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The Real Deal Los Angeles

Dubai developer hits LA hotel group with fraud allegations

Owner of former Viceroy hotel alleges the company scared off visitors
September 08, 2017 06:30PM

FIVE Palm Jumeirah Dubai (Viceroy Hotel Group)

West Hollywood-based Viceroy Hotel Group is in legal hot water following a lawsuit brought by the owner of a $1 billion luxury hotel in Dubai.

Developer Kabir Mulchandani of Five Holdings filed a lawsuit in Los Angeles Superior Court on Thursday accusing Viceroy of fraud and mismanagement. 

Viceroy was hired in 2013 to run the 477-unit hotel now called FIVE Palm Jumeirah Dubai, Bloomberg reported.

Shortly after opening in March 2017 under the name Viceroy Palm Jumeirah Dubai, owner Five Holdings grew concerned after guests complained about the food and service.

But it discovered bigger issues, according to the complaint.

“Investigations by two respected accounting firms into the operations of the hotel have revealed fraudulent accountings, breach of trust, self-dealing, doctored invoices, phony budgets, unapproved budget overruns, and concealment of mismanagement by Viceroy Dubai,” Five Holdings said in its complaint.

The developer canceled its contract with Viceroy in June and changed the hotel’s name. 

It alleges that Viceroy claimed to be the rightful owner of the hotel and told travel agents that they could be fined or imprisoned if they booked rooms. Expedia stopped new bookings until its legal team could verify Viceroy’s claims, according to the suit.

Five Holdings estimates that it may have lost more than $100 million in contracts and bookings because of Viceroy’s ownership claims, according to Bloomberg. The complaint includes claims for libel and defamation. [Bloomberg] — Subrina Hudson