SEC v. Taylor Woods; and Howard Wu, No. 2:24-cv-06633, Central District of California (Aug. 7, 2024) — Complaint

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DEREK BENTSEN (Cal. Bar No. 232550)
Email: [email protected]

EDWARD B. GERARD (Cal. Bar No. 248053)
Email: [email protected]

MATTHEW B. REISIG (NY Bar No. 4898094)
Email: [email protected]

100 F Street, N.E.
Washington, DC 20549
Telephone: (202) 551-6426 (Bentsen)
Facsimile: (202) 772-9282 (Bentsen)

LOCAL COUNSEL
DONALD SEARLES (Cal Bar. No. 135705)
Email: [email protected]
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone: (323) 965-4573
Facsimile: (213) 443-1904

Attorneys for Plaintiff
Securities and Exchange Commission

IN THE UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE
COMMISSION,
PLAINTIFF,
v.
TAYLOR WOODS and HOWARD WU,

DEFENDANTS.

Case No.: 2:24-cv  -6633
COMPLAINT

DEMAND FOR JURY
TRIAL

Plaintiff, Securities and Exchange Commission (the “Commission”) alleges as
follows:

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JURISDICTION AND VENUE
1. This Court has subject matter jurisdiction over this action by authority of
Sections 20 and 22 of the Securities Act [15 U.S.C. §§ 77t and 77v] and Sections 21 and
Section 27 of the Exchange Act [15 U.S.C. §§ 78u and 78aa].
2. Venue for this action is proper in the Central District of California under
Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)] and under Section 27 of the
Exchange Act [15 U.S.C. § 78aa]. Certain of the acts, practices, transactions, and
courses of business alleged in this Complaint occurred within the Central District of
California, and were effected, directly or indirectly, by making use of means or
instrumentalities in interstate commerce, or the mails. For example, Defendants, who
were both residents of this District at all relevant times, committed many of the acts
detailed below within this District, where their Urban Commons entity was also
headquartered; and several of Defendants’ investor victims reside within this District.
SUMMARY OF ALLEGATIONS
3. This case concerns two securities fraud schemes perpetrated by Defendants
Taylor Woods and Howard Wu, involving investments in U.S.-based hotels, which
resulted in investors losing over $70 million.
4. In the first scheme, Defendants fraudulently induced investors to consent to
the sale of their investment interests—collectively worth approximately $169   million—
in thirteen U.S.-based hotels, by falsely representing that, among other things: (i)
Defendants had secured a n unaffiliated third-party buyer for all the hotels; (ii) the
investors’ consents, which Defendants solicited through consent solicitation statements
(“consent solicitations”) provided by Defendants, would be used to facilitate the sale of
all the hotels to that purported buyer; (iii) the investors would receive a  pro rata share of
the net proceeds from sale of the hotels to the buyer; and (iv) the investors would retain
a security interest in the hotels if the purported third-party buyer failed to make
payments due from the sale. In the consent solicitations, the Defendants expressly

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acknowledged that the investors were agreeing to a sale rather than other strategic
alternatives, which included placing the hotels into an overseas Real Estate Investment
Trust (“REIT”) for public listing. In fact, as Defendants well knew, there was no third-
party buyer. Instead, the Defendants at all relevant times owned and controlled the
supposed third-party buyer. Defendants then intentionally exploited executed consent
solicitations to consolidate as many of the thirteen hotels as possible for placement into a
REIT for public listing in Singapore and assigned themselves a total of 15.2% of that
REIT’s shares. While the REIT offering was pending, Woods and Wu compounded their
misrepresentations by falsely attributing delays of payments promised to investors to ,
among other things, the (non-existent) third-party buyer’s purported insistence on
delaying payment until after the sales of all thirteen hotels had closed.
5. In the second scheme, which Defendants perpetrated after the REIT had
filed for bankruptcy, Defendants fraudulently raised at least $1.775 million from a new
set of investors, this time for the purported purpose of placing a bid to buy the hotels that
had comprised the REIT out of bankruptcy and operate them. Despite having
represented to investors that, among other things, their funds would be used solely for
the hotels’ purchase price, would be placed in escrow, and would be returned to
investors if the bid was unsuccessful, Defendants—before even placing the bid—
misappropriated all the investors’ funds, applying the bulk of the funds to personal and
unrelated business purposes. Ultimately, Defendants failed to return at least $1.75
million owed to investors.
6. By reason of the conduct described above, the defendants violated, and
unless restrained and enjoined will continue to violate, Section 10(b) of the Exchange
Act [15 U.S.C. §78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and
Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]. The Commission also seeks
permanent injunctions enjoining the defendants from directly or indirectly participating
in the issuance, purchase, offer or sale of any security. The Commission also seeks an

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order barring Defendants from acting as officers or directors of any issuer the securities
of which are registered or which is required to file reports with the Commission, an
order for Defendants to disgorge their ill-gotten gains plus prejudgment interest, and an
order imposing civil penalties on Defendants.
DEFENDANTS
7. Taylor Woods, age 52, currently resides in Boise, Idaho. Until 2021, he
resided in this District, specifically in Orange County, California. Woods was (along
with Wu) the co-founder and co-owner of Urban Commons LLC, U.S. Hospitality
Investments LLC, and Sky Holdings LLC (each described below), and was likewise
(along with Wu) the co-managing member of Urban Commons.
8. Howard Wu, age 41, is a resident of Los Angeles, California. Wu was
(along with Woods) the co-founder and co-owner of Urban Commons LLC, U.S.
Hospitality Investments LLC, and Sky Holdings LLC (each described below), and was
likewise (along with Woods) the sole co-managing member of Urban Commons.
OTHER RELEVANT ENTITIES
9. Urban Commons LLC (“Urban Commons”) was a Delaware limited
liability company headquartered in Los Angeles, California. Woods and Wu founded the
company in 2008 and were its sole owners at all relevant times. The company offered
equity interests to purchase hotels in the U.S. and managed the hotels after the
purchases. The business registrations for Urban Commons are no longer in existence and
good standing under the laws of the State of Delaware and the company is defunct.
10. Eagle Hospitality Real Estate Investment Trust (the “Singapore REIT”)
was a REIT comprising twelve hotels managed by Urban Commons and six hotels
purchased from an unrelated company (“Seller A”). Urban Commons, as the Singapore
REIT’s sponsor, listed the Singapore REIT on the Singapore Exchange (“SGX”) on May
24, 2019. On March 23, 2020, trading in the Singapore REIT was voluntarily suspended,
and it entered Chapter 11 bankruptcy on January 18, 2021. The hotels that comprised the

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Singapore REIT were sold, as part of the bankruptcy, to parties not affiliated with
Woods, Wu, Urban Commons, or Sky Holdings (described below).
11. U.S. Hospitality Investments LLC (“U.S. Hospitality”) was a Delaware
limited liability company headquartered in Los Angeles, California. Woods and Wu
founded U.S. Hospitality in November 2017 and were, at all relevant times, its sole
owners. Woods and Wu used U.S. Hospitality to purchase the investors’ equity interests
in the thirteen hotels managed by Urban Commons, and to transfer as many of them as
possible (which turned out to be twelve of them) to the Singapore REIT (described
above) for public listing in Singapore. The business registrations for U.S. Hospitality are
no longer in existence and good standing under the laws of the State of Delaware and the
company is defunct.
12. Sky Holdings, LLC (“Sky Holdings”) was a Delaware limited liability
company headquartered in Los Angeles, California. Woods and Wu formed Sky
Holdings in July 2020 and were its sole owners. Woods and Wu used Sky Holdings to
raise capital from investors to make a bid to purchase the hotels placed into the
Singapore REIT out of bankruptcy. Sky Holdings’ business registrations have been
revoked and it is defunct.
FACTS
I. BACKGROUND
13. Defendants co-founded Urban Commons and were its sole owners and
managing members at all relevant times. Urban Commons offered investors equity
interests in single-purpose limited liability companies that would use the invested capital
to purchase hotels in the United States. Urban Commons also managed the hotels after
the purchases on behalf of the limited liability companies and received management fees
for doing so.
14. From at least 2011 through 2016, Urban Commons offered subscription
agreements to investors to acquire equity interests in the single-purpose limited liability

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companies that each purchased a U.S. hotel. The funds raised through these investment
offerings were used to acquire thirteen different hotel properties in the United States,
specifically: the Sheraton Pasadena, Holiday Inn Hotel & Suites Anaheim, Embassy
Suites by Hilton Anaheim North, Holiday Inn Hotel & Suites San Mateo, Four Points by
Sheraton San Jose Airport, the Westin Sacramento, Embassy Suites by Hilton Palm
Beach, the Queen Mary Long Beach, Renaissance Denver Stapleton, the Holiday Inn
Denver East, Holiday Inn Resort Orlando Suites Waterpark, the Crowne Plaza Danbury,
and the Ramada Hialeah Miami Airport (hereinafter “the Thirteen Hotels”).
II. THE SINGAPORE REIT SCHEME
A. Defendants Explore Strategic Alternatives for the Thirteen Hotels;
Recommend Against a REIT, and in Favor of a Third-Party Sale
15. In or around November 2016, the Defendants caused Urban Commons to
retain an investment bank (“Investment Bank A”) to explore consolidating the Thirteen
Hotels into a single entity to obtain senior secured financing or conduct an institutional
capital raise.
16. By May 2017, an executive with Investment Bank A (who would later serve
as Urban Commons’ president and as the Singapore REIT’s chief executive) introduced
Defendants to investment banks in Singapore, including the bank that would later
become the Singapore REIT’s lead underwriter (“Singapore Bank A”)  , to discuss the
potential public listing of the Thirteen Hotels through a REIT in a foreign market.
17. In a   June 2017 email, Defendants, as managing members of Urban
Commons, presented three strategic alternatives to investors in the Thirteen Hotels: (i)
hold on to the properties long-term; (ii) go public by forming a REIT; or (iii) sell the
hotels to a third-party buyer willing to pay a premium for them. In their  presentation,
Defendants acknowledged that they had consulted investment banks about going public
through a foreign-market REIT, but recommended against this option, stating:
[T]here are a number of additional execution risks, including the
unique nature of US based assets being held in a foreign market REIT,

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perhaps the first of its kind, so the risk of reliance on these valuations
is unclear. Further, there are large up-front costs associated with the
REIT formation process and a considerable amount of work required
to prepare for that event as well as a number of tax considerations
between the US and foreign market to consider, let alone foreign
exchange rate, global influence, market fluctuations, timing to market,
trading volume limitations, and currency risks to consider.
18. In this same June 2017 email, Defendants falsely told investors that
Defendants had found an   unaffiliated third-party buyer who was offering a premium
price for all Thirteen Hotels. Finally, in that same email, Defendants recommended that
investors pursue the sale of all Thirteen Hotels rather than refinancing the Thirteen
Hotels or placing them in a public REIT.
B. Defendants Pursue a Course At Odds With What They Recommended
to the Thirteen Hotels’ Investors
19. In November 2017, after recommending the sale of the Thirteen Hotels,
Defendants established U.S. Hospitality as a   Delaware limited liability corporation, in
which each Defendant held a 50% common equity interest.
20. In or around February 2018, prior to the circulation of the consent
solicitations,   the Defendants retained a major accounting firm (“Accounting Firm A”) to
conduct audits of the Thirteen Hotels ahead of listing on the SGX. Employees of Urban
Commons, at the direction and with the knowledge of the Defendants, told Accounting
Firm A that Urban Commons was consolidating the Thirteen Hotels into U.S.
Hospitality for an initial public offering (“IPO”) of a REIT on SGX targeted for
September 2018. These Urban Commons employees further told Accounting Firm A,
also at the direction and with the knowledge of the Defendants, that their initial plan was
to use the capital raised in the IPO to buy out investors of their equity interests in the
Thirteen Hotels.
21. Defendants intentionally hid from investors Defendants’ plan to use
investors’ consents to place the Thirteen Hotels (or as many of them as possible) into the

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Singapore REIT. Further, Defendants affirmatively misled the investors by representing
that instead of a REIT, Defendants were pursuing an outright sale of the Thirteen Hotels
to a third-party buyer. Similarly, Defendants intentionally hid from investors that they
intended to rely on the proceeds of the (undisclosed and disavowed) REIT to fund
payment to investors for their equity interests in the Thirteen Hotels. Instead, Defendants
falsely told investors that Defendants would use the proceeds of the outright sale of the
Thirteen Hotels to the (nonexistent) third-party buyer to  payout investors. At no time
prior to the public listing of the Singapore REIT did the Defendants correct these
misstatements and omissions to investors.
22. During this same time, Defendants also continued to pursue what would
become the Singapore REIT with Singapore Bank A and Accounting Firm A. To that
end, as Defendants knew, Singapore Bank A and Accounting Firm A were both
conducting due diligence on the Thirteen Hotels and doing so solely to facilitate the
Singapore REIT listing on SGX. Defendants did not just fail to tell investors of that
activity. Defendants affirmatively misled the investors by misrepresenting to them that
the activity then taking place consisted of the third-party buyer’s conducting due
diligence on the Thirteen Hotels, and Defendants’  negotiating with, and countering
offers made by, that buyer, as to each of the Thirteen Hotels. At no time prior to the
Singapore REIT did the Defendants correct these fraudulent and misleading statements
to investors.
23. Contrary to Defendants’ false and misleading representations, and as
Defendants knew, there were no negotiations at all with any such third-party buyer. U.S.
Hospitality was not a third party, as it was owned and controlled, at all times, solely by
the Defendants. Defendants, along with employees in the Finance Department at Urban
Commons, had set the prices and terms of the sales of each of the Thirteen Hotels to
U.S. Hospitality. The Defendants knew or were reckless in not knowing that they
effectively solely controlled U.S. Hospitality, as they had signed the operating

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agreement and other documents for U.S. Hospitality, including opening bank accounts as
its sole owners.  Thus, as Defendants knew, any “negotiations” were effectively merely
between Defendants and themselves.
24. Defendants’ misrepresentations and omissions regarding the true nature of
the transaction were material to investors because their actions were directly at odds
with what they recommended to investors and they failed to fully disclose how
Defendants were self-interested in the transaction. Reasonable investors would have
considered it material to their decision to sell their investments that the Defendants were
using the consent solicitations to facilitate the Singapore REIT, the very type of overseas
REIT the Defendants had cautioned investors against.
25. Reasonable investors would also have considered   it material to their
decision to sell their investments that the Defendants, not a third-party buyer, were on
the other side of the proposed transaction and acquiring control of their investments.
C. Defendants Use Materially Misleading Consent Solicitations to
 Fraudulently Induce Securities Sales by the Thirteen Hotels’ Investors
26. The consent solicitations that Defendants signed and began circulating to
each of the investors in the Thirteen Hotels in April 2018 disclosed, for the first time,
that the name of the purported third-party buyer was U.S. Hospitality. These consent
solicitations stated that Urban Commons would retain the common membership interests
in the buyer, U.S. Hospitality, but that those interests would be subordinate to the
preferred membership interests in U.S. Hospitality. As Defendants knew or recklessly
disregarded, however, these statements were materially misleading half-truths.
Defendants knew that they were effectively the only owners of U.S. Hospitality as there
were no to very little preferred membership interests. Further, as Defendants also knew
or recklessly disregarded, the operating agreement of U.S. Hospitality – which was
neither included in the solicitations nor provided to investors – vested all control over
U.S. Hospitality in Defendants’ hands.

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27. The consent solicitations acknowledged that the Defendants had
communicated three alternatives to the investors: (1) refinance the hotels to continue
holding them long-term, (2) sell the hotels, or (3) “combine the entities into a real estate
investment trust and engaging in a public listing, taking into account there are significant
execution and valuation risks in an initial public offering due to market conditions for
real estate investment trust.” The consent solicitations further stated that: (1) the
Defendants had recommended outright the sale to a third party to the investors, (2) in
response to Defendants’ recommendation, the investors had expressed “a strong
preference for the sale option,”   and (3) the Defendants believed the sale to be both in the
best interest of the investors and at fair prices.
28. The Defendants assisted in the drafting of the consent solicitations and had
ultimate authority over their approval for dissemination to investors. Although counsel
assisted the Defendants in drafting the consent solicitations, counsel was not aware of
Defendants’ direct communications to investors which created the false impression that
there was an actual third-party purchaser of the Thirteen Hotels.
29. Specifically, in their communications with investors after the consent
solicitations were sent, (i) the Defendants consistently and inaccurately referred to U.S.
Hospitality as a third-party buyer; and (ii) Urban Commons employees, at Defendants’
instruction, consistently and inaccurately referred to U.S. Hospitality as “they” or
“them” rather than “we” or “us.” By means of these communications, Defendants
knowingly or recklessly created the false appearance, misleading investors, that U.S.
Hospitality was under the control of persons or entities other than the Defendants.
30. The consent solicitations also represented that the investors would receive,
on a pro rata basis and according to a specified schedule, their respective shares of the
Thirteen Hotels’ net sales proceeds. As Defendants well knew or recklessly disregarded,
however, the Thirteen Hotels (or as many of them as possible, which turned out to
comprise twelve of the hotels) were going to be publicly listed in the Singapore REIT,

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not sold to a third-party buyer; therefore, any payment to the investors would be entirely
reliant on the success of the Singapore REIT.
31. The consent solicitations further represented that the investors would retain
a security interest in the Thirteen Hotels, which Urban Commons would continue to
manage, if the purported third-party buyer failed to make payments in accordance the
payment schedules set forth in the consent solicitations. As Defendants knew or
recklessly disregarded, however, these representations were false and materially
misleading, as they omitted the key fact that there was to be a public listing of a REIT,
not a third-party sale; and that the public listing of the REIT would remove the
investors’ security interest, since the Thirteen Hotels would, through the REIT offering,
no longer be owned by U.S. Hospitality.
32. The consent solicitations also failed to disclose that U.S. Hospitality’s
governing documents – its operating agreements – required it   to do everything it could
to facilitate the undisclosed REIT. Specifically, all versions of U.S. Hospitality’s
operating agreements dated December 20, 2017 or later required it “do all acts and
things reasonably by requested by the Manager [i.e. Urban Commons, and hence the
Defendants Woods and Wu] and to cast all votes . . . to facilitate an Initial Public
Offering.”   Further, U.S. Hospitality also agreed in a covenant to a promissory note dated
January 12, 2018, to not “sell, lease, or otherwise dispose” of the Thirteen Hotels
“except for the actions necessary to prepare for an underwritten initial public offering.”
The Defendants, acting knowingly or recklessly, did not, in the consent solicitations or
otherwise, disclose these facts to investors.
33. These misrepresentations and omissions in the consent solicitations were
material to investors because they concealed the fact that the Defendants were using the
consent solicitations to execute the Singapore REIT, the very type of overseas REIT the
Defendants had cautioned investors against.  Further, the fact that investors’ repayment
was contingent on an overseas REIT rather than an outright sale and that investors would

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not actually retain a security interest was material to investors as it put their potential
return and interests in the hotels at significantly greater risk. A reasonable investor
would consider it material to their decision to sell their investments that the Defendants
were using the consent solicitations to facilitate the very type of overseas REIT the
Defendants had cautioned investors against. Further, a reasonable investor would
consider it material to their decision to sell their investments that that their potential
investment return was contingent on the success of an overseas REIT rather than a sale,
and that the overseas REIT would extinguish any supposed security interest in the
Thirteen Hotels.
34. U.S. Hospitality completed its purchase of the investors’ investment
interests in the Thirteen Hotels on December 27, 2018.
D. The Defendants Lulled Investors for a Year, Continuing to
Misrepresent the True Nature of the Transaction
35. The consent solicitations for each of the Thirteen Hotels included a
payment schedule according to which investors were to receive the proceeds from the
sale of the hotels over the course of three separate payments. While it varied with each
hotel, the payment schedule: typically provided for the first payment to be made four
months from closing, the second, on average, seven months after closing, and a   final
payment to be made on January 31, 2019.
36. By October 2018, all the required payments set forth in the payment
schedules in the consent solicitations remained outstanding. The Defendants directed
employees of Urban Commons to tell investors that the buyer had chosen to not make all
the required payments until it had closed on all the properties, but that it would be
paying the five-percent interest penalty under the purchase agreements. In fact, however,
Defendants knew, or recklessly disregarded the fact, that the lack of payment stemmed
from delays in the public listing of the Singapore REIT, as Singapore Bank A, the lead
underwriter, continued to conduct due diligence on the Thirteen Hotels.

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37. The Defendants continued to conceal the true nature of the transaction from
investors, who were still unaware that payment for their equity interests was dependent
on the success of the Singapore REIT.
38. By late January 2019, payments from the purported buyer continued to
remain outstanding. The Defendants directed employees of Urban Commons to tell
investors that the sales of all the properties had finally closed and gave assurances that
payments would be forthcoming. To stave off any demands by investors to seek a
default against U.S. Hospitality, the Defendants highlighted how the outstanding balance
due to investors, under the consent solicitations, would accrue interest of 15 percent
starting on February 1, 2019, and that the buyer actually would have until July 31, 2019
to avoid default.
39. The Defendants continued, knowingly or recklessly, to conceal that
payment for the equity interests was reliant on the success of the Singapore REIT, and
did not disclose, that (i) payment of the five percent interest that had been accruing since
October 2018, as well as (ii) payment of the additional 15 percent interest accruing since
February 2019, would also be contingent on the success of the Singapore REIT.
Defendants’ materially misleading promises of interest payments, combined with their
materially misleading omission that any such payments depended on the success of the
undisclosed Singapore REIT, had the effect of lulling investors, thereby giving
Defendants more time to finalize the public listing of the Singapore REIT.
40. On or about April 3, 2019, the Defendants directed employees of Urban
Commons to tell investors that the buyer had “indicated that they are in the final stages
of their process and are moving their capital and planning on paying us off in the next 2-
3 weeks.” Defendants knew, or recklessly disregarded the truth, that this statement was
materially false and misleading, since there was no such buyer, and what was nearing its
“final stages” was only the launch of the undisclosed REIT, not any third-party sale.
Again, by this statement, the Defendants continued to mislead investors into believing

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that payment was imminent and would be made in full, and continued to conceal the fact
that receipt of these payments depended on the success of the Singapore REIT.
41. In the weeks prior to the public listing of the Singapore REIT in May 2019,
Defendants learned that the underwriters were recommending a lower offering price as
the prospective public listing was undersubscribed. The lower offering price would, as
Defendants knew or recklessly disregarded, reduce the proceeds from the offering –
proceeds that Defendants knew, or recklessly disregarded, were, in truth, essential both
to paying off existing debt on the properties in the Singapore REIT and to making the
payments  Defendants had promised to investors.
42. Because Defendants realized the public listing of the Singapore REIT
would not provide sufficient cash, and to buy more time to pay investors, the Defendants
approached several investors in the days prior to the public listing of the Singapore REIT
seeking extensions of payments due on behalf of U.S. Hospitality. The Defendants
misrepresented to these investors that U.S. Hospitality was in a position to pay 70-80
percent of the payment obligations, and that the remaining payments would be
forthcoming shortly if the entity could acquire a few additional months to make the
remaining payments, as the buyer was pursuing a public listing of a REIT in Singapore.
These extension agreements promised the investors an absolute 14 percent return
regardless of whether the payments came earlier than six months.
43. Contrary to the Defendants’ claims, U.S. Hospitality was not in a position
to make substantial payments to existing investors, and it was the Defendants who were
the sponsors and founders of the REIT, not a third-party buyer. The Defendants also
omitted from investors that payment under the extensions would remain reliant on the
success of the impending public listing of the Singapore REIT, which the Defendants
knew or were reckless in not knowing would not provide the necessary amounts of
capital funding to pay these investors. Further, the Defendants knowingly or recklessly
failed to disclose to investors their role as sponsors and founders of the REIT and that

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payment under the extensions would be reliant on the future market value of the
Singapore REIT shares, with such payments being possible only to the extent the
Singapore REIT’s shares could be sold by the Defendants or others at high enough
prices to fund them.
44. On or about May 24, 2019, the Singapore REIT, which contained the
Thirteen Hotels that the investors had sold to U.S. Hospitality, except the Ramada
Hialeah Miami Airport, commenced its initial public offering on SGX. The Defendants
stood to benefit from the public listing of the Singapore REIT, had it been successful, as
they each received 66,101,999 shares for a combined 15.2 percent interest in the
Singapore REIT. These shares were represented in the Singapore REIT’s prospectus as
explicitly serving as purchase consideration for the U.S. Hospitality portfolio. The
Defendants knew, and implicitly acknowledged with their receipt of these shares, that
they were, at all times, the controlling owners of U.S. Hospitality. At a listing price of
$0.78, these shares represented nearly $51.6 million of value to each Defendant.
E. After the Singapore REIT’s IPO, the Defendants Engaged in a Scheme
to Further Lull Investors and Conceal Their Fraud
45. The public listing of the Singapore REIT did not return sufficient cash to
pay the outstanding payments owed to investors who had sold their equity interests to
U.S. Hospitality. Full payment under the purchase and sale agreements with U.S.
Hospitality was due on January 31, 2019. The default date under these agreements was
July 31, 2019.
46. As the founders of the Singapore REIT, the Defendants and their collective
15.2 percent equity interest in the offering were subject to a six-month lock-up of all the
shares and then a further six-month lock-up of half of the shares. As a result, the
Defendants could not use proceeds from the sale of their shares to pay investors, if they
chose, until six or twelve months after the public listing. Faced with an inability to pay
investors in the Thirteen Hotels as promised, Defendants caused U.S. Hospitality to

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en  ter into an assignment and assumption agreement with Seller A (a company described
in ¶ 10 above), which provided that Seller A would assume the debts U.S. Hospitality
owed the investors in the Thirteen Hotels. As consideration, Seller A received shares in
the Singapore REIT in the same amount as the debt owed to investors. Defendants
knowingly or recklessly failed to disclose this assignment and assumption agreement to
investors at the time.
47. Seller A had an existing business relationship with the Defendants. Seller A
previously sold 6 other hotels to entities solely controlled by the Defendants to
consolidate them with the twelve hotels of U.S. Hospitality for placement into the
Singapore REIT. In lieu of cash from Defendants for the six hotels, Seller A received
approximately $252 million worth of shares in the Singapore REIT.
48. The prospectus of the Singapore REIT represented that Seller A and
the Defendants were unrelated and did not disclose many of the agreements
between them, and hence, the full scope of their close relationship was not known
to foreign regulators, the underwriters including Singapore Bank A, investors in
the Thirteen Hotels (to whom the Defendants did not, in any event, furnish the
prospectus), and foreign investors in the public listing.
49. On August 1, 2019, the Defendants, on behalf of U.S. Hospitality,
drafted, signed, and sent a default notice from U.S. Hospitality, which they
continued to solely own, to Seller A.  At or about the same time, in a separate
communication, the Defendants told Seller A to ignore the default
notice.  Thereafter, the Defendants continued to be aware both that Seller A was
selling its shares and how much, if any, of the resulting sale proceeds, were being
transferred to U.S. Hospitality to  pay investors who had sold the Thirteen Hotels
to it.
50. On March 24, 2020, trading in the Singapore REIT was voluntarily
halted on SGX.

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51. On or about March 30, 2020, in a letter to investors, the Defendants
disclosed for the first time U.S. Hospitality’s agreements with Seller A, including
the assignment and assumption and the default notice. The Defendants did not,
however, disclose to investors that Defendants had, on or about the same date as
the default notice, separately instructed Seller A to ignore the default notice. The
Defendants told the investors that Seller A was the buyer. The Defendants knew
or were reckless in not knowing this representation was materially false and
misleading. As founders and directors of the Singapore REIT, the Defendants
knew or recklessly disregarded that its prospectus – which was not publicly
disclosed in the United States – clearly stated that it had been the Defendants who
had acquired the U.S. Hospitality properties in addition to purchasing the 6 hotels
from Seller A. Through these misrepresentations, the Defendants continued,
knowingly or recklessly, to conceal their fraudulent scheme and lull investors.
52. In this same letter, the Defendants also misrepresented the reason
why the investors no longer had any pledged security interests in the Thirteen
Hotels, stating that the Defendants had converted these interests into equity
pledges in the Singapore REIT, believing this action to have been in the best
interests of the investors.  In reality, however, as the Defendants knew, or
recklessly disregarded the truth of the fact that, they had converted the pledged
security interests because hotels encumbered by such pledges could not be
included in a   publicly listed REIT. Since the equity pledges were now tied to
publicly traded shares in the Singapore REIT that had been halted from trading,
the Defendants started in this letter falsely and misleadingly to blame the global
COVID-19 pandemic as the cause of the investor losses.  By so doing, Defendants
knowingly or recklessly further lulled and concealed from investors Defendants’
responsibility for the fraud in which Defendants had engaged to the detriment of
their investors.

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53. On May 26, 2020, the Singapore REIT received an inquiry from
SGX concerning material interested person transactions that were not disclosed in
the Singapore REIT offering, which led the Defendants to resign as directors of
the Singapore REIT. By January 18, 2021, the hotels that formed the REIT filed
Chapter 11 bankruptcy.
III. THE SKY HOLDINGS SCHEME
54.  Prior to entering bankruptcy, the hotels comprising the Singapore
REIT began to experience declines in cash flow, resulting in a series of defaults,
culminating in the acceleration of the Singapore REIT’s primary loan. As noted
above, on March 24, 2020, trading of the Singapore REIT was halted. As a result
of this  financial distress, from April to December 2020, the Singapore REIT
underwent a process to sell or restructure its hotel assets.
55. In or around June 2020, Defendants formed Sky Holdings for the
purpose of restructuring and acquiring the distressed Singapore REIT’s assets.
After the Singapore REIT restructuring failed and it filed for bankruptcy,
Defendants then shifted their focus to organizing a bid to acquire the hotels out of
bankruptcy.
56. Between around January and May 2021, Defendants, through Sky
Holdings, raised at least $1.775 million from U.S. investors purportedly to fund
the purchase of the hotels out of bankruptcy. In exchange for their investment,
Defendants offered investors equity interests in Sky Holdings.
57. In written investor materials and oral statements, Defendants
knowingly or recklessly misrepresented to potential and actual investors that (1)
Defendants had secured $350 million in debt financing commitments and needed
the remaining funds it was soliciting from investors to complete the purchase of
the hotels in bankruptcy; (2) the proceeds of the securities offering would be used
solely for the purchase price for the hotels (with Defendants paying for any legal

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and administrative expenses related to the bid); and (3) the offering’s proceeds
would be held in escrow and would be returned if the bid was unsuccessful.  All
these statements were false. To encourage investors to act quickly, Defendants
further misrepresented that there were limited investor slots and the funds being
solicited were needed immediately because of the purported impending deadline
for submitting the bid and completing the transaction.
58. During the period of the Sky Holdings securities offering, Defendants
were facing significant financial issues (with little to no cash flow), both
personally and across their businesses, and were in desperate need for capital. The
funds received from Sky Holdings investors comprised the bulk of Sky Holdings’
deposits for the period from January to May 2021. Rather than use these proceeds
as they represented to investors, Defendants, who were the sole signatories on Sky
Holdings’ account, and controlled the disbursement of all Sky Holdings funds,
knowingly and/or recklessly  misappropriated all of the funds raised through the
offering, paying nearly $1 million to either themselves or to shore up their outside
businesses, and using the remainder for legal and administrative expenses they
had told investors they, rather than investors, would pay.
59. Throughout 2021, Defendants attempted to secure debt financing for
their bid, but were unsuccessful. Defendants never received financing
commitments from any source. Due to lack of capital and other reasons, including
their involvement in the failed Singapore REIT, Defendants’ financial adviser and
counsel repeatedly advised Defendants that their chance of winning the bid was
remote. Throughout the bankruptcy process, Defendants were aware of the bid
procedures and bid deadline of May 14, 2021.
60. Whether or not Defendants had secured debt financing was material
to investors’ decision to invest as it would determine, in large part, the likelihood
Defendant would have the ability to actually purchase the hotel assets out of

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bankruptcy. Reasonable investors would have considered it material to their
decision to invest in Sky Holdings that the Defendants had not secured any debt
financing for their bid – let alone $350 million as the Defendants had represented.
61. On or about May 14, 2021, Defendants, through a separate entity
Constellation Hospitality Group, submitted a bid to purchase the hotels, which
included a deposit of $10 million of funds into escrow. By the time of the bid,
Defendants had already spent the Sky Holdings investment offering proceeds and
were forced to borrow the funds needed for the deposit. The next day, counsel for
the Singapore REIT in bankruptcy notified Defendants that their bid was
insufficient because they failed to comply with the bid procedures, including, but
not limited to, failing to provide proof of financing commitments and submitting a
wholly inadequate deposit. On or about June 10, 2021, the deposit funds were
returned to Defendants’ borrower.
62. Following Defendants’ unsuccessful bid, Sky Holdings investors
demanded the return of their funds in accordance with the terms of the investor
agreements and Defendants’ promises. In response, Defendants knowingly and or
recklessly lulled investors with continued false representations in oral statements
and text messages that they were unable to return their funds because they were
tied up in escrow with the bankruptcy court. Despite having assured investors in
their Sky Holdings offering that the investors’ funds would be held in escrow and
would be returned if the bid was unsuccessful, Defendants failed to return investor
funds in the amount of at least $1.75 million following the rejection of their bid.
63. It was material to investors that their investment would be used solely for
purchase bid of the hotel assets and that their funds would be held in escrow rather than
misappropriated for Defendants’ personal expenses because otherwise their investment
would be put at considerable risk. Reasonable investors would have considered it
material to their decision to invest in Sky Holdings that despite their agreements and

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statements to the contrary, the Defendants would use Sky Holdings investors’ funds for
their outside businesses and to pay legal and administrative expenses instead of holding
those funds in escrow for the bid, and that by so doing, the Defendants would not be able
to return the investors’ funds as promised if the bid was unsuccessful.
IV. TOLLING AGREEMENTS
64. Between July 2023 and March 2024, Defendants each entered into
three separate tolling agreements with the SEC. Each tolling agreement specifies a
period of time (a “tolling period”) in which “the running of any statute of
limitations applicable to any action or proceeding against [Defendants] authorized,
instituted or brought by ... the Commission ... arising out of the [Commission’s
investigation of Defendants’ conduct],  including any sanctions or relief that may
be imposed therein, is tolled and suspended....” Each tolling agreement further
provides that the Defendants “shall not include the tolling period in the calculation
of the running of any statute of limitations or for any other time-related defense
applicable to any proceeding, including any sanctions or relief that may be
imposed therein, in asserting or relying upon any such time-related defense.”
Collectively, these agreements tolled the running of any limitations period or any
other time-related defenses available to each of the Defendants for a period of
approximately twelve months and 18 days, thereby preserving the timeliness of
the Commission’s claims for civil penalties as to all conduct in or after July 2018.
FIRST CAUSE OF ACTION
Violation of Section 10(b) of the Securities Act [15 U.S.C. § 78j(b)]
and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]
(BOTH DEFENDANTS)
65. The Commission realleges and incorporates by reference the
allegations contained in Paragraphs 1 through 64 above.
66. Defendants Woods and Wu, by engaging in the conduct described

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above, each,  directly or indirectly, by the use of means or instrumentalities of
interstate commerce or use of the mails, in connection with the purchase or sale of
securities, with scienter, (a) employed devices, schemes, or artifices to defraud;
(b) made untrue statements of a material fact or omitted to state a material fact
necessary in order to make the statements made, in the light of the circumstances
under which they were made, not misleading; and (c) engaged in acts, practices, or
courses of business that operated or would operate as a fraud and deceit upon
other persons.
67. By reason of the foregoing, Defendants each violated, and unless
restrained and enjoined will continue to violate, Section 10(b) of the Exchange
Act [15 U.S.C. §78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
SECOND CAUSE OF ACTION
Violation of Section 17(a) of the Securities Act [15 U.S.C. §§   77q(a)]
(BOTH DEFENDANTS)
68. The Commission realleges and incorporates by reference the
allegations contained in Paragraphs 1   through 2, 5 through 12, and 54 through 64,
above.
69. By engaging in the conduct described above, Defendants each, in the
offer or sale of securities, and by the use of the means or instruments of
transportation or communication in interstate commerce or by use of the mails,
directly or indirectly: (a) employed devices, schemes, or artifices to defraud; (b)
obtained money or property by means of untrue statements of material facts of by
omitting to state a material fact necessary to make the statements   made, in light of
the circumstances under which they were made, not misleading; and (c) engaged
in transactions, practices, or courses of business which operated   or would operate
as a fraud or deceit upon the buyer.
70. By reason of the foregoing, Defendants each, directly or indirectly

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violated, and unless enjoined will continue to violate, Section 17(a) of the
Securities Act [15 U.S.C. § 77q(a)].
PRAYER FOR RELIEF
 WHEREFORE, the Commission respectfully requests that the Court enter a Final
Judgment:
I.
  Finding that Defendants Woods and Wu committed the violations of the
Federal Securities Laws as alleged in this Complaint.
II.
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of Civil
Procedure, permanently enjoining Defendants Woods and Wu and their officers, agents,
servants, employees, and attorneys, and those persons in active concert or participation
with any of them, who receive actual notice of the judgment by personal service or
otherwise, and each of them, from:
a.  violating the federal securities laws alleged in this complaint:
1. Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule 10b-5
thereunder [17 C.F.R. § 240.10b-5]; and
2.   Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]; and
b. directly or indirectly, including, but not limited to, through any entity he owns
or controls, participating in the issuance, purchase, offer or sale of any
security; provided, however, that such injunction shall not prevent him from
purchasing or selling securities listed on a national securities exchange for his
own personal account in his own name.
III.
Ordering Defendants to disgorge all ill-gotten gains obtained as a result of the acts
or courses of conduct alleged in this Complaint, together with prejudgment interest

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thereon, pursuant to Section 21(d)(3), (d)(5) and 21(d)(7) of the Exchange Act [15
U.S.C. §§ 78u(d)(3), 78u(d)(5) and 78u(d)(7)].
IV.
Ordering Defendants to pay civil penalties pursuant to Section 20(d) of the
Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C.
§ 78u(d)(3)].
V.
Permanently barring Defendants from serving as an officer or director of any
public company pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. §
78u(d)(2].
VI.
 Retaining jurisdiction of this action in accordance with the principles of equity
and the Federal Rules of Civil Procedure in order to implement and carry out the terms
of all orders and decrees that may be entered, or to entertain any suitable application or
motion for additional relief within the jurisdiction of this Court.
VII.
Granting such other and further relief as this Court may determine to be just and
necessary.
DEMAND FOR JURY TRIAL
Pursuant to Federal Rule of Civil Procedure 38, the Commission demands trial by
jury.
 Dated: August 6, 2024        /s/    Derek Bentsen

Donald Searles
Derek Bentsen
Edward B. Gerard
Matthew B. Reisig
Attorneys for Plaintiff
Securities and Exchange Commission

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DEREK BENTSEN (Cal. Bar No. 232550) 
Email: [email protected]  
EDWARD B. GERARD (Cal. Bar No. 248053) 
Email: [email protected]  
MATTHEW B. REISIG (NY Bar No. 4898094) 
Email: [email protected]  
100 F Street, N.E. 
Washington, DC 20549 
Telephone: (202) 551-6426 (Bentsen) 
Facsimile: (202) 772-9282 (Bentsen) 
 
LOCAL COUNSEL 
DONALD SEARLES (Cal Bar. No. 135705) 
Email: [email protected] 
444 S. Flower Street, Suite 900 
Los Angeles, California 90071 
Telephone: (323) 965-4573 
Facsimile: (213) 443-1904 
 
Attorneys for Plaintiff 
Securities and Exchange Commission 
  

IN THE UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

 
 
SECURITIES AND EXCHANGE 
COMMISSION, 

PLAINTIFF, 

v. 

TAYLOR WOODS and HOWARD WU,  
 

DEFENDANTS. 
 
 

Case No.: 2:24-cv-6633 

COMPLAINT 

 
DEMAND FOR JURY 
TRIAL 

 

Plaintiff, Securities and Exchange Commission (the “Commission”) alleges as 

follows: 

Case 2:24-cv-06633   Document 1   Filed 08/06/24   Page 1 of 24   Page ID #:1

mailto:[email protected]
mailto:[email protected]
mailto:[email protected]


 

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JURISDICTION AND VENUE 

1. This Court has subject matter jurisdiction over this action by authority of 

Sections 20 and 22 of the Securities Act [15 U.S.C. §§ 77t and 77v] and Sections 21 and 

Section 27 of the Exchange Act [15 U.S.C. §§ 78u and 78aa].  

2. Venue for this action is proper in the Central District of California under 

Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)] and under Section 27 of the 

Exchange Act [15 U.S.C. § 78aa]. Certain of the acts, practices, transactions, and 

courses of business alleged in this Complaint occurred within the Central District of 

California, and were effected, directly or indirectly, by making use of means or 

instrumentalities in interstate commerce, or the mails. For example, Defendants, who 

were both residents of this District at all relevant times, committed many of the acts 

detailed below within this District, where their Urban Commons entity was also 

headquartered; and several of Defendants’ investor victims reside within this District.  

SUMMARY OF ALLEGATIONS 

3. This case concerns two securities fraud schemes perpetrated by Defendants 

Taylor Woods and Howard Wu, involving investments in U.S.-based hotels, which 

resulted in investors losing over $70 million.  

4. In the first scheme, Defendants fraudulently induced investors to consent to 

the sale of their investment interests—collectively worth approximately $169 million—

in thirteen U.S.-based hotels, by falsely representing that, among other things: (i) 

Defendants had secured an unaffiliated third-party buyer for all the hotels; (ii) the 

investors’ consents, which Defendants solicited through consent solicitation statements 

(“consent solicitations”) provided by Defendants, would be used to facilitate the sale of 

all the hotels to that purported buyer; (iii) the investors would receive a pro rata share of 

the net proceeds from sale of the hotels to the buyer; and (iv) the investors would retain 

a security interest in the hotels if the purported third-party buyer failed to make 

payments due from the sale. In the consent solicitations, the Defendants expressly 

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acknowledged that the investors were agreeing to a sale rather than other strategic 

alternatives, which included placing the hotels into an overseas Real Estate Investment 

Trust (“REIT”) for public listing. In fact, as Defendants well knew, there was no third-

party buyer. Instead, the Defendants at all relevant times owned and controlled the 

supposed third-party buyer. Defendants then intentionally exploited executed consent 

solicitations to consolidate as many of the thirteen hotels as possible for placement into a 

REIT for public listing in Singapore and assigned themselves a total of 15.2% of that 

REIT’s shares. While the REIT offering was pending, Woods and Wu compounded their 

misrepresentations by falsely attributing delays of payments promised to investors to, 

among other things, the (non-existent) third-party buyer’s purported insistence on 

delaying payment until after the sales of all thirteen hotels had closed.  

5. In the second scheme, which Defendants perpetrated after the REIT had 

filed for bankruptcy, Defendants fraudulently raised at least $1.775 million from a new 

set of investors, this time for the purported purpose of placing a bid to buy the hotels that 

had comprised the REIT out of bankruptcy and operate them. Despite having 

represented to investors that, among other things, their funds would be used solely for 

the hotels’ purchase price, would be placed in escrow, and would be returned to 

investors if the bid was unsuccessful, Defendants—before even placing the bid—

misappropriated all the investors’ funds, applying the bulk of the funds to personal and 

unrelated business purposes. Ultimately, Defendants failed to return at least $1.75 

million owed to investors.  

6. By reason of the conduct described above, the defendants violated, and 

unless restrained and enjoined will continue to violate, Section 10(b) of the Exchange 

Act [15 U.S.C. §78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and 

Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]. The Commission also seeks 

permanent injunctions enjoining the defendants from directly or indirectly participating 

in the issuance, purchase, offer or sale of any security. The Commission also seeks an 

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order barring Defendants from acting as officers or directors of any issuer the securities 

of which are registered or which is required to file reports with the Commission, an 

order for Defendants to disgorge their ill-gotten gains plus prejudgment interest, and an 

order imposing civil penalties on Defendants. 

DEFENDANTS 

7. Taylor Woods, age 52, currently resides in Boise, Idaho. Until 2021, he 

resided in this District, specifically in Orange County, California. Woods was (along 

with Wu) the co-founder and co-owner of Urban Commons LLC, U.S. Hospitality 

Investments LLC, and Sky Holdings LLC (each described below), and was likewise 

(along with Wu) the co-managing member of Urban Commons. 

8. Howard Wu, age 41, is a resident of Los Angeles, California. Wu was 

(along with Woods) the co-founder and co-owner of Urban Commons LLC, U.S. 

Hospitality Investments LLC, and Sky Holdings LLC (each described below), and was 

likewise (along with Woods) the sole co-managing member of Urban Commons.  

OTHER RELEVANT ENTITIES 

9. Urban Commons LLC (“Urban Commons”) was a Delaware limited 

liability company headquartered in Los Angeles, California. Woods and Wu founded the 

company in 2008 and were its sole owners at all relevant times. The company offered 

equity interests to purchase hotels in the U.S. and managed the hotels after the 

purchases. The business registrations for Urban Commons are no longer in existence and 

good standing under the laws of the State of Delaware and the company is defunct.  

10. Eagle Hospitality Real Estate Investment Trust (the “Singapore REIT”) 

was a REIT comprising twelve hotels managed by Urban Commons and six hotels 

purchased from an unrelated company (“Seller A”). Urban Commons, as the Singapore 

REIT’s sponsor, listed the Singapore REIT on the Singapore Exchange (“SGX”) on May 

24, 2019. On March 23, 2020, trading in the Singapore REIT was voluntarily suspended, 

and it entered Chapter 11 bankruptcy on January 18, 2021. The hotels that comprised the 

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Singapore REIT were sold, as part of the bankruptcy, to parties not affiliated with 

Woods, Wu, Urban Commons, or Sky Holdings (described below). 

11. U.S. Hospitality Investments LLC (“U.S. Hospitality”) was a Delaware 

limited liability company headquartered in Los Angeles, California. Woods and Wu 

founded U.S. Hospitality in November 2017 and were, at all relevant times, its sole 

owners. Woods and Wu used U.S. Hospitality to purchase the investors’ equity interests 

in the thirteen hotels managed by Urban Commons, and to transfer as many of them as 

possible (which turned out to be twelve of them) to the Singapore REIT (described 

above) for public listing in Singapore. The business registrations for U.S. Hospitality are 

no longer in existence and good standing under the laws of the State of Delaware and the 

company is defunct. 

12. Sky Holdings, LLC (“Sky Holdings”) was a Delaware limited liability 

company headquartered in Los Angeles, California. Woods and Wu formed Sky 

Holdings in July 2020 and were its sole owners. Woods and Wu used Sky Holdings to 

raise capital from investors to make a bid to purchase the hotels placed into the 

Singapore REIT out of bankruptcy. Sky Holdings’ business registrations have been 

revoked and it is defunct. 

FACTS 

I. BACKGROUND 

13. Defendants co-founded Urban Commons and were its sole owners and 

managing members at all relevant times. Urban Commons offered investors equity 

interests in single-purpose limited liability companies that would use the invested capital 

to purchase hotels in the United States. Urban Commons also managed the hotels after 

the purchases on behalf of the limited liability companies and received management fees 

for doing so. 

14. From at least 2011 through 2016, Urban Commons offered subscription 

agreements to investors to acquire equity interests in the single-purpose limited liability 

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companies that each purchased a U.S. hotel. The funds raised through these investment 

offerings were used to acquire thirteen different hotel properties in the United States, 

specifically: the Sheraton Pasadena, Holiday Inn Hotel & Suites Anaheim, Embassy 

Suites by Hilton Anaheim North, Holiday Inn Hotel & Suites San Mateo, Four Points by 

Sheraton San Jose Airport, the Westin Sacramento, Embassy Suites by Hilton Palm 

Beach, the Queen Mary Long Beach, Renaissance Denver Stapleton, the Holiday Inn 

Denver East, Holiday Inn Resort Orlando Suites Waterpark, the Crowne Plaza Danbury, 

and the Ramada Hialeah Miami Airport (hereinafter “the Thirteen Hotels”).  

II. THE SINGAPORE REIT SCHEME 

A. Defendants Explore Strategic Alternatives for the Thirteen Hotels; 

Recommend Against a REIT, and in Favor of a Third-Party Sale 

15. In or around November 2016, the Defendants caused Urban Commons to 

retain an investment bank (“Investment Bank A”) to explore consolidating the Thirteen 

Hotels into a single entity to obtain senior secured financing or conduct an institutional 

capital raise.  

16. By May 2017, an executive with Investment Bank A (who would later serve 

as Urban Commons’ president and as the Singapore REIT’s chief executive) introduced 

Defendants to investment banks in Singapore, including the bank that would later 

become the Singapore REIT’s lead underwriter (“Singapore Bank A”), to discuss the 

potential public listing of the Thirteen Hotels through a REIT in a foreign market.  

17. In a June 2017 email, Defendants, as managing members of Urban 

Commons, presented three strategic alternatives to investors in the Thirteen Hotels: (i) 

hold on to the properties long-term; (ii) go public by forming a REIT; or (iii) sell the 

hotels to a third-party buyer willing to pay a premium for them. In their presentation, 

Defendants acknowledged that they had consulted investment banks about going public 

through a foreign-market REIT, but recommended against this option, stating: 

[T]here are a number of additional execution risks, including the 
unique nature of US based assets being held in a foreign market REIT, 

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perhaps the first of its kind, so the risk of reliance on these valuations 
is unclear. Further, there are large up-front costs associated with the 
REIT formation process and a considerable amount of work required 
to prepare for that event as well as a number of tax considerations 
between the US and foreign market to consider, let alone foreign 
exchange rate, global influence, market fluctuations, timing to market, 
trading volume limitations, and currency risks to consider. 

18. In this same June 2017 email, Defendants falsely told investors that 

Defendants had found an unaffiliated third-party buyer who was offering a premium 

price for all Thirteen Hotels. Finally, in that same email, Defendants recommended that 

investors pursue the sale of all Thirteen Hotels rather than refinancing the Thirteen 

Hotels or placing them in a public REIT.  

B. Defendants Pursue a Course At Odds With What They Recommended 

to the Thirteen Hotels’ Investors 

19. In November 2017, after recommending the sale of the Thirteen Hotels, 

Defendants established U.S. Hospitality as a Delaware limited liability corporation, in 

which each Defendant held a 50% common equity interest.  

20. In or around February 2018, prior to the circulation of the consent 

solicitations, the Defendants retained a major accounting firm (“Accounting Firm A”) to 

conduct audits of the Thirteen Hotels ahead of listing on the SGX. Employees of Urban 

Commons, at the direction and with the knowledge of the Defendants, told Accounting 

Firm A that Urban Commons was consolidating the Thirteen Hotels into U.S. 

Hospitality for an initial public offering (“IPO”) of a REIT on SGX targeted for 

September 2018. These Urban Commons employees further told Accounting Firm A, 

also at the direction and with the knowledge of the Defendants, that their initial plan was 

to use the capital raised in the IPO to buy out investors of their equity interests in the 

Thirteen Hotels.  

21. Defendants intentionally hid from investors Defendants’ plan to use 

investors’ consents to place the Thirteen Hotels (or as many of them as possible) into the 

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Singapore REIT. Further, Defendants affirmatively misled the investors by representing 

that instead of a REIT, Defendants were pursuing an outright sale of the Thirteen Hotels 

to a third-party buyer. Similarly, Defendants intentionally hid from investors that they 

intended to rely on the proceeds of the (undisclosed and disavowed) REIT to fund 

payment to investors for their equity interests in the Thirteen Hotels. Instead, Defendants 

falsely told investors that Defendants would use the proceeds of the outright sale of the 

Thirteen Hotels to the (nonexistent) third-party buyer to payout investors. At no time 

prior to the public listing of the Singapore REIT did the Defendants correct these 

misstatements and omissions to investors. 

22. During this same time, Defendants also continued to pursue what would 

become the Singapore REIT with Singapore Bank A and Accounting Firm A. To that 

end, as Defendants knew, Singapore Bank A and Accounting Firm A were both 

conducting due diligence on the Thirteen Hotels and doing so solely to facilitate the 

Singapore REIT listing on SGX. Defendants did not just fail to tell investors of that 

activity. Defendants affirmatively misled the investors by misrepresenting to them that 

the activity then taking place consisted of the third-party buyer’s conducting due 

diligence on the Thirteen Hotels, and Defendants’ negotiating with, and countering 

offers made by, that buyer, as to each of the Thirteen Hotels. At no time prior to the 

Singapore REIT did the Defendants correct these fraudulent and misleading statements 

to investors. 

23. Contrary to Defendants’ false and misleading representations, and as 

Defendants knew, there were no negotiations at all with any such third-party buyer. U.S. 

Hospitality was not a third party, as it was owned and controlled, at all times, solely by 

the Defendants. Defendants, along with employees in the Finance Department at Urban 

Commons, had set the prices and terms of the sales of each of the Thirteen Hotels to 

U.S. Hospitality. The Defendants knew or were reckless in not knowing that they 

effectively solely controlled U.S. Hospitality, as they had signed the operating 

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agreement and other documents for U.S. Hospitality, including opening bank accounts as 

its sole owners.  Thus, as Defendants knew, any “negotiations” were effectively merely 

between Defendants and themselves. 

24. Defendants’ misrepresentations and omissions regarding the true nature of 

the transaction were material to investors because their actions were directly at odds 

with what they recommended to investors and they failed to fully disclose how 

Defendants were self-interested in the transaction. Reasonable investors would have 

considered it material to their decision to sell their investments that the Defendants were 

using the consent solicitations to facilitate the Singapore REIT, the very type of overseas 

REIT the Defendants had cautioned investors against.  

25. Reasonable investors would also have considered it material to their 

decision to sell their investments that the Defendants, not a third-party buyer, were on 

the other side of the proposed transaction and acquiring control of their investments. 

C. Defendants Use Materially Misleading Consent Solicitations to 

 Fraudulently Induce Securities Sales by the Thirteen Hotels’ Investors  

26. The consent solicitations that Defendants signed and began circulating to 

each of the investors in the Thirteen Hotels in April 2018 disclosed, for the first time, 

that the name of the purported third-party buyer was U.S. Hospitality. These consent 

solicitations stated that Urban Commons would retain the common membership interests 

in the buyer, U.S. Hospitality, but that those interests would be subordinate to the 

preferred membership interests in U.S. Hospitality. As Defendants knew or recklessly 

disregarded, however, these statements were materially misleading half-truths.  

Defendants knew that they were effectively the only owners of U.S. Hospitality as there 

were no to very little preferred membership interests. Further, as Defendants also knew 

or recklessly disregarded, the operating agreement of U.S. Hospitality – which was 

neither included in the solicitations nor provided to investors – vested all control over 

U.S. Hospitality in Defendants’ hands. 

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27. The consent solicitations acknowledged that the Defendants had 

communicated three alternatives to the investors: (1) refinance the hotels to continue 

holding them long-term, (2) sell the hotels, or (3) “combine the entities into a real estate 

investment trust and engaging in a public listing, taking into account there are significant 

execution and valuation risks in an initial public offering due to market conditions for 

real estate investment trust.” The consent solicitations further stated that: (1) the 

Defendants had recommended outright the sale to a third party to the investors, (2) in 

response to Defendants’ recommendation, the investors had expressed “a strong 

preference for the sale option,” and (3) the Defendants believed the sale to be both in the 

best interest of the investors and at fair prices.  

28. The Defendants assisted in the drafting of the consent solicitations and had 

ultimate authority over their approval for dissemination to investors. Although counsel 

assisted the Defendants in drafting the consent solicitations, counsel was not aware of 

Defendants’ direct communications to investors which created the false impression that 

there was an actual third-party purchaser of the Thirteen Hotels. 

29. Specifically, in their communications with investors after the consent 

solicitations were sent, (i) the Defendants consistently and inaccurately referred to U.S. 

Hospitality as a third-party buyer; and (ii) Urban Commons employees, at Defendants’ 

instruction, consistently and inaccurately referred to U.S. Hospitality as “they” or 

“them” rather than “we” or “us.” By means of these communications, Defendants 

knowingly or recklessly created the false appearance, misleading investors, that U.S. 

Hospitality was under the control of persons or entities other than the Defendants.  

30. The consent solicitations also represented that the investors would receive, 

on a pro rata basis and according to a specified schedule, their respective shares of the 

Thirteen Hotels’ net sales proceeds. As Defendants well knew or recklessly disregarded, 

however, the Thirteen Hotels (or as many of them as possible, which turned out to 

comprise twelve of the hotels) were going to be publicly listed in the Singapore REIT, 

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not sold to a third-party buyer; therefore, any payment to the investors would be entirely 

reliant on the success of the Singapore REIT. 

31. The consent solicitations further represented that the investors would retain 

a security interest in the Thirteen Hotels, which Urban Commons would continue to 

manage, if the purported third-party buyer failed to make payments in accordance the 

payment schedules set forth in the consent solicitations. As Defendants knew or 

recklessly disregarded, however, these representations were false and materially 

misleading, as they omitted the key fact that there was to be a public listing of a REIT, 

not a third-party sale; and that the public listing of the REIT would remove the 

investors’ security interest, since the Thirteen Hotels would, through the REIT offering, 

no longer be owned by U.S. Hospitality. 

32. The consent solicitations also failed to disclose that U.S. Hospitality’s 

governing documents – its operating agreements – required it to do everything it could 

to facilitate the undisclosed REIT. Specifically, all versions of U.S. Hospitality’s 

operating agreements dated December 20, 2017 or later required it “do all acts and 

things reasonably by requested by the Manager [i.e. Urban Commons, and hence the 

Defendants Woods and Wu] and to cast all votes . . . to facilitate an Initial Public 

Offering.” Further, U.S. Hospitality also agreed in a covenant to a promissory note dated 

January 12, 2018, to not “sell, lease, or otherwise dispose” of the Thirteen Hotels 

“except for the actions necessary to prepare for an underwritten initial public offering.”  

The Defendants, acting knowingly or recklessly, did not, in the consent solicitations or 

otherwise, disclose these facts to investors. 

33. These misrepresentations and omissions in the consent solicitations were 

material to investors because they concealed the fact that the Defendants were using the 

consent solicitations to execute the Singapore REIT, the very type of overseas REIT the 

Defendants had cautioned investors against.  Further, the fact that investors’ repayment 

was contingent on an overseas REIT rather than an outright sale and that investors would 

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not actually retain a security interest was material to investors as it put their potential 

return and interests in the hotels at significantly greater risk. A reasonable investor 

would consider it material to their decision to sell their investments that the Defendants 

were using the consent solicitations to facilitate the very type of overseas REIT the 

Defendants had cautioned investors against. Further, a reasonable investor would 

consider it material to their decision to sell their investments that that their potential 

investment return was contingent on the success of an overseas REIT rather than a sale, 

and that the overseas REIT would extinguish any supposed security interest in the 

Thirteen Hotels. 

34. U.S. Hospitality completed its purchase of the investors’ investment 

interests in the Thirteen Hotels on December 27, 2018. 

D. The Defendants Lulled Investors for a Year, Continuing to 

Misrepresent the True Nature of the Transaction 

35. The consent solicitations for each of the Thirteen Hotels included a 

payment schedule according to which investors were to receive the proceeds from the 

sale of the hotels over the course of three separate payments. While it varied with each 

hotel, the payment schedule: typically provided for the first payment to be made four 

months from closing, the second, on average, seven months after closing, and a final 

payment to be made on January 31, 2019. 

36. By October 2018, all the required payments set forth in the payment 

schedules in the consent solicitations remained outstanding. The Defendants directed 

employees of Urban Commons to tell investors that the buyer had chosen to not make all 

the required payments until it had closed on all the properties, but that it would be 

paying the five-percent interest penalty under the purchase agreements. In fact, however, 

Defendants knew, or recklessly disregarded the fact, that the lack of payment stemmed 

from delays in the public listing of the Singapore REIT, as Singapore Bank A, the lead 

underwriter, continued to conduct due diligence on the Thirteen Hotels. 

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37. The Defendants continued to conceal the true nature of the transaction from 

investors, who were still unaware that payment for their equity interests was dependent 

on the success of the Singapore REIT.  

38. By late January 2019, payments from the purported buyer continued to 

remain outstanding. The Defendants directed employees of Urban Commons to tell 

investors that the sales of all the properties had finally closed and gave assurances that 

payments would be forthcoming. To stave off any demands by investors to seek a 

default against U.S. Hospitality, the Defendants highlighted how the outstanding balance 

due to investors, under the consent solicitations, would accrue interest of 15 percent 

starting on February 1, 2019, and that the buyer actually would have until July 31, 2019 

to avoid default. 

39. The Defendants continued, knowingly or recklessly, to conceal that 

payment for the equity interests was reliant on the success of the Singapore REIT, and 

did not disclose, that (i) payment of the five percent interest that had been accruing since 

October 2018, as well as (ii) payment of the additional 15 percent interest accruing since 

February 2019, would also be contingent on the success of the Singapore REIT. 

Defendants’ materially misleading promises of interest payments, combined with their 

materially misleading omission that any such payments depended on the success of the 

undisclosed Singapore REIT, had the effect of lulling investors, thereby giving 

Defendants more time to finalize the public listing of the Singapore REIT. 

40. On or about April 3, 2019, the Defendants directed employees of Urban 

Commons to tell investors that the buyer had “indicated that they are in the final stages 

of their process and are moving their capital and planning on paying us off in the next 2-

3 weeks.” Defendants knew, or recklessly disregarded the truth, that this statement was 

materially false and misleading, since there was no such buyer, and what was nearing its 

“final stages” was only the launch of the undisclosed REIT, not any third-party sale. 

Again, by this statement, the Defendants continued to mislead investors into believing 

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that payment was imminent and would be made in full, and continued to conceal the fact 

that receipt of these payments depended on the success of the Singapore REIT.  

41. In the weeks prior to the public listing of the Singapore REIT in May 2019, 

Defendants learned that the underwriters were recommending a lower offering price as 

the prospective public listing was undersubscribed. The lower offering price would, as 

Defendants knew or recklessly disregarded, reduce the proceeds from the offering – 

proceeds that Defendants knew, or recklessly disregarded, were, in truth, essential both 

to paying off existing debt on the properties in the Singapore REIT and to making the 

payments Defendants had promised to investors. 

42. Because Defendants realized the public listing of the Singapore REIT 

would not provide sufficient cash, and to buy more time to pay investors, the Defendants 

approached several investors in the days prior to the public listing of the Singapore REIT 

seeking extensions of payments due on behalf of U.S. Hospitality. The Defendants 

misrepresented to these investors that U.S. Hospitality was in a position to pay 70-80 

percent of the payment obligations, and that the remaining payments would be 

forthcoming shortly if the entity could acquire a few additional months to make the 

remaining payments, as the buyer was pursuing a public listing of a REIT in Singapore. 

These extension agreements promised the investors an absolute 14 percent return 

regardless of whether the payments came earlier than six months. 

43. Contrary to the Defendants’ claims, U.S. Hospitality was not in a position 

to make substantial payments to existing investors, and it was the Defendants who were 

the sponsors and founders of the REIT, not a third-party buyer. The Defendants also 

omitted from investors that payment under the extensions would remain reliant on the 

success of the impending public listing of the Singapore REIT, which the Defendants 

knew or were reckless in not knowing would not provide the necessary amounts of 

capital funding to pay these investors. Further, the Defendants knowingly or recklessly 

failed to disclose to investors their role as sponsors and founders of the REIT and that 

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payment under the extensions would be reliant on the future market value of the 

Singapore REIT shares, with such payments being possible only to the extent the 

Singapore REIT’s shares could be sold by the Defendants or others at high enough 

prices to fund them. 

44. On or about May 24, 2019, the Singapore REIT, which contained the 

Thirteen Hotels that the investors had sold to U.S. Hospitality, except the Ramada 

Hialeah Miami Airport, commenced its initial public offering on SGX. The Defendants 

stood to benefit from the public listing of the Singapore REIT, had it been successful, as 

they each received 66,101,999 shares for a combined 15.2 percent interest in the 

Singapore REIT. These shares were represented in the Singapore REIT’s prospectus as 

explicitly serving as purchase consideration for the U.S. Hospitality portfolio. The 

Defendants knew, and implicitly acknowledged with their receipt of these shares, that 

they were, at all times, the controlling owners of U.S. Hospitality. At a listing price of 

$0.78, these shares represented nearly $51.6 million of value to each Defendant. 

E. After the Singapore REIT’s IPO, the Defendants Engaged in a Scheme 

to Further Lull Investors and Conceal Their Fraud   

45. The public listing of the Singapore REIT did not return sufficient cash to 

pay the outstanding payments owed to investors who had sold their equity interests to 

U.S. Hospitality. Full payment under the purchase and sale agreements with U.S. 

Hospitality was due on January 31, 2019. The default date under these agreements was 

July 31, 2019.  

46. As the founders of the Singapore REIT, the Defendants and their collective 

15.2 percent equity interest in the offering were subject to a six-month lock-up of all the 

shares and then a further six-month lock-up of half of the shares. As a result, the 

Defendants could not use proceeds from the sale of their shares to pay investors, if they 

chose, until six or twelve months after the public listing. Faced with an inability to pay 

investors in the Thirteen Hotels as promised, Defendants caused U.S. Hospitality to 

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enter into an assignment and assumption agreement with Seller A (a company described 

in ¶ 10 above), which provided that Seller A would assume the debts U.S. Hospitality 

owed the investors in the Thirteen Hotels. As consideration, Seller A received shares in 

the Singapore REIT in the same amount as the debt owed to investors. Defendants 

knowingly or recklessly failed to disclose this assignment and assumption agreement to 

investors at the time.  

47. Seller A had an existing business relationship with the Defendants. Seller A 

previously sold 6 other hotels to entities solely controlled by the Defendants to 

consolidate them with the twelve hotels of U.S. Hospitality for placement into the 

Singapore REIT. In lieu of cash from Defendants for the six hotels, Seller A received 

approximately $252 million worth of shares in the Singapore REIT. 

48. The prospectus of the Singapore REIT represented that Seller A and 

the Defendants were unrelated and did not disclose many of the agreements 

between them, and hence, the full scope of their close relationship was not known 

to foreign regulators, the underwriters including Singapore Bank A, investors in 

the Thirteen Hotels (to whom the Defendants did not, in any event, furnish the 

prospectus), and foreign investors in the public listing.  

49. On August 1, 2019, the Defendants, on behalf of U.S. Hospitality, 

drafted, signed, and sent a default notice from U.S. Hospitality, which they 

continued to solely own, to Seller A.  At or about the same time, in a separate 

communication, the Defendants told Seller A to ignore the default 

notice.  Thereafter, the Defendants continued to be aware both that Seller A was 

selling its shares and how much, if any, of the resulting sale proceeds, were being 

transferred to U.S. Hospitality to pay investors who had sold the Thirteen Hotels 

to it. 

50. On March 24, 2020, trading in the Singapore REIT was voluntarily 

halted on SGX. 

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51. On or about March 30, 2020, in a letter to investors, the Defendants 

disclosed for the first time U.S. Hospitality’s agreements with Seller A, including 

the assignment and assumption and the default notice. The Defendants did not, 

however, disclose to investors that Defendants had, on or about the same date as 

the default notice, separately instructed Seller A to ignore the default notice. The 

Defendants told the investors that Seller A was the buyer. The Defendants knew 

or were reckless in not knowing this representation was materially false and 

misleading. As founders and directors of the Singapore REIT, the Defendants 

knew or recklessly disregarded that its prospectus – which was not publicly 

disclosed in the United States – clearly stated that it had been the Defendants who 

had acquired the U.S. Hospitality properties in addition to purchasing the 6 hotels 

from Seller A. Through these misrepresentations, the Defendants continued, 

knowingly or recklessly, to conceal their fraudulent scheme and lull investors. 

52. In this same letter, the Defendants also misrepresented the reason 

why the investors no longer had any pledged security interests in the Thirteen 

Hotels, stating that the Defendants had converted these interests into equity 

pledges in the Singapore REIT, believing this action to have been in the best 

interests of the investors.  In reality, however, as the Defendants knew, or 

recklessly disregarded the truth of the fact that, they had converted the pledged 

security interests because hotels encumbered by such pledges could not be 

included in a publicly listed REIT. Since the equity pledges were now tied to 

publicly traded shares in the Singapore REIT that had been halted from trading, 

the Defendants started in this letter falsely and misleadingly to blame the global 

COVID-19 pandemic as the cause of the investor losses.  By so doing, Defendants 

knowingly or recklessly further lulled and concealed from investors Defendants’ 

responsibility for the fraud in which Defendants had engaged to the detriment of 

their investors. 

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53. On May 26, 2020, the Singapore REIT received an inquiry from 

SGX concerning material interested person transactions that were not disclosed in 

the Singapore REIT offering, which led the Defendants to resign as directors of 

the Singapore REIT. By January 18, 2021, the hotels that formed the REIT filed 

Chapter 11 bankruptcy. 

III. THE SKY HOLDINGS SCHEME 

54.  Prior to entering bankruptcy, the hotels comprising the Singapore 

REIT began to experience declines in cash flow, resulting in a series of defaults, 

culminating in the acceleration of the Singapore REIT’s primary loan. As noted 

above, on March 24, 2020, trading of the Singapore REIT was halted. As a result 

of this financial distress, from April to December 2020, the Singapore REIT 

underwent a process to sell or restructure its hotel assets.  

55. In or around June 2020, Defendants formed Sky Holdings for the 

purpose of restructuring and acquiring the distressed Singapore REIT’s assets. 

After the Singapore REIT restructuring failed and it filed for bankruptcy, 

Defendants then shifted their focus to organizing a bid to acquire the hotels out of 

bankruptcy. 

56. Between around January and May 2021, Defendants, through Sky 

Holdings, raised at least $1.775 million from U.S. investors purportedly to fund 

the purchase of the hotels out of bankruptcy. In exchange for their investment, 

Defendants offered investors equity interests in Sky Holdings.  

57. In written investor materials and oral statements, Defendants 

knowingly or recklessly misrepresented to potential and actual investors that (1) 

Defendants had secured $350 million in debt financing commitments and needed 

the remaining funds it was soliciting from investors to complete the purchase of 

the hotels in bankruptcy; (2) the proceeds of the securities offering would be used 

solely for the purchase price for the hotels (with Defendants paying for any legal 

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and administrative expenses related to the bid); and (3) the offering’s proceeds 

would be held in escrow and would be returned if the bid was unsuccessful.  All 

these statements were false. To encourage investors to act quickly, Defendants 

further misrepresented that there were limited investor slots and the funds being 

solicited were needed immediately because of the purported impending deadline 

for submitting the bid and completing the transaction. 

58. During the period of the Sky Holdings securities offering, Defendants 

were facing significant financial issues (with little to no cash flow), both 

personally and across their businesses, and were in desperate need for capital. The 

funds received from Sky Holdings investors comprised the bulk of Sky Holdings’ 

deposits for the period from January to May 2021. Rather than use these proceeds 

as they represented to investors, Defendants, who were the sole signatories on Sky 

Holdings’ account, and controlled the disbursement of all Sky Holdings funds,  

knowingly and/or recklessly  misappropriated all of the funds raised through the 

offering, paying nearly $1 million to either themselves or to shore up their outside 

businesses, and using the remainder for legal and administrative expenses they 

had told investors they, rather than investors, would pay. 

59. Throughout 2021, Defendants attempted to secure debt financing for 

their bid, but were unsuccessful. Defendants never received financing 

commitments from any source. Due to lack of capital and other reasons, including 

their involvement in the failed Singapore REIT, Defendants’ financial adviser and 

counsel repeatedly advised Defendants that their chance of winning the bid was 

remote. Throughout the bankruptcy process, Defendants were aware of the bid 

procedures and bid deadline of May 14, 2021. 

60. Whether or not Defendants had secured debt financing was material 

to investors’ decision to invest as it would determine, in large part, the likelihood 

Defendant would have the ability to actually purchase the hotel assets out of 

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bankruptcy. Reasonable investors would have considered it material to their 

decision to invest in Sky Holdings that the Defendants had not secured any debt 

financing for their bid – let alone $350 million as the Defendants had represented.   

61. On or about May 14, 2021, Defendants, through a separate entity 

Constellation Hospitality Group, submitted a bid to purchase the hotels, which 

included a deposit of $10 million of funds into escrow. By the time of the bid, 

Defendants had already spent the Sky Holdings investment offering proceeds and 

were forced to borrow the funds needed for the deposit. The next day, counsel for 

the Singapore REIT in bankruptcy notified Defendants that their bid was 

insufficient because they failed to comply with the bid procedures, including, but 

not limited to, failing to provide proof of financing commitments and submitting a 

wholly inadequate deposit. On or about June 10, 2021, the deposit funds were 

returned to Defendants’ borrower. 

62. Following Defendants’ unsuccessful bid, Sky Holdings investors 

demanded the return of their funds in accordance with the terms of the investor 

agreements and Defendants’ promises. In response, Defendants knowingly and or 

recklessly lulled investors with continued false representations in oral statements 

and text messages that they were unable to return their funds because they were 

tied up in escrow with the bankruptcy court. Despite having assured investors in 

their Sky Holdings offering that the investors’ funds would be held in escrow and 

would be returned if the bid was unsuccessful, Defendants failed to return investor 

funds in the amount of at least $1.75 million following the rejection of their bid. 

63. It was material to investors that their investment would be used solely for 

purchase bid of the hotel assets and that their funds would be held in escrow rather than 

misappropriated for Defendants’ personal expenses because otherwise their investment 

would be put at considerable risk. Reasonable investors would have considered it 

material to their decision to invest in Sky Holdings that despite their agreements and 

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statements to the contrary, the Defendants would use Sky Holdings investors’ funds for 

their outside businesses and to pay legal and administrative expenses instead of holding 

those funds in escrow for the bid, and that by so doing, the Defendants would not be able 

to return the investors’ funds as promised if the bid was unsuccessful.   

IV. TOLLING AGREEMENTS 

64. Between July 2023 and March 2024, Defendants each entered into 

three separate tolling agreements with the SEC. Each tolling agreement specifies a 

period of time (a “tolling period”) in which “the running of any statute of 

limitations applicable to any action or proceeding against [Defendants] authorized, 

instituted or brought by … the Commission … arising out of the [Commission’s 

investigation of Defendants’ conduct], including any sanctions or relief that may 

be imposed therein, is tolled and suspended….” Each tolling agreement further 

provides that the Defendants “shall not include the tolling period in the calculation 

of the running of any statute of limitations or for any other time-related defense 

applicable to any proceeding, including any sanctions or relief that may be 

imposed therein, in asserting or relying upon any such time-related defense.” 

Collectively, these agreements tolled the running of any limitations period or any 

other time-related defenses available to each of the Defendants for a period of 

approximately twelve months and 18 days, thereby preserving the timeliness of 

the Commission’s claims for civil penalties as to all conduct in or after July 2018. 

FIRST CAUSE OF ACTION 

Violation of Section 10(b) of the Securities Act [15 U.S.C. § 78j(b)]  

and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5] 

(BOTH DEFENDANTS) 

65. The Commission realleges and incorporates by reference the 

allegations contained in Paragraphs 1 through 64 above. 

66. Defendants Woods and Wu, by engaging in the conduct described 

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above, each, directly or indirectly, by the use of means or instrumentalities of 

interstate commerce or use of the mails, in connection with the purchase or sale of 

securities, with scienter, (a) employed devices, schemes, or artifices to defraud; 

(b) made untrue statements of a material fact or omitted to state a material fact 

necessary in order to make the statements made, in the light of the circumstances 

under which they were made, not misleading; and (c) engaged in acts, practices, or 

courses of business that operated or would operate as a fraud and deceit upon 

other persons. 

67. By reason of the foregoing, Defendants each violated, and unless 

restrained and enjoined will continue to violate, Section 10(b) of the Exchange 

Act [15 U.S.C. §78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

SECOND CAUSE OF ACTION 

Violation of Section 17(a) of the Securities Act [15 U.S.C. §§ 77q(a)] 

(BOTH DEFENDANTS) 

68. The Commission realleges and incorporates by reference the 

allegations contained in Paragraphs 1 through 2, 5 through 12, and 54 through 64, 

above. 

69. By engaging in the conduct described above, Defendants each, in the 

offer or sale of securities, and by the use of the means or instruments of 

transportation or communication in interstate commerce or by use of the mails, 

directly or indirectly: (a) employed devices, schemes, or artifices to defraud; (b) 

obtained money or property by means of untrue statements of material facts of by 

omitting to state a material fact necessary to make the statements made, in light of 

the circumstances under which they were made, not misleading; and (c) engaged 

in transactions, practices, or courses of business which operated or would operate 

as a fraud or deceit upon the buyer. 

70. By reason of the foregoing, Defendants each, directly or indirectly 

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violated, and unless enjoined will continue to violate, Section 17(a) of the 

Securities Act [15 U.S.C. § 77q(a)].  

PRAYER FOR RELIEF 

 WHEREFORE, the Commission respectfully requests that the Court enter a Final 

Judgment:  

I. 

  Finding that Defendants Woods and Wu committed the violations of the 

Federal Securities Laws as alleged in this Complaint. 

II. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of Civil 

Procedure, permanently enjoining Defendants Woods and Wu and their officers, agents, 

servants, employees, and attorneys, and those persons in active concert or participation 

with any of them, who receive actual notice of the judgment by personal service or 

otherwise, and each of them, from: 

a.  violating the federal securities laws alleged in this complaint: 

1. Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule 10b-5 

thereunder [17 C.F.R. § 240.10b-5]; and  

2.   Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]; and 

b. directly or indirectly, including, but not limited to, through any entity he owns 

or controls, participating in the issuance, purchase, offer or sale of any 

security; provided, however, that such injunction shall not prevent him from 

purchasing or selling securities listed on a national securities exchange for his 

own personal account in his own name.  

III. 

Ordering Defendants to disgorge all ill-gotten gains obtained as a result of the acts 

or courses of conduct alleged in this Complaint, together with prejudgment interest 

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thereon, pursuant to Section 21(d)(3), (d)(5) and 21(d)(7) of the Exchange Act [15 

U.S.C. §§ 78u(d)(3), 78u(d)(5) and 78u(d)(7)]. 

IV. 

Ordering Defendants to pay civil penalties pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. 

§ 78u(d)(3)]. 

V. 

Permanently barring Defendants from serving as an officer or director of any 

public company pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 

78u(d)(2]. 

VI. 

 Retaining jurisdiction of this action in accordance with the principles of equity 

and the Federal Rules of Civil Procedure in order to implement and carry out the terms 

of all orders and decrees that may be entered, or to entertain any suitable application or 

motion for additional relief within the jurisdiction of this Court. 

VII.  

Granting such other and further relief as this Court may determine to be just and 

necessary. 

DEMAND FOR JURY TRIAL 

Pursuant to Federal Rule of Civil Procedure 38, the Commission demands trial by 

jury. 

 Dated: August 6, 2024    /s/ Derek Bentsen   
 Donald Searles 

Derek Bentsen  
Edward B. Gerard 
Matthew B. Reisig 
Attorneys for Plaintiff 
Securities and Exchange Commission 

 

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	JURISDICTION AND VENUE
	FACTS