Trouble continues to mount for Los Angeles-based Urban Compass, the bankrupt owner of Lower Manhattan’s Wagner Hotel and former operator of the RMS Queen Mary in Long Beach, California.
In a lawsuit filed Thursday in Los Angeles bankruptcy court, New York-based LLC Berritto Enterprises accused the developer and two of its executives of accepting a $1 million investment for a hotel venture, then making off with the funds after the deal fell apart.
The plaintiff’s identity is not disclosed in the complaint, though Berritto Enterprises is registered to the Long Island address of Frank Berritto, a retired banking executive.
In January, the lawsuit alleges, the plaintiff was introduced to an Urban Commons executive, defendant Taylor Woods, who proposed Berritto invest in Sky Holdings, an LLC that would acquire a portfolio of 18 distressed hotels from Eagle Hospitality Trust — a Singaporean REIT that has seen its own litany of financial troubles during the pandemic.
The lawsuit alleges that Berritto deposited the $1 million in funds, at Woods’ direction, into a Sky Holdings account in February.
But the acquisition never came to fruition, according to the suit. Instead, Woods continued to lead Berritto on by saying that the deal would close “in a few weeks.” Berritto again contacted Woods in April, the lawsuit alleges, at which time Woods assured that the deal was expected to close in mid-May.
In July, Berritto asked for a refund on the $1 million investment, pursuant to the terms of the parties’ earlier agreement. Following the request, Berritto stopped hearing from the defendant, according to the suit.
Instead, the money was transferred to a separate account connected to “Urban Real Estate” in violation of the agreement, the lawsuit claims.
“Defendants first created an investment scheme in which they were the only ones assured a safe and lucrative return,” the complaint states.
Urban Commons Executive Howard Wu is also listed as a defendant in the case. Plaintiff Berritto Enterprises is seeking the return of its $1 million investment, as well as attorneys’ fees and further relief as determined by the court.
Neither party could be reached for comment. A lawyer for Berritto did not respond to a request for comment.
Berritto Enterprises is not the only spurned partner accusing Woods and Wu of wrongdoing.
“No two individuals bear more responsibility for the events leading to the debtors’ Chapter 11 cases than [Urban Commons’] Woods and Wu,” the lawyers for trustees of Eagle Hospitality Trust wrote in a court filing as part of EHT’s bankruptcy proceedings earlier this year, alleging that the pair “repeatedly abused their position as insiders of both Urban Commons and the [REIT] for their own personal gain.”
Woods and Wu have rejected these claims, accusing EHT’s trustees of engaging in a “smear campaign” and an “unfounded witch-hunt.”
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