• Wall Street Journal, Wednesday, April 22, 2009 10:32 AM

Hilton Hotels is temporarily suspending development of its Denizen Hotels as a federal grand jury in Manhattan investigates charges that two former Starwood executives smuggled out more than 100,000 pages of proprietary documents before they joined Hilton, Tamara Audi reports.

Hilton spokeswoman Ellen Gonda says the company is cooperating fully with the U.S. attorney's office in Southern District of New York, which has asked for documents relating to its employment of Ross Klein and Amar Lalvani, who are on paid administrative leave "pending Hilton's review of the situation." Hilton also placed on paid administrative leave its luxury-hotel development team.

Hilton has said that launching new luxury and so-called lifestyle brands is a priority, and it was in talks with developers in Istanbul, London, Mumbai, New York and Panama City to open Denizen Hotels in those locations. Starwood filed a civil lawsuit against Hilton in federal district court in White Plains, N.Y., last week.

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