A planned 77-story downtown tower at the center of Jose Huizar’s criminal trial is also subject to a lawsuit by the project’s construction contractor.
Psomas, a construction firm active across California, filed a breach of contract complaint against Shenzhen New World Group regarding the Chinese developer’s planned $700 million redevelopment of the LA Grand Hotel.
The complaint, filed in Los Angeles County Superior Court Tuesday, alleges that Shenzhen New World Group simply stopped making its monthly payments to Psomas, and now owes the contractor $503,000.
Additionally, Psomas alleges that Shenzhen New World Group created shell companies “Shen Zhen I” and “Shen Zhen II” to shield the developer from accumulating debts.
“The Shen Zhen entities manipulate assets between themselves without arms-length transactions and in disregard of legal formalities,” the lawsuit reads.
Psomas and Shenzhen New World Group didn’t respond to requests for comment Thursday.
The complaint sheds light on a vexed project that’s become synonymous with Huizar’s reign as City Council planning committee chairperson and DTLA development kingmaker. Federal prosecutors indicted Huizar on charges he ran a criminal enterprise that collected $1.5 million in bribes from real estate developers. A trial is scheduled for June 2021.
Shenzhen New World Group bought the 469-room Grand Hotel at 333 S. Figueroa Street in 2010 for $63 million out of foreclosure. The firm began plans for a sweeping expansion of the site, including construction of the tallest building west of the Mississippi River.
In 2018, the city granted approval for a project that included 224 apartments, a 559-room hotel, and 242 condos, plus nearly 30,000 square feet of commercial space.
It is unclear what, if any, construction work has gone into the project so far.
In May, federal prosecutors unsealed a plea deal by former Huizar staffer George Esparza that chronicled alleged bribes between Shenzhen New World Group and Huizar. The allegations include company chairperson Wei Huang providing Huizar $600,000 to settle a sexual harassment claim brought against Huizar by one of his former staff members.
Shenzhen New World Group is also one of four developers, including fellow Shenzen-based outfit Shenzhen Hazens, who allegedly financed Huizar junkets to Las Vegas and picked up his gambling and escort tabs.
The city attorney’s office took action in July to strip Shenzhen Hazens of approvals for that company’s downtown hotel redevelopment.
No such action has yet been taken at the LA Grand project, though the city attorney has proposed legislation to let city hall renege approval of projects tied to political corruption.