Ex-Queen Mary operators ordered by judge to pay daily $250 fine in alleged PPP loan fraud

A view of the Queen Mary ship, with a modern Carnival Cruise ship behind
A view of the Queen Mary ship, with a modern Carnival Cruise ship behind, docked in Long Beach.
(Jay L. Clendenin / Los Angeles Times)

A federal bankruptcy judge issued a $250-a-day fine to former operators of the Queen Mary who are accused of stealing $2.4 million from a COVID-19 relief loan meant to pay their employees during the pandemic.

The judge’s order Tuesday arrives amid a bankruptcy proceeding over how a real estate firm maintained the aging ship as part of a lease agreement with the city of Long Beach, which owns the ship and a parcel of land around the port. Urban Commons set its sights on revamping the retired British ocean liner as a tourist destination, but within five years of the company taking over the lease, a real estate investment trust it had created filed for bankruptcy, leaving behind a trail of debt.

Beginning in 2016, Urban Commons held a 66-year lease to operate the Queen Mary and develop the surrounding land. It created Eagle Hospitality Real Estate Trust as an investment entity to generate revenue from the Queen Mary’s role as a hotel and from other hospitality ventures, but in January of this year, the trust filed for bankruptcy protection with roughly $500 million in debt.


The Queen Mary is in poor shape. This year the city of Long Beach took back control of the ship after Eagle Hospitality Trust filed for bankruptcy. A recent report estimated it could cost the city $175 million to preserve the ship and $190 million to scrap it or sink it. A 2017 report estimated $289 million worth of renovations and upgrades were required to keep the ship afloat.

At the center of the bankruptcy proceedings are Urban Commons executives Howard Wu and Taylor Woods. In court filings, U.S. Bankruptcy Judge Christopher S. Sontchi has labeled the two as “fraudsters.”

Documents filed in the bankruptcy proceedings allege that Woods and Wu applied for two federal loans that were earmarked for the Queen Mary’s employee payroll. Instead, according to the documents, the executives emptied their company bank account as soon as they received the loan and funneled the money into several other accounts.

Wu and Woods argued that they made an error on the loan application and in court documents said that they did not intend to apply under the Urban Commons Queensway company, which they no longer represent.

In November, Sontchi held Woods and Wu in contempt for not properly accounting for the roughly $2.4 million received from the federal Paycheck Protection Program loan and for not freezing their assets.

On Tuesday, in a 13-page sanctions order, Sontchi ordered the men to pay $250 a day starting Jan. 1. The fine is meant to force the men to comply with the court’s previous order about their financial accounts.


The court order notes that Woods has been “opaque” regarding his bank accounts and that Wu has made transfers to his wife’s bank account via the payment tool Zelle, despite the two men claiming that they have been upfront about their assets. Several other financial projections on the men’s assets have been scrutinized by the court.

“One would have thought the issuance of the Contempt Order and the Sanction Order would serve to make it clear to Mr. Woods and Mr. Wu that continued fraudulent behavior would not be tolerated by the Court and it was time to make a complete and forthright accounting,” Sontchi wrote. “Clearly, Defendants have not gotten the message.”

Attorneys for Wu and Woods did not immediately respond to requests for comment.