‘A betrayal you can’t even put into words’
A little-known real estate investment firm had big plans for the Queen Mary, but now they owe hundreds of millions to an array of creditors—and the fate of the city’s most famous asset is more uncertain than ever.
Mary and Mike Dannelley took a fast liking to Taylor Woods when he joined their tight-knit cycling group for daily rides through the coastal hills of Orange County. Athletic and engaging, with a big smile and confident air, he seemed like a man on the move in ways beyond his bike.
The Dannelleys became so close to Woods over a handful of years that they were willing to entrust their future to him. When he offered them a high-return opportunity to invest in his expanding hotel empire—which included the multimillion-dollar operating rights to the Queen Mary—they handed him their $2.8 million nest egg.
Today, the Corona del Mar couple is in a very long line of investors, creditors, government agencies and ex-employees who claim they were cheated and are trying to recoup hundreds of millions of dollars from the wreckage of Woods’ once high-flying real estate company, Urban Commons.
The Dannelleys’ investment was subsumed in a complicated web of real estate business entities that would be packaged and sold on the Singapore Stock Exchange before eventually collapsing into Delaware bankruptcy court early this year amid allegations of self-dealing and fraud.
“We’re absolutely devastated,” said Mary Dannelley, an employment lawyer who, with her husband, has filed suit against Woods and Urban Commons in Orange County after seeing only $95,000 of the millions they invested.
“He’s very convincing and we thought he had a good heart,” she said of Woods. “It’s a betrayal you can’t even put into words.”
The vast extent of the losses sustained by virtually everyone connected to Urban Commons, Woods and his business partner, Howard Wu, are only now coming to light as the aggrieved have resorted to lawsuits and bankruptcy court claims for redress.
Some of them are doctors, lawyers, bankers and mortgage brokers who poured millions of dollars of their savings into Urban Commons nationwide hotel investments. A legion of small businesses and vendors who provided services to the Queen Mary have gone unpaid. Hundreds of people, many of them heartbroken, have lost deposit money for hotel stays, dream weddings, proms, family reunions and other events on the ship.
Two former Urban Commons vice presidents have filed lawsuits alleging that they were stiffed on promised cash and stock bonuses totaling more than $1 million each. The company that provides day-to-day management of the ship, Evolution Hospitality, has sued Urban Commons for $2.6 million in management fees and other expenses, alleging the firm drained the Queen Mary Hotel’s operating bank accounts.
Epic Entertainment Productions, which stages the Queen Mary’s highly successful “Dark Harbor” Halloween event, disclosed in a bankruptcy court claim that it’s owed nearly $1 million.
Urban Common’s landlord, meanwhile, has gone to court to try to get $570,000 in rent the firm allegedly failed to pay for its showcase Century City high-rise offices with panoramic views of the Pacific. Several cities, including Long Beach, say they’ve lost hundreds of thousands of dollars in unpaid occupancy taxes on the company’s hotels.
And the list goes on.
Milad Shafieezad may not be a million-dollar investor but the teenager also saw his hard-earned dollars vanish into Urban Commons’ sea of red ink.
He had given the Queen Mary Hotel a $170 room deposit to have his 18th birthday party on the ship. He’d saved up for a year, stashing away a little each month from his allowance and topping it off with some Christmas money. But when the ship shut down during the pandemic, he never got his money back.
“I hope she reopens soon,” Shafieezad said. “To so many people the ship is just a boat, but to me and many others it’s so much more than that.”
Woods and Wu, for their part, blame the pandemic for Urban Commons’ collapse and debts.
“COVID has created a huge revenue deficit over a prolonged period and unfortunately we provided a guarantee intended to ensure normal operations, but which was impossible to sustain during COVID,” they said in a statement to the Post. “We believe it is unreasonable to push the obligations and responsibilities onto Urban Commons for the chaos and resulting chain reaction of 2020-2021.”
Lawsuits and public records, however, show that Urban Commons’ financial problems had begun at least a year before the pandemic shutdowns that delivered a blow to the hotel and tourism industries.
The city is trying hard to steer the conversation away from the past now that there is no lease-holder for its iconic but troubled asset for the first time in decades.
“This was clearly an operator that did not live up to its commitments, which is why the City placed them in multiple defaults of their lease…The City is now focused on new models of operating the vessel with it back in public hands for the first time in 40 years,” Long Beach City Manager Tom Modica said in a statement.
Here, based on a review by the Post of more than a dozen lawsuits, bankruptcy court filings and interviews, is a look at the mounting fallout from Urban Commons’ demise, once again leaving Long Beach struggling to chart a new course for the Queen Mary.
A vision fit for a Queen
Urban Commons first made headlines in Long Beach in late 2015, when it was named as the latest operator of the Queen Mary, buying the ship’s 66-year lease out of default for $69 million.
Long Beach has owned the Queen Mary as a hotel and tourist attraction since its arrival from England in 1967. For half a century, the city had leased the ship to a string of operators, including the Walt Disney Co., that struggled to make a profit and, in some cases, failed to properly maintain the aging vessel.
Woods, Wu and Urban Commons were largely unknown when they approached the city of Long Beach with a grand plan to transform the ship’s waterfront acreage into a $250-million entertainment destination known as Queen Mary Island.
Woods had created Urban Commons in 2008. Throughout the ensuing years, he listed the firm’s address as “Suite 350” in a building along a coastal stretch in tony Corona del Mar. In truth, that was the number of a mail drop in the town’s UPS Store.
“We believe that trust must be the basis of all our relationships,” the company proclaimed on its website.
Urban Commons’ growth strategy was aimed at getting investors to buy so-called memberships in the hotels it was pursuing across the country, from San Jose to Orlando. With assurances of big returns, investors pumped hundreds of millions of dollars into the labyrinth of limited liability companies Urban Commons created for each hotel, most of them near major airports and resort destinations.
Although Woods and Wu had raised enough to buy eight hotels by the time they approached Long Beach about the Queen Mary, they had no experience with the kind of major land development they were proposing to city officials.
But when they unveiled renderings of their vision of Queen Mary Island by the renowned Los Angeles-based architectural firm Gensler, city officials were impressed. They eagerly embraced a suitor they hoped would finally realize the Queen’s potential and bring more tourist dollars to the city.
Under the lease agreement, the city agreed to issue $23 million in bonds and Tidelands funds for Urban Commons to make critical repairs on the aging ship. The firm, for its part, promised to keep the ship in “first class condition and repair,” an assurance that could potentially cost tens of millions of dollars. The City Council approved the deal on a 6-1 vote.
With the Queen Mary in its portfolio, Urban Commons had gained a powerful vehicle to raise more investment dollars in the U.S. and abroad, particularly in Asia.
The ship, beloved around the world, was now prominently featured in the firm’s promotional and fundraising efforts. Wu would hold extravagant parties aboard the Art Deco vessel lasting into the early hours. Sometimes he arrived in a Rolls-Royce or by helicopter, landing at the nearby Island Express helipad.
“That was just a Tuesday for him,” quipped one former friend.
A sinking venture
By early 2019, the city began to realize it may have a problem looming on the horizon. Urban Commons was not living up to its maintenance responsibilities, according to the city, and was failing to provide financial documents. Some of the Queen Mary’s vendors and employees were being paid late or not at all.
The IRS was confronting the same problem when it came to Wu. In September 2019, the agency recorded a $2.5 million tax lien against his personal assets for unpaid income taxes, interest and penalties dating back to 2013, a span during which he and Woods were being handed the keys to the Queen Mary.
Still, the two entrepreneurs were looking to go even bigger, hoping to lure international investors through a public offering of shares in its portfolio of properties, including the Queen Mary. A key goal was to raise money to fund the $250-million Queen Mary Island development that had helped Urban Commons land its deal with Long Beach.
To that end, it created a real estate investment entity called Eagle Hospitality Trust, which would be listed on the Singapore Stock Exchange. The Urban Commons properties—which Woods and Wu had earlier transferred to another entity they controlled—were sold to Eagle Hospitality Trust and then offered for sale to the public through shares. Woods and Wu were on the Eagle board and had the largest ownership stake in the venture.
But only months after Eagle’s initial public offering in Singapore, trading was halted when the shares plummeted following news revelations in the Post and elsewhere that the Queen Mary’s condition was severely deteriorating. Soon, the trust defaulted on a $341 million loan from Bank of America.
By late that year, the city began sending warning letters to Urban Commons that it was in danger of defaulting on its lease. The city auditor launched an investigation into how the initial $23 million for critical repairs was spent, an investigation that is ongoing.
Following the Singapore implosion, lawsuits against Woods, Wu and Urban Commons seemed to come from every direction, but all had this in common: they began to reveal for the first time the breadth of the hidden financial problems engulfing the leaseholder of the Queen Mary.
A number of investors seeking damages accused Woods and Wu of concealing both the loan default and their dual roles in Urban Commons and the newly created Eagle Hospitality Trust, which the investors alleged created a conflict of interest. Some claimed that Eagle had purchased the properties from Urban Commons, including the Queen Mary lease, at undervalued prices so the trust could realize a bigger profit during the public offering of shares in Singapore.
More suits would later be filed in Los Angeles and Orange counties by businesses and individuals who had extended millions of dollars in high-interest loans to Woods and Wu. According to the suits, the two men personally guaranteed the loans but failed to pay.
West Bay Capital, for one, said in a Los Angeles Superior Court lawsuit filed earlier this year that it loaned Woods, Wu, and Urban Commons $7.5 million on the eve of Eagle Hospitality Trust’s debut on the Singapore exchange, but has yet to see a penny. Nor has West Bay been paid back for a subsequent $2.5 million loan, according to the suit filed by the El Segundo-based firm.
Last month, the judge in the case ordered that $10 million in assets of both Wu and Woods be attached and kept out of their reach as the case moves forward.
As their fortunes plummeted, Woods and Wu continued to hunt for new investors for new ventures, which failed to materialize and led to new litigation.
In a federal suit filed last October, two doctors accused Woods and Wu of theft and securities fraud in connection with their $750,000 investment in two hotel projects in early 2020. They say they were promised a 30% return on the purchase of a Hilton hotel in Seattle and a 70% return on the purchase of the Wagner Hotel (formerly Ritz Carlton Battery Park) in New York City.
The doctors—Clifford Rosen of Ontario, Canada, and Ronald Christensen of Scottsdale, Arizona—allege that Woods and Wu failed to disclose that their parent company, Eagle Hospitality, had defaulted on its Bank of America loan and that the trust had come under investigation in Singapore for potential securities violations. Both those issues, they said, would have been red flags for entering a business relationship.
“Our clients have not received the promised returns, let alone any return on their investment, and believe the membership interests in the hotel properties were never even acquired,” the doctors’ attorney, Norma Garcia Gullien, said in a statement to the Post. “They fear they have been victimized by a type of Ponzi scheme.”
Rough seas ahead
Nowhere has the demise of Urban Commons been on fuller display than in the bankruptcy court in Delaware, where parent company Eagle Hospitality Trust, confronting hundreds of millions of dollars of debt, sought protection from creditors in January.
The claimants range from tiny to titanic. Alongside Bank of America, which is seeking to recover its $341million loan, there are 23 pages of people and businesses listed in the bankruptcy proceeding who lost a combined $1.3 million in deposits for various events they’d booked on the ship.
(A number of media outlets have filed claims, including the Post, which said it is owed $1,200 in unpaid advertising services.)
Long Beach has filed a claim, too, saying Urban Commons owes $1 million in fees and unpaid rent and failed to perform more than $40 million in critical Queen Mary repairs that the city said it will now have to address.
What’s more, it was disclosed in the bankruptcy proceeding that Urban Commons owes $5 million in property taxes to Los Angeles County and almost $1 million in sales tax to the state.
The reality is that most investors and creditors are unlikely to recover much, if any, of their money because there’s simply not enough left to go around. In a July 15 note to shareholders, Eagle Hospitality said it would be delisting itself on the Singapore Stock Exchange and that recovery of money is unlikely.
Complicating the proceedings, several law firms representing Urban Commons have asked courts to be relieved of their roles, including the attorneys representing Urban Commons in bankruptcy court. They said they are owed more than $500,000 in legal fees.
Woods, in asking the court to reject his lawyer’s efforts, insisted that Urban Commons’ companies “have consistently made payments and diligently attempted to become current.” He said the unpaid bills resulted, among other things, from the unexpected cost of responding to multiple motions for discovery.
Even more problematic, the bankruptcy proceedings have produced stunning allegations of fraud against Woods and Wu involving the federal government’s relief loan program to help businesses and their employees weather the pandemic’s economic impact.
The former Queen Mary operators were accused in court documents submitted by Eagle Hospitality of misusing more than $2.4 million in aid money meant to help hundreds of employees who’d been furloughed when the ship was closed.
According to the documents, Woods and Wu split the Queen Mary’s employee payroll into two groups so they could apply for two different federal Paycheck Protection Program (PPP) loans. Within hours of receiving the funds, the two allegedly diverted them into various accounts for personal gain, Eagle Hospitality said in documents intended to show why it should not be held responsible for the loans that had been sought without its approval.
In public statements, Woods has blamed the issue on clerical errors and insisted he and Wu acted in good faith. The loan money has yet to be accounted for, according to bankruptcy court documents.
At a hearing in May, U.S. Bankruptcy Judge Christopher Sontchi said he was considering referring the matter to the U.S. Attorney, according to news reports.
“Let me be clear,” the judge said. “These defendants’ behavior is beyond the pale. It was reprehensible. It was a violation of public trust.”
The future of the Queen Mary
So what now for the Queen Mary?
During the bankruptcy proceedings, 14 of Urban Commons’ 15 hotel properties were sold at auction. There were no bidders for the Queen Mary lease and the tens of millions of dollars in repair costs that will be needed to keep the ship viable into the future.
It was a sad moment in the storied life of a ship that ferried not only the rich and famous but also hundreds of thousands of troops during World War II.
In recent months, Long Beach officials have tried to put the best possible spin on the failures of the many operators the city has selected over the years to oversee its most famous, publicly owned asset.
“We will be fully engaged in the preservation of this historic landmark and are incredibly grateful for this opportunity,” Mayor Robert Garcia said after the failed auction, when Urban Commons simply surrendered the lease to the city.
The reality is that city officials have always been in control of the Queen Mary and its historic preservation.
With no lease holder for the ship, the difference now is that the city is fully—and visibly—accountable for its maintenance and financial success.
Ideas for what to do next have ranged from spending $105 million to scrap the Queen Mary to spending roughly $500 million to move it and build a new dry dock.
More immediately, the city is considering transferring control of the Queen Mary to the Harbor Commission, which oversees the Port of Long Beach.
City officials have said the commission is better positioned to handle the Queen Mary leases and development of the surrounding land.
But critics, including several port-related unions, say the port is already committed to more than $1 billion in capital improvement projects over the next 10 years—projects that could be jeopardized with new obligations the Queen Mary may bring.
As John McLaurin, President of the Pacific Merchant Shipping Association, put it: “If the City of Long Beach appreciates the competitive environment that the Port of Long Beach has to navigate in, it will not saddle the Port with the constant headache and financial burden of the Queen Mary.”
The City Council is expected to vote on the matter later this year.
While many questions remain about the Queen Mary’s future journey with Long Beach, this much seems clear: The seas ahead are unlikely to be smooth.
Asia Morris, Brandon Richardson, Thomas R. Cordova and Larry Duncan
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Prior reporting on the Queen Mary
By Kelly Puente
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