The feds have jumped into action after CBS News New York investigator Mahsa Saeidi’s exclusive investigation found three New York City hotels had abruptly shut down with no warning, leaving workers unpaid and guests scrambling.

New documents reveal as our investigation went on air in September, LuxUrban filed for a Chapter 11 bankruptcy. In those documents, CFO Michael James said the company had under $10 million on hand and potentially $10-50 million in debt.

“You screwed me over. I want my money back.”

The list of those waiting to get paid by LuxUrban is long, and it doesn’t even include Landis Tindell, who realized he wasn’t alone after watching CBS News New York’s first report.

“[It was] validation that I wasn’t the only one upset because it’s happening to other people,” he said.

Tindell booked a trip from Oklahoma to New York in March 2024, then, within 24 hours, he canceled. In emails, LuxUrban promised a refund, but over a year later, he’s still waiting.

“Just, like, trying to understand how they keep getting away with these kinds of things?” Tindell said.

Ed Rossi, of California, booked a stay at a LuxUrban in Brooklyn, but he says when he arrived in September, it had been sold and his reservation canceled without his knowledge.

“You screwed me over. I want my money back,” Rossi said.

Bankruptcy attorney Heath Berger is not connected to this case but reviewed the docket.

“I don’t understand how they were taking bookings, and what were they doing with the money?” he said. “Somebody is going to answer that question.”

That somebody could be an independent trustee appointed at the request of the Department of Justice.

LuxUrban plans to oppose federal takeover

The bankruptcy watchdog for the DOJ is the U.S. trustee. In court documents, the trustee said LuxUrban’s actions have created a “state of chaos for the public and LuxUrban’s creditors.” 

Last week, the DOJ filed a motion asking the court to take control of LuxUrban’s bankruptcy and business operations. It’s serious intervention in a bankruptcy proceeding. Citing news reports, the DOJ says “a hotel operator… that leaves customers stranded” and workers allegedly unpaid is “untenable, and dangerous.”

Berger says what the trustee is alleging is “very significant.”

“To see a motion like this done this fast is extraordinary,” he said.

CBS News New York called LuxUrban and its attorneys.

After days of no response, the CFO emailed Saeidi, saying:

“The Company intends to file opposition to the US Trustee’s motion. The Company filed in order to provide it breathing room to determine whether it would be able propose a reorganization. On a personal note, I was brought in over a year ago to help with preparing the financial statements.  I was not involved with the operations of the properties. I signed the court documents as an officer of the Company. The Online Travel Agency’s (‘OTA’) that book the reservations and collect the money were responsible in notifying the guests that the hotels were closed and the reservations would be moved to a comparable hotel.”

LuxUrban’s attorney also sent a statement, saying, “The properties are secure. No new reservations are being accepted by the Debtors, and the Debtors intend to fight the US Trustee’s motion to impose a Chapter 11 Trustee since, among other things, the Debtors are pursuing reorganizational paths forward.”

Refunds for LuxUrban guests

So will guests get their money back?

“My gut is no,” Berger said.

The problem is the list is so long. The entities that had their loan tied to a specific asset will get paid first. Everyone else gets whatever’s left.

Anyone who believes LuxUrban owes them money can file a proof of claim with the court just in case.

Meanwhile, the CFO says third-party booking websites are responsible for refunds, not LuxUrban, but after the hotel shut down, it appeared as though you could still book rooms directly through the hotel’s websites.

That will be a question for the courts. We’ll stay on this story and monitor the proceedings. 

If the court allows a Chapter 11 trustee to be appointed, they’d replace LuxUrban’s current leadership. 

Anyone questions for Mahsa Saeidi about LuxUrban can reach out to Mahsa Saeidi by clicking here.

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