Judge to appoint receiver for Myrtle Beach hotel at heart of fraud allegations

dwren@thesunnews.comOctober 3, 2013 

— A state judge said Thursday he will appoint a receiver to oversee the operations of an oceanfront hotel here that is at the heart of international fraud allegations and a bitter dispute over its ownership.

Judge Larry Hyman told lawyers for the hotel’s business partners to choose an impartial third-party to take over operations at The Sportsman Motor Inn by Monday or he will choose someone for them. Hyman decided to appoint a receiver over the objection of Gengmin Qiu, one of the business partners who sought to be given control of the property.

James Hills, a lawyer representing Qiu, said his client wanted to run the property because it would cost less than hiring a receiver.

Qiu and his brother – Gengwu Qiu, who lives in China – 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. Tang has filed a counterclaim against the brothers, saying they owe her more than $250,000 in salary and expenses for the work she’s already done.

Thursday’s hearing was only to appoint a receiver and Hyman did not hear evidence from either side about the theft and financial allegations.

Hyman also refused to hear evidence about a separate federal court case in New Jersey where lawyers for a Norwegian marine transportation company are seeking to collect a $7 million judgment against Qiu, who fled China in 2010 after defrauding the company in a ship-building transaction. Lawyers in New Jersey, where Qiu now lives, say they will investigate whether Qiu used any of the money from that deal to buy the Myrtle Beach hotel.

Hyman said the New Jersey case has no relevance to whether a receiver is needed to oversee The Sportsman. The allegations over financial wrongdoing at the hotel will be heard at a later date.

A receiver typically handles day-to-day operations of a property and its finances. Even with a receiver, however, The Sportsman’s fate is in doubt. The property has been vacant for years and is not suitable for operation as a hotel without further renovations. Gene Connell, a lawyer representing Tang, said his client doesn’t object to a receiver as long as work continues to get the hotel ready for business. Hills said Qiu is not sure whether any more money should be spent on the property. The property also could be seized to help repay the $7 million owed to the marine transportation company.

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. Hills said Qiu was not aware that Tang put the hotel up as collateral for a loan and the $200,000 was never recorded in the hotel company’s financial records.

Pally has filed a foreclosure lawsuit against the hotel’s owners. Qiu has filed a motion to intervene in that case in an attempt to stop the foreclosure. No court date has been set for that matter.

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.

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