NAJIB’S GOOSE IS COOKED – NEW YORKER TRUMP CANNOT MISS THIS: DOJ MOVES AGAINST JHO LOW TO SAVE 46-STOREY ICONIC HOTEL

KUALA LUMPUR – The United States Department of Justice (DOJ) has made a move to oust Low Taek Jho, better known as Jho Low, from a group that owns the financially troubled Park Lane Hotel in New York, the Wall Street Journal (WSJ) reported yesterday.

Citing court documents, the WSJ reported that the DOJ and New York property developer Steven Witkoff have asked a federal court to approve a plan to remove Low from the consortium which owns the hotel located in Manhattan.

“[Low]’s 55% stake in the hotel is one of the many assets purchased with what the DOJ believes were proceeds from an allegedly multibillion-dollar fraud that spanned the globe and is under investigation in multiple countries,” said WSJ.

The alleged fraud in question refers to certain dealings of troubled state investment fund 1Malaysia Development Bhd (1MDB), which were reportedly brokered by Low.

An investor group led by Witkoff, along with Low, purchased the Park Lane in 2013 from the estate of Leona Helmsley in a deal that valued the trophy property at US$654 million (RM2.89 billion).

According to the WSJ, the court papers stated that Low and his family provided the lion’s share of the equity, with “proceeds derived from or involved in fraud, misappropriation and other violations of United States and foreign law.”

The 46-storey hotel overlooks New York’s Central Park is Low’s splashiest investment in the US, according to the daily.

“The hotel is the largest asset being sought by the US in its case against Low,” it said.

On Monday, the DOJ and Witkoff filed a joint motion in Los Angeles Federal Court, asking for approval of their plan to stabilize the ailing hotel and to set up a process for selling Low’s stake in the property.

The WSJ reported that the plan, if approved, would enable a group of investors led by Witkoff to shore up the hotel’s finances and move forward with its development plans.

According to court papers cited by WSJ, the process of selling Low’s “complex and valuable” stake would take many months.

“Unless the parties are able to commence that process, now the [hotel] faces default, loss of financing arrangements, and foreclosure, all at significant detriment to the value of the asset [and] the people harmed by the alleged crimes,” said the paper.

Witkoff, who is described in the court papers as a prominent player in the real-estate industry, hasn’t been accused of wrongdoing or having any connection to the 1MDB matter.

“The court papers reveal that he has been cooperating closely with the authorities,” WSJ reported.

Witkoff’s group, which includes other marquee names in New York real estate such as developer Harry Macklowe, and Howard Lorber who is the chairman of brokerage Douglas Elliman, purchased the property with an eye towards converting it into a luxury condominium.

“The group’s plans were stalled when the federal government began its action to seize Low’s assets.

“That effectively froze the owners out of the financing markets and made state government approval of their conversion plan unlikely,” the WSJ reported.

According to the court papers, financial problems began to mount since the government action, because the Park Lane’s cash flow isn’t enough for the group to stay current on some US$480 million in debt and pay expenses related to the planned development and operations.

“The group issued a so-called capital call to its participants, to plug the gap… Low didn’t contribute, which put him in default on his stake.

“Witkoff and the other Park Lane owners have come up with the necessary money to stay current on the hotel’s interest payments and other obligations.

“[The court papers state that ]as part of the agreement with the [DOJ],  Witkoff and other hotel investors would be reimbursed for that amount along with 12% interest if  Low’s stake is sold,” the WSJ reported.

 

Citing an affidavit filed by Gene Patton , who is chief of the programme operations unit of the DOJ’s money-laundering and asset-recovery section, the WSJ reported that Witkoff is uniquely positioned to market the asset to potential investors around the world.

However, people familiar with the matter told the WSJ that more problems are approaching for the group, because of the debt which comes due later this year.

“The court papers say the DOJ cut its deal with Witkoff’s group in September. .it isn’t clear [as to] why the two sides waited months to ask for court approval, which would be necessary for a sale of Low’s stake to proceed,” the daily reported.

The court papers also raise questions about Low’s relationship with Mubadala Development Co, an Abu Dhabi sovereign-wealth fund.

“According to court papers, Witkoff told the DOJ that  Low sold Mubadala about a 45% interest in his 55% stake in the Park Lane, shortly after he and Witkoff’s group purchased the hotel,” said the WSJ.

The report also cited the court papers as stating Mubadala “has begun to discuss the purchase” of Low’s stake, subject to court approval.

“Accordingly, at this time, at least the [Low] related potentially interested parties do not consent to Monday’s motion,” said the paper.

A spokesman for Mubadala told the WSJ in an email that the fund’s legal team is looking into the recent paper submitted in the proceedings and will determine its position and take the necessary action.

A spokesman for Low didn’t respond to a request for comment from the WSJ.

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