By Helga Gendell
Part XI of the Marina del Rey history continues the story about Marina lessee Abraham M. Lurie.
Part X concluded with Los Angeles Times reporter Jeffrey Rabin’s article, “The Ties are Cozy,” dated November 13th, 1989, about Lurie’s business dealings and unidentified partners [a Middle Eastern investment group headed by billionaire Saudi Arabian businessmen and arms brokers Khalid and Abdul Aziz Al-Ibrahim, brothers-in-law of King Fahd].
Rabin’s article stated “that the county counsel’s office had advised the Department of Beaches and Harbors that the county could face potential problems under federal anti-racketeering statutes if ‘tainted money’ was invested in the Marina. The property could be subject to seizure by law enforcement agencies or tied up in civil litigation if illegally obtained funds were used, officials warned.”
Rabin’s Los Angeles Times article continues, “This posed a potential dilemma for the department since Lurie was asking the county to approve investors whose names could not be revealed.
“In fact, the county’s 15-year-old policy on assignment of Marina leases from one party to another specifically requires examination of the financial condition of the new partner, an unlikely task when the partners are secret,” the article stated.
“Outside legal counsel, who examined Lurie’s deal with the secret investors, urged the county to obtain specific financial guarantees from the investors, given the secrecy and concerns that most of their assets could be outside the US. Despite that advice, county officials did not examine, nor did they require disclosures regarding the identity, finances, nationality or background of the investors.
“They did, however, look into the background of key officials with the Century City consulting firm that would manage the investment for the foreign buyers.”
Rabin’s article continues, “‘We asked and we were told right from the beginning that (the investors) wished to remain anonymous,’” Department of Beaches and Harbors Director Ted Reed said.
“So the county simply sought assurances about the investor’s character. In the final week, supervisors received letters from lawyers and accountants attesting to the integrity of the investors.
“Chicago attorney Cornelius J. Sullivan said his clients, the unnamed investors, were successful foreign business people. ‘Their principal activities involve real estate investments throughout the worldÖ. Their businesses do not in any way involve trafficking in drugs, laundering money, or other criminal activity,’” Sullivan wrote.
“He told the county that the investors prefer to protect their privacy and avoid the public limelight ‘in order to avoid hucksters, flimflam men, gold diggers, extortionists, kidnappers, terrorists, and similar criminal elements that tend to gravitate to and feed upon the prominent and well-to-do.’”
The Times article continues, “And in a two-paragraph letter delivered to supervisors on the morning of the final vote, Thomas M. Goff of Laventhol & Horwath — the investor’s accounting firm — aid the financiers were not members of any terrorist or subversive organization, nor were they from a communist country or a nation suspected of terrorism.”
“Supervisor Dean Dana said he recalled Lurie’s lobbying efforts but said he was unaware of the Marina developer’s financial troubles. He said he was not concerned about secrecy surrounding the foreign investors. ‘It seemed like a reasonable deal,’” said Dana.
“Mas Fukai, chief deputy to Supervisor Kenneth Hahn, said the county was assured it was dealing with respectable people who were concerned about their personal safety. ‘The explanation was satisfactory to the supervisor,’” Fukai said.
Rabin’s article continues, “On the day of the decision, David Naftalin, attorney for the Marina Tenants Association, protested to the supervisors that the county had received ‘absolutely no information on the financial condition of the assigneeÖIf the county is going to maintain control over its real property,’ he argued, ‘it ought to know who the assignees are. This is a general principle.’”
“Naftalin also questioned the county’s acceptance of secret investors: ‘The idea that a lawyer from Chicago is going to give an affidavit stating that there won’t be any tainted money put into the Marina seems a little bit difficult to give credibility to.’”
“Supervisor Ed Edelman, who was not present when the board voted 4-0 to approve the transaction, said he was troubled by the secrecy. ‘The county needs to know who it’s doing business with,’ he said in a subsequent interview.”
Rabin’s article concludes with comments from Reed:
“But Department of Beaches and Harbors Director Reed defended the county, saying the public interest was served by Lurie’s partnership with the foreign investors. He said it will mean substantial new investment in the Marina and will spur construction of the Marina Beach Hotel.
“Besides, he said, ‘secrecy is common in the business world. I am in the business world. I am here to make money for the county,’” Reed said.
An abstract summary of Rabin’s Los Angeles Times July 11th, 1991 article, “Developer, Saudi Partners File for Bankruptcy,” detailed occurrences leading up to this event.
According to the abstract summary in the Times report, “October 1990, Lurie agrees to sell his remaining 50.1 percent interest in the Marina to the Saudis for $15.3 million, with the Saudis also agreeing to assume more than $130 million in debts on the properties.
“Los Angeles County demands to know the identity of the investors and their background. But the deal collapses and a bitter battle for control of the Marina holdings ensues.
The abstract continues, “March 1991 — the Saudi investors file suit in Los Angeles Superior Court seeking to dissolve their Marina partnership and accusing Lurie of engaging in ‘fraud and abuse.’ Two banks file default notices against the partnership for failure to make payments on $75 million in loans.
“June 1991 — Lurie, faced with mounting legal problems involving his Saudi partners, his ex-wife and former real estate brokers, files for bankruptcy in a bid to protect his personal assets. A Superior Court judge appoints a receiver to oversee the Marina holdings.
“July 10th, 1991 — The day before a scheduled bank foreclosure against one of their Marina hotels, Lurie and his partners seek protection under Chapter 11 of the federal bankruptcy code,” according to the Los Angeles Times abstract summary.
On December 3rd, 1992, Rabin’s article, “Lurie Ends Attempts to Refinance Marina Real Estate” stated, “In a move that could end his involvement in Marina del Rey, developer Abraham M. Lurie withdrew a bankruptcy reorganization plan, enhancing chances that a billionaire Saudi Arabian businessman will end up controlling almost 20 percent of the Marina’s properties.”
The article stated that Lurie withdrew his plan to reorganize after financing for the plan collapsed.
“The move effectively removes Lurie as a major player in a long-running and bitter battle for control of the real estate empire that he has dominated since the late 1960s,” wrote Rabin.
“The withdrawal of Lurie’s plan marks the end of an era. Long a prominent figure and major contributor to political campaigns, he was the largest leaseholder in the Marina.
“On the second day of a crowded bankruptcy court hearing, the Saudi plan had the support of the county and most major creditors of the bankrupt Marina International Properties, Ltd. with the exception of Bank of Montreal,” the article continued.
“The proceedings are being closely watched by a phalanx of attorneys representing the county and a group of banks that together have more than $140 million in unpaid loans on the Marina properties.
“With real estate values depressed by the recession and the deteriorated condition of the properties, initial appraisals put the value of the leaseholds at between $111 million and $126 million,” stated Rabin’s article.
“By far the biggest loser could be the Canadian bank, which is owed more than $54.6 million on the Marina Beach Hotel, almost double what appraisers believe it is worth.
“Attorneys for the Bank of Montreal have been mounting a vigorous challenge to the Saudi reorganization plan since the bankruptcy court hearing began Tuesday,” according to Rabin’s article.
“In testimony, Abdul Aziz Yahya, president of Newfield Enterprises International, a Century City firm that manages Al-Ibrahim’s US real estate holdings, said the Saudi businessman would be the sole owner of the reorganized Marina properties under their plan.”
In February 1993, Los Angeles County terminated Lurie’s lease on the last piece of undeveloped waterfront property in Marina del Rey, ending what a top county official once described as a “great embarrassment,” according to Rabin.
On May 1st, 1993, Rabin’s and Times reporter Ron Russell’s article, “Saudi Wins Court Fight Over Marina Real Estate,” stated, “A billionaire Saudi Arabian businessman with close ties to the Saudi royal family won a bitterly contested battle in federal bankruptcy court and took control of the largest bloc of properties in county-owned Marina del Rey.”
“The Saudi plan calls for investing $4.7 million in upgrading the Marina properties and boat slips. And Ibrahim has pledged to invest another $12 million and extensively redevelop the properties if the county agrees to extend the leases, most of which expire in 30 to 40 years,” wrote Rabin and Russell.
“The Bank of Montreal withdrew its proposal and joined late last month in supporting the Saudi bid after Ibrahim’s attorneys agreed to reduce the bank’s losses on the deal. The Canadian bank was owed more than $54 million on the high-rise Marina Beach Hotel only to see the property’s values slump to barely half that amount,” Rabin and Russell wrote.
“Eric Bourdon, then director of the county Department of Beaches and Harbors, also welcomed the new Saudi role in the Marina. ‘They will upgrade the properties and manage them much more aggressively’”, he said.
According to Rabin and Russell’s article, Ibrahim’s nine Marina holdings — Marina International Hotel, Doubletree/Marina Beach Hotel, Marina del Rey Hotel, Admiralty Apartments, Islander Marina Apartments, Fisherman’s Village, Pier 44, Marina West and the Marina Beach Shopping Center — “provide more than $5 million a year in rent, hotel and sales tax receipts to the financially strapped county government. County officials hope that the receipts will increase as the Marina holdings are upgraded.”
In a Los Angeles Times article by Rabin on February 13th, 1997 titled “Sheik Loses Holdings in Marina del Rey,” he wrote, “A billionaire Saudi Arabian businessman, who secretly bought a major stake in county-owned Marina del Rey almost eight years ago, has lost most of his remaining Marina holdings in federal bankruptcy court.”
Rabin wrote, “Los Angeles County officials have been concerned that promises by the Saudi businessman to invest in upgrading and redeveloping aging Marina properties have not been kept up because of the bankruptcy.
“Ironically, Sheik Abdul Aziz al-Ibrahim, brother-in-law of Saudi King Fahd, became the largest leaseholder in the Marina when he drove his US business partner out of the harbor after a contentious bankruptcy case that ended in 1993.
Rabin continues “Since then, the Saudi investor, whose US real estate interests include Ritz Carlton in New York, Washington, Houston and Aspen, Colorado, has apparently lost interest in Marina del Rey.
“County officials welcomed the court’s approval this week of an agreement to remove six properties from the protracted bankruptcy proceedings and transfer long-term leases on hundreds of boat slips, an apartment complex, shopping centers, restaurants and offices to a new owner.
“‘We obviously don’t like leaseholds in bankruptcy,’ said Stan Wisniewski, then director of the county Department of Beaches and Harbors. ‘We’re pleased to see this chapter come to a close.’”
“In a settlement agreement approved in Los Angeles by US Bankruptcy Court Judge Calvin Ashland, the sheik’s company, MGC Commercial, will give up its long-term leases on the six Marina properties, including the tourist attraction Fisherman’s Village, the Marina Beach and Marina West Shopping Center and office complexes, Admiralty Apartments and Pier 44 and 77.
“Earlier, Ibrahim lost the high-rise Marina Beach Hotel, which is now owned and operated by Marriott. He retains leases on just two properties, the Marina International and Marina del Rey hotels.
“The six properties involved in the bankruptcy settlement will be foreclosed on February 24th by CS First Boston Mortgage Capital Corp. The company holds approximately $26 million in loans on the properties,” wrote Rabin.
“As part of the settlement agreement, CS First Boston promised to repair or replace 32 boat slips and pay the county more than $53,000 in back rent.
“Altogether, the county will receive about $24 million this year in income from the Marina, but nearly $21 million of that goes to repay notes issued when the county mortgaged the Marina in 1993 to pay one-time operating expenses,” Rabin wrote.
“To boost its return on the prime waterfront property, county officials are working on an ambitious long-range strategy to encourage development of the Marina.
“The county’s Small Craft Harbor Commission approved 4-1 a plan to provide incentives for upgrading the harbor to attract more residents, business people and tourists.
“‘We’re excited because clearly it’s a historic document for Marina del Rey,’” Wisniewski said.
Note: The Marina del Rey Historical Society is compiling memorabilia for its collection. If you have photos, documents or any special memory of the Marina you would like to share, please contact the society at (310) 578-1001, or email@example.com/.