Marina del Rey Lease Sale Approved
After receiving assurances that a secretive group of foreign investors is not involved in drug trafficking, money laundering, criminal activity or terrorism, the Los Angeles County Board of Supervisors on Tuesday unanimously approved a complex deal giving the overseas interests a 49.9% stake in prime leases at Marina del Rey.
The $21.8-million deal--the largest foreign investment ever at the marina--spans at least four countries and involves 10 newly formed California corporations, a Cayman Islands tax shelter, a Luxembourg holding company, a Paris-based bank and foreign investors who value their privacy.
The marina is owned by the county. Businesses there operate on long-term leases that can be bought and sold much like conventional real estate.
County officials who oversee the marina said they do not know the identity or nationality of the investors. The leases involved are on 10 properties, including three hotels, two apartment complexes, restaurants, tourist facilities, a shopping center, office building and hundreds of boat slips.
“We asked and we were told right from the beginning that they wished to remain anonymous,” said Ted Reed, director of the county Department of Beaches and Harbors.
The seller of the lease interests is the marina’s largest leaseholder, Abraham M. Lurie, president and owner of Real Property Management Inc. Lurie said he, too, does not know the identity of the foreign investors who have become his business partners.
Lurie retains a controlling 50.1% interest in all 10 leases.
Foreign investors have made highly publicized purchases of privately owned Southern California real estate in recent years. The marina transaction differs from these in that it involves publicly owned land.
After The Times asked last month about the identity of the investors, county officials requested and received written assurances from the group’s Chicago attorney, Cornelius J. Sullivan, that the investors are successful foreign business persons who “prefer to protect their privacy and avoid the public limelight.
“They are wealthy individuals who . . . wish to remain anonymous in order to avoid hucksters, flimflam men, gold diggers, extortionists, kidnapers, terrorists and similar criminal elements that tend to gravitate to and feed upon the prominent and well-to-do,” Sullivan wrote county officials.
“Their principal activities involve real estate investments throughout the world as well as active commercial businesses in the areas of trading and general commerce,” Sullivan wrote.
Specific Disclaimers
“Their businesses do not in any way involve trafficking in drugs, laundering money, or other criminal activity. Further, they are not in any way related to what we in the United States refer to as the ‘Mafia,’ nor are their businesses in any way akin to those generally identified with the Mafia.”
According to Sullivan and county officials, the deal was structured specifically to protect the anonymity of the investors and minimize their U.S. taxes. The California companies involved are owned by a parent firm in the Cayman Islands, a Caribbean archipelago with tax laws favorable to international investors.
The Caymans company, Marina Enterprises International Ltd., is owned in turn by North American Real Estate Holding, based in Luxembourg, a small European duchy with incorporation laws requiring minimal public disclosure.
Thomas M. Goff, a principal in the Los Angeles office of the Laventhol & Horwath accounting firm, gave county officials a letter before the supervisors meeting stating that the investors “are not from any country suspected of terrorism, nor are they involved with any terrorist or subversive organization.”
Goff added that the investors do not live in a communist country and do not have any dealings with South Africa. In a telephone interview, he refused to identify the investors. “I am not at liberty to say,” Goff said. “I can’t provide any information.”
Reed said the deal was the first involving a marina lease where the new partners have remained anonymous. “This is quite common in Europe and other places,” he said. But he acknowledged that it is unique as far as the marina is concerned.
No Personal Knowledge
“I do not know anything about the investors,” he said. “I’m taking the word of attorneys and certified public accountants that they are who they represent they are. . . . Their statement was these people are not involved in illegal activities.”
Under provisions of the leases, Reed told the supervisors, the county cannot unreasonably withhold approval of a change in Lurie’s business partners.
He said the transaction must meet three tests--an assessment of the new partners’ financial condition, the effect on rents charged for apartments and boat slips, and whether the change is in the best interests of the marina.
On all three counts, Reed said, the deal should be approved.
Attorney David Naftalin, representing the Marina Tenants Assn., a group of apartment renters, disagreed. Urging the supervisors to reject the deal, he said the county has absolutely no information on the financial condition of the investors. To maintain proper control over public property, he said, the county “ought to know” who the investors are.
