Investors in 6 Embassy Suite Hotels Sue on Fraud Charges
About 1,400 people who invested $98 million in limited partnerships to build six Embassy Suites hotels in California filed suit Thursday, contending that they were victims of a massive fraud scheme.
Four named plaintiffs filed the suit in U.S. District Court on behalf of themselves and the other investors across the country who participated in a plan to build hotels in El Segundo, Downey, Santa Ana, Oxnard and Napa and Burlingame in Northern California.
The lawsuit contends that the scheme was masterminded by Robert E. Woolley of Irving, Tex., who it said served as general partner of each of the six hotel limited partnerships. The lawsuit said Woolley and several associates lured about 1,400 investors into the project by distributing memoranda that omitted “crucial” facts.
Also named as defendants are Woolley’s son, Robert E. Woolley Jr., and his construction firm, Rewcon Inc. of Irving, Tex.; Charles M. Sweeney of San Mateo, Calif., and Landmark Suites of America Inc., all general partners of the Napa limited partnership, and Joseph J. Amoroso of Westlake Village, a general partner in the Oxnard development.
None of the defendants could be reached for comment. The suit accuses them of racketeering, fraud, unjust enrichment and violation of U.S. securities laws and California business codes.
The suit said the defendants falsely represented themselves as experts in hotel development, construction and management. Private placement memoranda circulated by the defendants “projected great success” in each of the six developments and promised significant returns on investments, the suit said.
But actual cash distributions to investors--promised to be about $59 million for all six hotels--fell far short, the suit said. Three of the projects generated no return and the three others provided returns of between 3% and 7% of what was promised, the suit said.
