The judge overseeing the bankruptcy of hotel owner Eagle Hospitality Real Estate Investment Trust is considering referring two of its shareholders to prosecutors for possible criminal conduct over accusations they absconded with government COVID-19 relief, WSJ Pro Bankruptcy reported. At a hearing on Wednesday, Judge Christopher Sontchi in the U.S. Bankruptcy Court in Wilmington, Del., called the behavior of Taylor Woods and Howard Wu “beyond the pale,” “reprehensible” and an “abuse” of the U.S. government’s “attempt to help businesses survive the pandemic.” On Friday, Eagle Hospitality alleged that the businessmen, part-owners of the Singapore-based company, received $2.4 million in Paycheck Protection Program funds without authorization on behalf of hotel operations at the Queen Mary ocean liner in Long Beach, Calif. The two used the money for their own benefit, according to the company’s court filing. Eagle Hospitality, which has 15 U.S. hotels, said it has asked Woods and Wu to return the loan proceeds to no avail, and believes the funds have been depleted in ways not intended by the PPP, the popular source of forgivable, government-backed loans set up early in the pandemic, mainly to aid small business. PPP loans can be forgiven if they are mostly used to avoid layoffs. Eagle Hospitality has said it worries that it could be on the hook for repaying a loan it never received. Judge Sontchi said yesterday that he believed that fraud had been committed against Eagle Hospitality and that he would consider referring the matter to federal prosecutors for further investigation.
