News Summary
An investigation into LuxUrban Hotels Inc. has been initiated due to allegations of fraud, unpaid rents, and significant operational issues. Led by former Louisiana Attorney General Charles C. Foti, Jr., the inquiry seeks to determine whether LuxUrban officials violated fiduciary duties. The company’s failure to execute a Master Lease Agreement with the Royalton Hotel and ongoing lawsuits for unpaid rent have raised serious concerns regarding its financial health. Operational violations at LuxUrban properties, along with staffing issues and abrupt property closures, have added to the turmoil facing the company.
New York City – An investigation has been initiated into LuxUrban Hotels Inc. (OTC: LUXH) following serious allegations of fraud, unpaid rent, and significant operational issues at their properties. The inquiry is led by Charles C. Foti, Jr., a former Attorney General of Louisiana, who is a partner at the law firm Kahn Swick & Foti, LLC (KSF). The investigation focuses on whether LuxUrban officials breached their fiduciary duties or violated any laws concerning their business practices.
The troubles at LuxUrban Hotels came into sharper focus when it was revealed that the company had not executed a 25-year Master Lease Agreement (MLA) with the Royalton Hotel in New York, despite a public announcement stating otherwise in November 2023. A report released by Bleeker Street Research on January 17, 2024, disclosed that LuxUrban failed to provide a necessary Letter of Credit for the lease, which raised questions about the company’s financial health and transparency.
As LuxUrban’s financial troubles surfaced, reports indicated that the company was embroiled in multiple lawsuits due to its failure to consistently fulfill rent obligations. In the last six months alone, LuxUrban has been sued for unpaid rent by landlords of four of its properties, yet these ongoing legal disputes were not disclosed in prior communications made by the company.
On February 2, 2024, LuxUrban officially announced the termination of negotiations regarding the Royalton Hotel, retracting previous statements that included the hotel as part of their portfolio. This led to an amendment of earlier quarterly reports where the Royalton was listed inappropriately under “Properties under lease, not operating.”
The fallout from these revelations did not end there; LuxUrban and several executives faced a securities class action lawsuit for failing to disclose material information and violating federal securities laws. Recently, a court denied LuxUrban’s motion to dismiss this lawsuit, allowing it to move forward.
Adding to the chaos, operational violations were reported at LuxUrban properties like the Tuscany Hotel and Hotel 27 located in Midtown Manhattan. Reports indicated staffing issues at the Tuscany Hotel, where staff halted work due to unpaid wages, leaving a dwindling number of employees to attend to ongoing needs. Guests expressed confusion when they arrived to find services severely lacking due to inadequate staffing—rooms went uncleaned despite ongoing bookings.
Furthermore, a representative from the FDNY uncovered operational violations at the Tuscany Hotel, resulting in multiple citations and subsequent vacating of the property by the building owner. Guests were caught off guard by the abrupt closures of several LuxUrban properties, which negatively affected those who had pre-paid for their stays.
In addition to these operational challenges, workers at various LuxUrban locations filed grievances detailing long-standing issues such as non-payment of wages and arbitration awards required to recover owed money. Many guests who had made advance payments for hotel stays found themselves in precarious situations when arriving at facilities that had suddenly shut down without notice.
As the investigation by KSF continues, they are seeking information from any individuals who may assist in uncovering the full extent of the issues faced by LuxUrban Hotels. The outcome of this inquiry may have significant implications for the company’s future and for those who interact with its properties.
Deeper Dive: News & Info About This Topic
- Business Wire: LuxUrban Hotels Investigation
- CBS News: LuxUrban Hotel Investigation
- GlobeNewswire: Important Notice for Shareholders
- Financial Content: LuxUrban Hotels Investigation
- Google Search: LuxUrban Hotels
Author: STAFF HERE NEWORLEANS WRITER
NEW ORLEANS STAFF WRITER The NEW ORLEANS STAFF WRITER represents the experienced team at HERENewOrleans.com, your go-to source for actionable local news and information in New Orleans, Orleans Parish, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as French Quarter Festival, New Orleans Jazz & Heritage Festival, and Essence Music Festival. Our coverage extends to key organizations like the New Orleans Chamber of Commerce and Greater New Orleans, Inc., plus leading businesses in energy, healthcare, and education that power the local economy such as Entergy, Ochsner Health, and Tulane University. As part of the broader HERE network, including HEREShreveport.com, we provide comprehensive, credible insights into Louisiana's dynamic landscape.
