Glossy marketing books are set to be sent out this week to potential bidders for the forced sale of the iconic Park Lane Hotel in Manhattan, New York City, with Jho Low’s 55% share of the proceeds going to the US Government.
- Dreams of a supertower of ultraluxury apartments no more
- Hope of forced sale of Park Lane Hotel surpassing $1b
- Justice Department to take all of Jho Low’s 55% share of sale proceeds
New York developer Steven Witkoff won the bid for the 47-storey Park Lane Hotel in chic Manhattan in July 2013, with the intention of building a supertower with ultraluxury apartments. He celebrated his success over dinner with Jho Low. After all, it was Low who helped to clinch the deal for the Witkoff group with his $100m non-refundable deposit – double the amount normally put up.
Witkoff and his partners – New Valley LLC, Highgate Holdings and developer Harry Macklowe had 15 per cent stake in the deal. Low took 55 per cent and brought in the Mubadala Development Company – a sovereign investment fund based in Abu Dhabi – for the remaining 30 per cent. Low agreed to finance 85 per cent of the $654m purchase.
However, the planned ambitious tower never took off.
Four years after that classy dinner – the first and last time Witkoff and Low socialised – Witkoff and his remaining partners are being forced by the Department of Justice (DoJ) to sell the building. The DoJ had brought a civil forfeiture action last July against the prime piece of New York property linked to funds allegedly embezzled from 1MDB.
The New York Times reported that Low’s fortune dissipated under scrutiny from authorities in the US and other countries who say that “his money was stolen from the Malaysian people
Witkoff, who was introduced to Low by a lawyer, was reluctant to elaborate on his dealings with Low, “given the investigations and associated litigation”.
According to the New York Times, the “once-ubiquitous” Low who sits at the centre of what the authorities are calling “one of the biggest international money-laundering schemes ever” has “disappeared”.
The DoJ revealed in its suit filed last July that an executive in Witkoff’s office emailed Low, asking “where the money on your side of the deal is coming from.” Low responded: “Low family capital” and “Just all the family.” The DoJ, however, alleges that the money came from 1MDB.
Hints of trouble for the Park Lane owners came in late 2015 when they were looking at refinancing the debt used to buy the property. Low again told his partners and the lender that his money came from “family trusts established by his father”.
However, the new lender in the deal, JP Morgan Chase, started to raise questions and news began circulating about Low and the 1MDB controversy. Low told his partners that the claims of alleged wrongdoing were baseless – the work of rival political parties in Malaysia.
In July 2016, Low defaulted on the Park Lane mortgage payment. At the same time, the DoJ filed its civil complaint seeking to recover more than $1b in assets. And there ended the owners’ lofty dream of building their undulating glass tower with every apartment having an unimpeded view of Central Park and Low’s idea of “outdoor swimming pools on the exterior galleries of each of the five penthouses”.
Under a cooperation agreement between Witkoff and the DoJ, the proceeds from the sale of the hotel will be divided between the Witkoff group and Mubadala, with the US government taking Low’s share.
The civil forfeiture suit sought to recover all the assets and investments acquired using the alleged $3.5b misappropriated from 1MDB, including but not limited to Park Lane, a condominium in New York, a Beverly Hills mansion, a private jet, artworks, as well as the funding of the film The Wolf of Wall Street.
The New York Times quoted Heather Lowe of Global Financial Integrity, a Washington-based non-profit that focuses on illicit financing, as saying that the case represents “the tip of the iceberg” when it comes to corruption and money laundering.
On Mar 22, the Wall Street Journal reported that US authorities intend to file criminal charges against Jho Low in a money laundering investigation surrounding 1MDB. The charges would also include wire fraud against Low and some of his associates.
Glossy marketing books are expected to be sent to prospective bidders this week, with the pitch: The Park Lane is “the world’s best development site.”
The sellers hope the bids will exceed $1b.
A quick watch of the Department of Justice 1MDB Press Conference, condensed to under 9 minutes:
The full version at 37 minutes long: