Companies allegedly associated with a fugitive Chinese billionaire, including one firm found guilty of wire fraud and other federal charges, argue in new court papers for dismissal of a lawsuit brought by two lessees at the L.A. Grand Hotel Downtown whose owners are critical of its conversion into a homeless shelter.
The Los Angeles Superior Court lawsuit was filed by the nonprofit Academy of Media Arts and the still unopened ROME Nightclub against Wei Huang, Shen Zhen New World I LLC and other defendants allegedly connected to Huang. The complaint alleges fraud, breach of contract and the covenant of good faith and fair dealing, negligence and interference with contractual relations and prospective economic advantage.
Huang has not yet been served.
On Thursday, attorneys for the firms filed court papers with Judge Thomas Long seeking dismissal of the case. They also filed separate pleadings seeking to compel arbitration regarding the ROME claims and to strike some of the contents of the suit that they maintain are either prejudicial or false. An initial hearing is scheduled for Aug. 13.
“Plaintiffs fail to assert a single fact to support their baseless and inflammatory allegations,” the defense attorneys state in their court papers.
Despite the ROME lease having a binding arbitration clause and although the academy lease was entered into long after the project started, both have sued alleging that the hotel’s participation in the city of Los Angeles’ Project Roomkey program violated their respective leases, the defense attorneys further state.
The defense attorneys add in their pleadings that there is so much uncertainty in the complaint that each defendant does not know what it is being accused of.
But according to the suit filed Jan. 25, Huang’s “unilateral and voluntary decision to profit from the homeless shelter for an indefinite period of time has fundamentally altered the first-class character, appearance and reputation of the premises.”
Shen Zhen New World I was sentenced in May 2023 to five years probation and fined $4 million for Huang’s actions and those of others who provided more than $1 million in benefits, including luxury trips and a sham loan, to bribe then-Los Angeles City Councilman Jose Huizar to obtain city approval to build a 77-story skyscraper.
U.S. District Court Judge John Walter said the case exposed the “crushing costs of public corruption.”
At the conclusion of an 11-day trial that ended in November 2022, a jury found Shen Zhen guilty of three counts of honest service wire fraud, four counts of interstate and foreign travel in aid of bribery, and one count of bribery.
In 2010, Huang bought the L.A. Grand Hotel on Figueroa Street in what was part of Huizar’s district at the time.
“For more than five years, Huang bribed Councilman Huizar with cash, casino gambling chips, flights on private jets and commercial airlines, stays at luxury Las Vegas hotels and casinos, expensive meals, spa services, prostitution services, sham loans and $600,000 in collateral for Mr. Huizar to confidentially settle a sexual harassment lawsuit,” according to the suit, which further states that Huang remains a fugitive in China.
Huizar was sentenced in January to 13 years in federal prison for using his City Hall position to shake down real estate developers for at least $1.5 million in cash and benefits in exchange for help getting downtown real estate projects approved.
The Academy of Media Arts helps provide a pathway to college and career opportunities for those in disadvantaged areas. The academy’s founder and director, Dana Hammond, was a 9-year-old caregiver while his mother battled drug addiction. After entering into a lease agreement with Huang, the academy grew its enrollment and graduated 98% of its founding senior class, each of whom went on to four-year universities, the suit states.
ROME Nightclub has invested hundreds of thousands of dollars in plans, permits and a liquor license for its September opening of the establishment on the hotel’s rooftop, a project that has increased the hotel’s value by more than $15 million, the suit states.
But when Huang was unable to fill the vacancies at the hotel, he transformed all rooms into a homeless shelter and was paid $1.5 million a month while claiming that it was an emergency, short-term public health program, the suit states.
Academy students and nightclub financiers have been subjected to trash, assaults, hypodermic needles, violence and safety threats, according to the suit, which further states that some families have removed their children.