The Securities and Exchange Commission (SEC) has taken action against Taylor Woods and Howard Wu.
The relevant complaint was filed on August 6, 2024, at the California Central District Court.
This case concerns two securities fraud schemes perpetrated by Defendants Taylor Woods and Howard Wu, involving investments in U.S.-based hotels, which resulted in investors losing over $70 million.
In the first scheme, Defendants fraudulently induced investors to consent to the sale of their investment interests—collectively worth approximately $169 million— in thirteen U.S.-based hotels, by falsely representing that, among other things, Defendants had secured an unaffiliated third-party buyer for all the hotel and that the investors would receive a pro rata share of the net proceeds from sale of the hotels to the buyer.
In the consent solicitations, the Defendants expressly acknowledged that the investors were agreeing to a sale rather than other strategic alternatives, which included placing the hotels into an overseas Real Estate Investment Trust (“REIT”) for public listing.
In fact, as Defendants well knew, there was no third-party buyer. Instead, the Defendants at all relevant times owned and controlled the supposed third-party buyer.
Defendants then intentionally exploited executed consent solicitations to consolidate as many of the thirteen hotels as possible for placement into a REIT for public listing in Singapore and assigned themselves a total of 15.2% of that REIT’s shares. While the REIT offering was pending, Woods and Wu compounded their misrepresentations by falsely attributing delays of payments promised to investors to, among other things, the (non-existent) third-party buyer’s purported insistence on
delaying payment until after the sales of all thirteen hotels had closed.
In the second scheme, which Defendants perpetrated after the REIT had filed for bankruptcy, Defendants fraudulently raised at least $1.775 million from a new set of investors, this time for the purported purpose of placing a bid to buy the hotels that had comprised the REIT out of bankruptcy and operate them. Despite having represented to investors that, among other things, their funds would be used solely for the hotels’ purchase price, would be placed in escrow, and would be returned to investors if the bid was unsuccessful, Defendants—before even placing the bid— misappropriated all the investors’ funds, applying the bulk of the funds to personal and unrelated business purposes.
Ultimately, Defendants failed to return at least $1.75 million owed to investors.
The SEC alleges that the defendants violated Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].
The Commission also seeks permanent injunctions enjoining the defendants from directly or indirectly participating in the issuance, purchase, offer or sale of any security. The Commission also seeks an order barring Defendants from acting as officers or directors of any issuer the securities of which are registered or which is required to file reports with the Commission, an order for Defendants to disgorge their ill-gotten gains plus prejudgment interest, and an order imposing civil penalties on Defendants.
Taylor Woods, age 52, currently resides in Boise, Idaho. Until 2021, he resided in this District, specifically in Orange County, California. Woods was (along with Wu) the co-founder and co-owner of Urban Commons LLC, U.S. Hospitality Investments LLC, and Sky Holdings LLC, and was likewise (along with Wu) the co-managing member of Urban Commons.
Howard Wu, age 41, is a resident of Los Angeles, California. Wu was (along with Woods) the co-founder and co-owner of Urban Commons LLC, U.S. Hospitality Investments LLC, and Sky Holdings LLC, and was likewise (along with Woods) the sole co-managing member of Urban Commons.
