Key Insights
- SEC files complaint against Taylor Woods and Howard Wu for two alleged fraud schemes involving U.S. hotel investments, resulting in over $70 million in investor losses.
- First scheme involved misrepresenting sale of $169 million in hotel interests; second scheme misappropriated $1.775 million raised for alleged bankruptcy hotel purchase.
LOS ANGELES (MarketsXplora) – The U.S. Securities and Exchange Commission (SEC) has filed a complaint against Taylor Woods and Howard Wu, accusing them of orchestrating two securities fraud schemes involving U.S.-based hotel investments that resulted in over $70 million in investor losses.
The complaint, filed on August 6, 2024, in the California Central District Court, alleges that Woods, 52, of Boise, Idaho, and Wu, 41, of Los Angeles, California, violated multiple securities laws, including Section 10(b) of the Exchange Act and Section 17(a) of the Securities Act.
According to the SEC, the first scheme involved fraudulently inducing investors to consent to the sale of their interests in thirteen U.S. hotels, collectively valued at approximately $169 million. The defendants allegedly misrepresented that they had secured an unaffiliated third-party buyer, promising investors a pro rata share of the net proceeds.
“In reality, there was no third-party buyer. The supposed buyer was owned and controlled by the defendants themselves,” a senior SEC official told MarketsXplora, speaking on condition of anonymity.
The complaint states that Woods and Wu then used the fraudulently obtained consents to consolidate the hotels into a Real Estate Investment Trust (REIT) for public listing in Singapore, assigning themselves 15.2% of the REIT’s shares.
In the second scheme, which occurred after the REIT’s bankruptcy, the defendants allegedly raised at least $1.775 million from a new group of investors under the guise of bidding to purchase the bankrupt REIT’s hotels. The SEC claims that contrary to their representations, Woods and Wu misappropriated these funds for personal and unrelated business purposes before even placing a bid.
“The defendants failed to return at least $1.75 million owed to investors,” the SEC official added.
The Commission is seeking permanent injunctions against Woods and Wu, barring them from participating in securities transactions and from serving as officers or directors of public companies. Additionally, the SEC is pursuing disgorgement of ill-gotten gains with prejudgment interest and civil penalties.
Woods and Wu were co-founders and co-owners of several entities, including Urban Commons LLC, U.S. Hospitality Investments LLC, and Sky Holdings LLC. They also served as co-managing members of Urban Commons.
The defendants could not be immediately reached for comment. It is unclear whether they have retained legal representation.
Meet Samson Ononeme, a dynamic writer, editor, and CEO of marketsxplora.com. With a passion for words and a sharp business acumen, he captivates readers with captivating storytelling and delivers insightful market analysis.