engaged in a pair of fraud schemes. In the first, they allegedly convinced investors to sell their interests in the hotels, promising them profitable returns when the properties, including the Queen Mary, were sold to a third-party buyer.
Prosecutors contend, however, that the pair actually planned to retain ownership of the properties and list them in an overseas real estate investment trust.
“In a second scheme, perpetrated in 2021 after the REIT had filed for bankruptcy, the complaint alleges that Woods and Wu raised at least $1.775 million from a second set of investors to purchase the same hotels out of bankruptcy,” according to the SEC. “The defendants allegedly told investors that their funds would be held in escrow, used only to fund the hotels’ purchase, and returned to investors if the bid was unsuccessful.”
Prosecutors contend, however, that Woods and Wu “misappropriated virtually all investors’ funds,” using the money mostly for business and personal expenses.
Speaking to the Long Beach Post, an attorney for Wu denied any wrongdoing, saying the case is based on a “lack of understanding how these transactions were structured.”
The city of Long Beach regained control of the Queen Mary in 2021 when Urban Commons surrendered its leases for oversight of the deteriorating vessel.
City officials said the company violated multiple provisions of the leases, “including failure to maintain the ship caused in part by decades of deferred maintenance by former operators of the ship.”
