Today, the Long Beach City Auditor’s Office released an official statement confirming that Urban Commons, the former leaseholder and operator of the Queen Mary, misrepresented financial information to the City of Long Beach.
The statement cites a “significant lack of cooperation” from Urban Commons during the investigation, which found that the operator “did in fact misrepresent financial information and failed to perform their duties under the lease.”
Urban Commons entered into a lease agreement with the City of Long Beach on Nov. 1, 2016. Part of their lease agreement gives the City the right to audit the books and records of Urban Commons, the investigative report states.
The investigation found that Urban Commons falsified invoices to the City, claiming it had paid vendors that had not been paid.
The invoices were stamped “PAID,” but upon further review, investigators discovered that Urban Commons had created a “tracking document” with the real dates that they paid their vendors.
Of 89 total invoices, 87 that were submitted to the City with a “PAID” stamp were not paid at the time that the invoices were sent to the City. The investigation found that, on average, Urban Commons invoiced the City 51 days prior to paying the vendor.
Ironically, Howard Wu, principal at Urban Commons, said last year that — over Urban Common’s five years of Queen Mary management — it had accumulated knowledge of how to handle the ship.
“We have learned not only the amount of love and care the ship requires daily,” Wu said in January 2020, “but also completed crucial groundwork, ensuring staff and guest safety.”
In 2017, a survey was conducted by outside consultants to evaluate the state of the Queen Mary. The survey estimated that approximately $235 to $289 million in repairs were necessary.
The City agreed to use approximately $23 million in bond funds and City reserves to fund some of the most “urgent” and “critical” repairs at the Queen Mary, the investigative report states.
According to the Auditor’s Office statement, “After repeated requests, Urban Commons has not provided its electronic check register, cash account detail, bank statements and cancelled checks, cashier’s checks, wire transfers or other payments paid to vendors and subcontractors relating to the $23 million funded by the City.”
City auditors will continue to pursue the investigation.
“This misrepresentation of the truth and unwillingness of Urban Commons to provide the basic and required financial records is very troubling,” the Auditor’s Office statement said.
See the investigation report with more details on the findings here.
