MYRTLE BEACH — Lawyers for a Norwegian marine transportation company say they plan to investigate whether a Chinese businessman used money from a multi-million dollar ship-building fraud to purchase an oceanfront hotel here that has been the focus of a dispute between business partners over who should operate the property.
The business partners’ dispute is scheduled to play out in an Horry County courtroom Thursday afternoon. A separate federal court battle several states away, however, ultimately could decide the hotel’s fate.
I.M. Skaugen Marine Services Ltd. is suing Gengmin Qiu, one of the hotel’s partners, over $7 million he stole in a deal involving the construction of three ships that took place in China in 2009, according to court documents. Walter Timpone – a New Jersey lawyer representing the marine transportation company in court there – said Qiu might have used proceeds from the fraud to purchase The Sportsman hotel at 1405 S. Ocean Boulevard.
“I think that’s a reasonable assumption,” Timpone said.
Qiu was found guilty of the theft by a Chinese arbitrator in March 2012. Qiu did not attend the hearing.
Timpone and Kristoffer Burfitt, another lawyer representing Skaugen, already have identified properties in New Jersey and New York that were purchased with the stolen funds. A federal judge has given the lawyers permission to levy those properties in an attempt to recover some of the marine transportation company’s money, and Timpone said they might seek to do the same with the Myrtle Beach hotel.
“Oh yeah, we’re certainly going to be investigating that,” Timpone said.
James Hills, a Myrtle Beach lawyer who represents Qiu in the hotel dispute, could not be reached for comment.
Qiu’s wholly owned company – Zhejiang Changda Import and Export Co. Ltd. – was supposed to obtain permits for Skaugen’s three ships to be exported out of China after their construction. Qiu also was supposed to refund to Skaugen all value-added tax proceeds associated with those exports. Qiu passed along the refund for the first ship but kept the refund for the second ship.
Qiu then fled to the United States in February 2010, before construction of the third ship had been completed. Qiu came to the United States shortly after he had transferred the stolen money – totaling about $7 million – to this country through a shell corporation he formed to launder the funds, court records show. Taizhou, China, prosecutors issued an arrest warrant for Qiu in July 2010. An Interpol listing has shown that Qiu is wanted for fraud in China, but it is not clear whether there is an active warrant for his arrest.
Skaugen obtained a financial judgment against Qiu during the arbitration hearing in China and now is trying to collect on that judgment in the United States.
Gengmin Qiu – along with his brother, who lives in China – entered into a partnership with Myrtle Beach hotelier Judy Tang in early 2012 to purchase The Sportsman for $925,000, according to Horry County court records. Qiu and his brother put up the bulk of the purchase price and Tang was supposed to oversee renovation of the property 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.
Qiu and his brother now accuse Tang of taking money that should have gone to The Sportsman and using it to fix up her other hotel, the Casa del Oro on 14th Avenue South. Tang says she has not taken any money or supplies that were earmarked for repairs at The Sportsman.
Qiu and his brother are seeking 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 operations and put the brothers in control of the corporation that owns the hotel, called Travel Home 1405 LLC. Tang has filed a counterclaim, saying the brothers owe her more than $250,000 in salary and expenses for the work she’s already done.
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.
Meanwhile, Skaugen’s lawyers are working to reverse several property conveyances Qiu made in the days after a federal judge in New Jersey issued a temporary restraining order to keep him from transferring assets. Qiu transferred his residence in New Brunswick, N.J., and another property in that city to his sister in April. The next month, Qiu transferred to his brother an interest in a cooperative apartment he owns in Flushing, N.Y. Once those transfers are reversed, the lawyers will use proceeds from those properties and a Lexus automobile Qiu owns to help repay Skaugen.
“We’re trying to find any of his assets,” Timpone said, adding that Qiu has not been cooperative in identifying property he owns. The Myrtle Beach hotel, for example, was not included on a court-ordered list of assets Qiu had to provide Skaugen’s lawyers. Apart from the Lexus and the three New Jersey and New York properties the lawyers already knew about, Qiu said he owns $800 worth of furniture and $500 worth of clothing.
“This is hardly, by any stretch of the imagination, a full accounting,” Timpone said in court documents. “Absent, for instance, is a listing of any cash, bank accounts or securities holdings.”
Qiu and his brother learned 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. Qiu said he traveled to Myrtle Beach to look at Tang’s hotel but liked The Sportsman on the oceanfront better. RBC Bank had foreclosed on The Sportsman and was marketing the 25-unit property for almost $2.7 million. The Qiu brothers and Tang bought the hotel out of foreclosure for nearly one-third of the bank’s asking price.
Contact DAVID WREN at 626-0281.