One of the limited partners in the group that owns and manages the the Hotel Arizona downtown is suing general partner Humberto S. Lopez claiming he fraudulently misappropriated more than $250,000 for his own benefit or for the benefit of his other companies.

Jerry Sonenblick, a limited partner of Pueblo Center Partners, filed the lawsuit April 24 in Superior Court of Pima County against Humberto S. Lopez, his wife Czarina Lopez, and HSL Pueblo Center Properties Limited Partnership, of which Lopez is president.

Print this story Email this story Post a Comment Hotel Arizona in downtown Tucson. ADVERTISEMENT

In the suit, Sonenblick said Lopez and HSL "fraudently misappropriated cash and other assets from the partnership, diverting them for Lopez’ own personal benefit or for the benefit of other companies owned or controlled by Lopez."

Also named in the suit were unknown parties and firms who allegedly received partnership funds.

The suit charges that:

• In March or April 2005, Lopez, acting as president of HSL, issued two separate checks drawn against the hotel’s bank account, made out to third parties in the amount of $44,000 and $36,000. The $44,000 check was written to an unknown third party and the $36,000 check was made to Alberto Parra to pay for insurance for a property in Yuma.

"Neither payment related to any partnership or hotel expense or debts and neither payment was recorded on the books of the partnership," Sonenblick said in the lawsuit. "Defendants Lopez and HSL fraudulently diverted partnership assets to pay off unrelated debts owed by other entities for which the hotel and partnership received no benefit."

• Around October 2005, Lopez, acting as president of HSL, fraudulently misappropriated $155,000 in cash from partnership accounts for use of other companies owned or controlled by Lopez. "The loan balances owed by the partnership to defendant Lopez were not reduced to reflect the withdrawal of funds," the suit said. "This diversion of assets was accomplished through a $155,000 wire transfer that was deposited into the Bank of Tucson in non-hotel accounts that were subsequently drawn against by Lopez’ other companies or companies controlled by Lopez for the benefit of those companies."

• From time to time in 2004 and 2005, Lopez fraudulently took out additional loans on behalf of the partnership from the Dabdoub family, a personal friend of the Lopezes. "Although the partnership’s loan debt increased, the loan proceeds were not used to pay off any other partnership or hotel debts or to otherwise benefit the partnership or hotel," the suit said. "Instead, those loan proceeds were fraudulently diverted for the personal benefit of defendant Lopez or for the benefit of his other companies or companies controlled by Lopez."

• In December 2004, Lopez held a holiday party for friends, hosted by the hotel at a cost of $18,000 to $20,000, and the partnership was never reimbursed for the cost nor were loan balances that the partnership owed to Lopez ever reduced.

• Also in December 2004, Lopez hosted a personal party at his home using the hotel’s catering services, but never reimbursed the hotel for this cost.

The lawsuit said that partnership operating agreements required "issue a call for advances" prior to incurring the advances.

Lopez failed to follow this procedure, the lawsuit said, but instead "simply incurred significant additional obligations, purportedly on behalf of the partnership, doing so over a period of many years, allowing such obligations to accumulate without issuing calls for advances."

The suit charges that Lopez incurred obligations exceeding $7,276,849.15 "without issuing timely calls for advances, and without following the procedural safeguards required in both operating agreements."

• Without providing any prior notice, Lopez apparently purchased the private activity bond debt in the amount of $8,855,000 in 2004. The private activity bond debt was previously classified as qualified non-resource liability in which Sonenblick was accorded a 33â…“ percent interest for purposes of determining his tax basis, the suit said. "By purchasing the debt in 2004, (Lopez’) individual tax basis was significantly increased and sonenblick’s was significantly decreased, resulting in Sonenblick apparently realizing "a significant tax gain and liability in 2004, without his knowledge."

The suit said Lopez, a certified public accountant, was knowledgeable about the consequences of his actions and "nevertheless intentionally took such actions without giving (Sonenblick) any notice," thereby committing fraud against Sonenblick.

By virtue of his actions, the suit said, Lopez’ actions "constitute a pattern of related and continuous unlawful activity in violation of Arizona’s RICO statute." The suit also accuses Lopez of breach of contract and breach of fiduciary duty and asked the court for damages to be awarded, including punitive damages for fraud, plus attorney’s fees and costs.

Lopez could not be reached for comment on the lawsuit.

The Hotel Arizona, 181 W. Broadway, was acquired by Lopez’ group in 1983 and has operated previously as the Radisson City Center Hotel.