Huizar-linked Chinese developer sued by construction contractor

Shenzhen New World Group allegedly stop paying Psomas at 77-story DTLA project

Los Angeles /
Sep.September 03, 2020 01:50 PM
Wei Huang, Jose Huizar and a rendering of the 77-story tower at 333 S. Figueroa Street (Shenzhen New World Group, Getty)
Wei Huang, Jose Huizar and a rendering of the 77-story tower at 333 S. Figueroa Street (Shenzhen New World Group, Getty)

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.


Related Articles

arrow_forward_ios
Former Maywood Mayor Ramon Medina (Facebook)
Was ex-mayor of this small LA County city charged in alleged pay-to-play property scheme? Bingo!
Was ex-mayor of this small LA County city charged in alleged pay-to-play property scheme? Bingo!
Malibu led the way in nearly every metric, according to Douglas Elliman's fourth quarter report. (iStock)
LA housing market’s hot Q4 caps rollercoaster year
LA housing market’s hot Q4 caps rollercoaster year
Mitchell Englander (Getty)
Paying for his play: Ex-LA councilman sentenced in City Hall corruption scandal
Paying for his play: Ex-LA councilman sentenced in City Hall corruption scandal
Onni Group president Rossano de Cotiis and a rendering of Times Mirror Square
Onni Group’s 1.1K-unit Times Mirror Square project nears final approval
Onni Group’s 1.1K-unit Times Mirror Square project nears final approval
Mitchell Englander (Getty)
No jail time for ex-LA councilmember would be “two-tier” justice system: prosecutors
No jail time for ex-LA councilmember would be “two-tier” justice system: prosecutors
Ron Zeff's Carmel Partners has agreed to pay a $1 million fine in connection with the Jose Huizar scandal. Zeff split image at far left and right; Huizar is in middle. (Multi Family Forum, Jose Huziar, SCB)
Carmel Partners agrees to $1M fine in connection with Huizar scandal
Carmel Partners agrees to $1M fine in connection with Huizar scandal
From left, Michael Rosenfeld and Century Plaza, Jose Huizar and City Hall, Jeff Bezos and 1801 Angelo Drive (Getty Images)
LA’s biggest real estate stories of 2020
LA’s biggest real estate stories of 2020
Photo illustration by Alexis Manrodt for The Real Deal (Getty, iStock)
The secrets still to come in the FBI’s Jose Huizar investigation
The secrets still to come in the FBI’s Jose Huizar investigation
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...