MYRTLE BEACH — The battle for control of an oceanfront hotel here is expected to play out in an Horry County courtroom this week, with two Chinese brothers – one of them a retired general in that country’s People’s Liberation Army – suing their Myrtle Beach-based business partner over allegations of missing construction materials and money.
Chinese citizens Gengwu Qiu, the retired general who lives in China, and his brother, New York resident Geng Min Qiu, are suing Myrtle Beach hotelier Judy Tang over who will take control of The Sportsman Motor Inn property at 1405 S. Ocean Boulevard. Both sides say they entered into a partnership in early 2012 to buy and fix up the property, with the brothers putting up the bulk of the purchase price and renovation funds and Tang overseeing the rehab work and day-to-day operations.
The 47-year-old hotel was supposed to reopen last year, but construction work proved to be more costly and time-consuming than planned, and the white concrete buildings that make up the hotel property remain closed.
Now, heading into the third year of their investment with no financial return in sight, the Qiu brothers are accusing Tang of misappropriating funds that were supposed to go toward The Sportsman’s rehab and using the money instead to fix up her other hotel, the Casa del Oro on 14th Avenue South.
A state judge on Thursday is scheduled to hear the Qiu brothers’ request for a temporary restraining order that would stop Tang from allegedly converting The Sportsman’s assets for her own use, prevent her from conducting any of the hotel’s day-to-day operations and put the brothers in control of the corporation that owns the hotel, called Travel Home 1405 LLC.
Tang has filed a counterclaim, accusing the brothers of locking her out of The Sportsman and failing to pay her more than $250,000 in salary and expenses for the work she’s done. Tang said in court documents that she is worried the brothers will “secret the monies earned from The Sportsman and place those in accounts in China” if they are given control of the hotel.
Tang says she has not taken any money or supplies that were earmarked for repairs at The Sportsman. Her lawyer, Gene Connell of Surfside Beach, says the dispute boils down to a culture clash over how business is conducted in China and how it’s done in America.
“They don’t understand the American way of doing business and that you have to get the proper permits and everything in place before you can start doing any work,” Connell said. “They don’t understand why it’s taking so long and costing so much, so they accused my client of stealing money.”
The brothers say they have no doubt their money has been misspent.
“I believe that Judy has stolen from me and my brother,” Geng Min Qiu said in an affidavit. “My brother has provided more money than we ever thought would be necessary for renovations to this hotel, and we have received no accountability of how it was spent. I have made many trips to Myrtle Beach to look at the hotel and see how things are progressing, but I kept being told that more money was needed and the work was not yet finished.”
Complicating matters is a $200,000 mortgage against the hotel that Tang received from a New York chiropractor in June 2012, purportedly to help fix up The Sportsman. The mortgage wasn’t filed until nearly a year after the loan was made and the chiropractor, Howard Pally, now says he has not been repaid. Pally has filed a foreclosure lawsuit against the hotel’s owners.
Pally isn’t the only one that hasn’t been paid, according to Horry County public records. Raimondi Construction Co. LLC and SRH Corp. filed separate mechanic’s liens in August 2012 claiming the hotel’s owners failed to pay more than $20,000 for construction work they did.
Other public records indicate far less was spent on The Sportsman than the hundreds of thousands of dollars the Chinese brothers say they gave Tang and the $200,000 loan Tang received. Two building permits have been issued since the brothers and Tang bought the hotel – one permit for about $40,000 worth of renovations to the buildings’ electric, plumbing and exterior and another for construction of a $3,000 fence.
The two contractors who filed mechanic’s liens say they were paid a combined $63,573 before the checks stopped coming. The mechanic’s liens are for the remainder of the money the contractors say they are owed.
Although Tang received the $200,000 loan in late June 2012, an inspector for the city of Myrtle Beach noted in an Aug. 2, 2012, report that renovations had ceased because The Sportsman’s owners had run out of money.
The brothers say Tang was not authorized to borrow money against the hotel. Tang says the brothers knew about the loan all along. In court documents, however, Geng Min Qiu says the $200,000 from that mortgage was never deposited into the corporate account.
“Where did this money go?” he said.
Connell says Tang can account for every penny she’s been given to spend on The Sportsman. However, some of the renovation receipts are missing, Connell said, because Tang claims Geng Min Qiu stole them from her home during one of his visits to Myrtle Beach. Geng Min Qiu says he didn’t commit any theft and, as a member of the corporation that owns the hotel, he has equal rights to the corporate records.
“Judy showed me where she kept the records and said that I could look at them whenever I wanted,” he said. “When I went to review the records, I believe that I found more than she thought I would and got upset.”
The brothers have filed an accountant’s affidavit alleging that Tang used $270,000 of their money to pay creditors for her other businesses or personal debts. The accountant also says Tang used $64,340 that was supposed to go to The Sportsman to remodel Casa del Oro. Another $40,626 in corporate debit card and check disbursements have no supporting documentation, according to the affidavit.
Paul Sesta – a construction worker who helped Tang make repairs to her buildings – filed an affidavit on the Qiu brothers’ behalf, saying sheetrock, tile, tools and other items that were supposed to be used at The Sportsman wound up at Tang’s other hotel.
“We were told from the beginning that if we kept it under budget [at The Sportsman], that we could use the remainder at the Casa del Oro,” Sesta said in the affidavit. Sesta said he threatened to tell Geng Min Qiu that he was being cheated and “all of a sudden, I was no longer in charge of anything.”
The Qiu brothers found out The Sportsman was for sale after seeing an advertisement in a New York-based, Chinese-language newspaper in which Tang was looking for an investor at the Casa del Oro. Geng Min Qiu said he traveled to Myrtle Beach and decided he liked The Sportsman on the oceanfront better. RBC Bank had foreclosed on the hotel and was marketing the 25-unit property for almost $2.7 million. The Qiu brothers and Tang bought the hotel out of foreclosure for $925,000.
Although the hotel has been vacant for years and renovation work stopped months ago, Myrtle Beach spokesman Mark Kruea said the property is not violating any of the city’s zoning laws.
“We’ve not had a complaint on the property, and as long as it’s secure – boarded up to keep trespassers and vagrants out – mowed and otherwise maintained, it’s not in violation.”
However, Geng Min Qiu said the longer the hotel stays vacant, the more money it’s going to cost to repair and the longer it will take for him and his brother to recoup their investment.
“It is imperative that I be given control of this property as soon as possible,” Geng Min Qiu said in court documents. “My brother cannot afford to keep throwing money at a hotel that cannot be opened.”
Contact David Wren at 626-0281