Nazarian's company cut from downtown L.A. development

SBE Entertainment was expected to operate an SLS hotel on Bunker Hill

The developer of a massive downtown Los Angeles retail and entertainment complex has cut ties with a company founded by Sam Nazarian, the nightclub mogul whose drug use and past ties to convicted felons came to light during a recent gaming license investigation.

New York-based Related Cos. said in a statement that the development company will not be working with Nazarian's SBE Entertainment to develop and operate two towers and a large retail and entertainment complex designed by Frank Gehry on Bunker Hill.

"We made the decision not to move forward with SBE in early January and shared that with city and county representatives at that time," Related president Bill Witte said in a statement published in the Los Angeles Downtown News. Related didn't say why it was eliminating SBE from the development.

SBE was expected to operate an SLS Hotel in the project, once valued at $3 billion.  

A Related Cos. representative could not be reached to comment. But an attorney representing Nazarian said he would fight the decision. 

“They have no right to back out of the deal, and we are considering all legal options,” said Nazarian’s attorney Daniel Petrocelli.

Nazarian has made a fortune as the founder of SBE Entertainment, a company that has developed and operated some of the city's most popular nightclubs, restaurants and hotels.

But during a routine background investigation into Nazarian and his operations as part of his request for a gaming license in Las Vegas, investigators disclosed that Nazarian had made about $3 million in payments to a convicted felon, with other money going to Death Row Records founder Marion "Suge" Knight, who faces murder charges after a fatal hit-and-run incident.

Nazarian also admitted during a gaming license hearing that he used cocaine, but he described the payments as extortion.

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