US judge dismisses claim that sparked race to claim fugitive Guo Wengui’s luxury flat
New York is the ‘wrong jurisdiction’ to adjudicate the matter brought by hedge fund tied to Hong Kong’s Pacific Alliance Asia Opportunity Fund, judge decides
A New York judge dismissed a case brought against China’s fugitive tycoon Guo Wengui in the US state by a hedge fund linked to Hong Kong’s Pacific Alliance Investment Management Limited.
The case filed on behalf of Cayman Islands-based Pacific Alliance Asia Opportunity Fund LP, a unit of Pacific Alliance Investment, was thrown out on the grounds that New York is the wrong jurisdiction to adjudicate the matter. Pacific Alliance Asia was trying to lay claim to a US$78 million penthouse in Manhattan owned by a US entity controlled by Guo, triggering a race among other companies suing the Chinese billionaire to claim the property before it was sold.
“New York has no interest in deciding a dispute between a Hong Kong investment fund and a citizen of the People’s Republic of China with respect to a transaction covered by Hong Kong law relating to real estate in the PRC, notwithstanding that the defendant citizen of the PRC presently lives in New York,” ruled Justice Barry Ostrager of the Supreme Court of the State of New York.
“While the extent to which documents and witnesses relating to this case are located in Hong Kong is unclear, the transactions out of which the claim arises occurred primarily in a foreign jurisdiction and the circumstance that the defendant can be found here is insufficient to outweigh the burden on the New York courts to hear this case,” the ruling said.
The Pacific Alliance hedge fund sued to try to recover US$88 million of defaulted debts it claims it is owed by Guo. The fund also filed request for a prejudgment order of attachment on the flat in the exclusive Sherry-Netherland Hotel to ensure that proceeds from any sale of the property don’t leave the US. The hedge fund’s legal team includes Edward Moss and Stuart Sarnoff of O’Melveny&Myers LLP.
The hedge fund said Guo’s residence “is his only New York asset worth enough to substantially satisfy any judgment in this case,” according to an affidavit filed on the company’s behalf.
Despite sparking a rush among companies suing Guo in the US to claim the penthouse before it was sold, the apartment’s pricey US$78 million price tag represents just one twentieth of the claims that have piled up against Guo in New York state courts.
As of mid-August, total claims being pursued against the fugitive tycoon in New York State by mainland Chinese plaintiffs amounted to about US$5.3 billion.
The latest claim, worth US$3.7 billion, was to be lodged by Kevin Tung of the law firm Kevin Kerveng Tung PC. The lawyer has filed two other lawsuits since June on behalf of clients trying to find recourse in a New York court for assets they weren’t able to recover in China.
Built across the street from the southeast corner of Central Park at the height of the jazz age in the late 1920s, the Sherry-Netherland features gothic and Italian Renaissance revival detailing inside and out. The building’s cheapest hotel rooms go for $329 per night, according to the property’s website.
The property has been on the market for at least two years, according to a listing online real estate database company Zillow.
Josh Schiller of Boies Schiller Flexner LLP, which represented Guo in the Pacific Alliance case, said in an email to the South China Morning Post: “The court correctly ruled that parties cannot simply drag Mr. Kwok into the New York courts for cases that have no connection to this state.”
“Miles Kwok” is one of eight names used for Guo in the Pacific Alliance affidavit and other related legal documents filed in New York.