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BajaNews
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Trump venture folds, leaving buyers strapped
http://www.miamiherald.com/business/nation/story/936320.html
Mar. 06, 2009
By ELLIOT SPAGAT
Stephen and Linda Drake cast aside concerns about owning property in Mexico because they believed in Donald Trump.
The Southern California couple paid $250,000 down payment on a 19th-floor oceanfront condo in Trump Ocean Resort Baja in 2006 before the first
construction crew arrived.
But admiration for the celebrity developer and star of "The Apprentice" has now turned into anger and disbelief as Trump's luxury hotel-condo plan
collapsed, leaving little more than a hole in the ground and investors out of their deposits, which totaled $32.2 million.
"I can't even stand to see Trump's face on TV," says Linda Drake, a psychologist, whose husband is a commercial airline pilot and financial adviser.
Investors were told last month their money was spent and they won't get a penny back. A single mother in suburban Los Angeles lost $200,000 and won't
be able to send her sons to private universities. A Los Angeles-area businessman lost a deposit of more than $1 million on four Trump units, including
two penthouses.
The project's collapse comes at a delicate time for Trump, whose casino company, Trump Entertainment Resorts Inc., filed for bankruptcy protection
last month. He also is embroiled in a lawsuit to avoid paying debt on the struggling Trump International Hotel & Tower in Chicago.
Trump and his children heavily promoted the northern tip of Mexico's Baja California coast. He sold 188 units for $122 million the first day they went
on a sale at a lavish event in a downtown San Diego hotel in December 2006.
"I went out and saw this site, and I was blown away by it," Ivanka Trump told The Associated Press in June 2007. "From the minute I saw it, it was a
deal I had to do."
The location was a contrast to more expensive Mexican coastal markets such as Puerto Vallarta, Los Cabos and Cancun, she said.
The Trumps remained buoyant even as the U.S. housing market began to crumble. Ivanka assured buyers in an October 2007 newsletter that all Trump
projects were immune to a slowdown.
"In characteristic Trump fashion, Trump Ocean Resort Baja will be the best of the best, and consequently always in demand," she wrote.
All that remains of Trump Baja is a highway billboard with a large photo of Donald Trump that advertises condos for sale. It hovers over a closed
sales center and showroom, a paved parking lot, a big hole that cuts a wide swath, drainage pipes and construction equipment.
The failure of Trump Baja is a big blow to a real estate market just south of the border from San Diego that was booming two years ago with U.S.
buyers looking for second homes and easy profits but is now similarly swooning. The market has been hammered by Mexico's drug-fueled violence and the
global economic crisis.
Other developers completed big projects nearby in recent years and the area remains home to thousands of Americans, but the cliff-lined coast is
pocked with partially built towers. The steel frame of one oceanfront high-rise is rusting, with air ducts hanging from one floor and an idled crane
out front. A wind-tattered sales sign hangs outside twin towers nearby, one that appears almost complete and the other a much shorter steel skeleton.
Trump Baja demanded about 30 percent down for units that sold from less than $300,000 to $3 million, buyers said.
Deposits on abandoned projects are also at risk in the U.S., even in states like California that prohibit developers from spending the money on
construction, lawyers say. The risk may be higher in Mexico because consumer protection laws are generally weak.
"The bottom line in Mexico is caveat emptor, buyer beware," said Art Spaulding, an Irvine, Calif., real estate attorney who does business south of the
border.
Trump's condos went on sale when Southern California home prices were near their peak, offering a lower-cost alternative in the Mexican border city of
Tijuana. The Trump Organization teamed up with Los Angeles developer Irongate Capital Partners LLC, the partnership behind Trump International Hotel
& Tower Waikiki in Honolulu.
Guadalupe Mendoza, 47, paid a $200,000 deposit at the first-day sale in San Diego, refinancing her Downey home and getting a loan from a sister. She
watched a giant screen show units getting snapped up.
After signing papers, buyers were ushered to a buffet of sirloin tip and fish tacos. Cheers erupted in the hotel ballroom for each new owner.
"I did it in less than a minute," said Mendoza, an administrator in the Los Angeles County Office of Education. "I remember my head was hurting and
thinking, 'My God, what was that?' I was thinking maybe I should have asked questions. It was like a roller-coaster ride."
Buyers pressed for updates as construction fell behind schedule. They got a bombshell letter in December that said negotiations for a construction
loan from German bank WestLB AG collapsed and Trump Baja had only $556,000 left. It quoted a contract clause that gave the developer a right to spend
their deposits.
Another letter came in January that said Trump was removing his name.
A Feb. 16 letter from a Mexican entity, PB Impulsores, said the project was scrapped "given the extreme dislocation of the financial markets." It said
there was no money left to refund deposits.
The December letter says Trump was not an investor, but buyers said they were sold on his imprimatur.
"We thought of Donald Trump," says Linda Drake. "If Donald Trump was behind it, it was going to work ... I am embarrassed to tell people we got caught
up in this."
Ivanka Trump told the AP in 2007 that her father "is the boss" when asked about his role in the project.
"He is involved in every capacity," she said.
In response to a request to interview Donald and Ivanka Trump, the Trump Organization issued a statement that said its partner violated an agreement
to license the Trump name, missing deadlines to obtain financing and begin construction.
Timothy Hughes, an attorney for Irongate, said the project "will not be going forward" but declined to answer questions.
One buyer sued Trump and Irongate in Los Angeles Superior Court last month and more litigation is expected.
"They put their trust in this project and feel betrayed," said Bart Ring, a Woodland Hills attorney who says he represents about 75 buyers who haven't
sued.
Homeowners and brokers in Baja welcomed the publicity and higher prices that Trump brought. Now they wish he never came.
"It was a two-edged sword that's cutting the wrong way," said broker Brian Flock. "Everybody is shellshocked. I call it post-Trump syndrome."
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Dave
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Kinky
Strapped?
Reamed is a better description.
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Woooosh
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Same story hit the Drudge Report at the same time- so more egg on the Donalds face. A good public shaming never hurt anyone. I saw him say on TV he
was embarrased the bankrupt Trump Casinos still have his name on them- ya think?
""I went out and saw this site, and I was blown away by it," Ivanka Trump told The Associated Press in June 2007. "From the minute I saw it, it was a
deal I had to do."
I guess she didn't arrive by helicopter and must have had a cold. Hard to miss the smell from the ground, hard to miss the wastewater treatment ponds
from the air.
[Edited on 3-7-2009 by Woooosh]
\"The only thing necessary for the triumph of evil is for good men to do nothing\"
1961- JFK to Canadian parliament (Edmund Burke)
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BajaNews
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Guadalupe Mendoza, 47, of Downey, Calif., an administrator in the Los Angeles County Office of Education who lost her $200,000 deposit on a $667,000,
two-bedroom condo in Trump Baja poses for a photo with Trump Baja brochures at her home in Downey, Calif. on Sunday, March 1, 2009. Donald Trump is
scrapping plans for a luxury-hotel oceanfront condominium across from Tijuana's sewage treatment plant, and buyers, mostly from Southern California,
won't get any of their $32 million in deposits back. The single mother says the loss means she can't afford to send her two sons: Francisco Negrete,
16, and Carlo Negrete, 14, to private university. (AP Photo/Damian Dovarganes)
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Woooosh
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loved the "luxury-hotel oceanfront condominium across from Tijuana's sewage treatment plant" part ofthat caption!
You can't blame it all on Donald. Greed was a key factor. These people had no idea what they were buying and din't bother driving an hour to find
out.
\"The only thing necessary for the triumph of evil is for good men to do nothing\"
1961- JFK to Canadian parliament (Edmund Burke)
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Dave
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WTF?
| Quote: | Originally posted by BajaNews
The single mother says the loss means she can't afford to send her two sons: Francisco Negrete, 16, and Carlo Negrete, 14, to private university. (AP
Photo/Damian Dovarganes) |
She could afford the 200k deposit plus the 467K balance yet she can't afford to send the boys to college?
I don't understand her math...Or her priorities.
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Woooosh
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| Quote: | Originally posted by BajaNews
Guadalupe Mendoza, 47, of Downey, Calif., an administrator in the Los Angeles County Office of Education who lost her $200,000 deposit on a $667,000,
two-bedroom condo in Trump Baja poses for a photo with Trump Baja brochures at her home in Downey, Calif. on Sunday, March 1, 2009. Donald Trump is
scrapping plans for a luxury-hotel oceanfront condominium across from Tijuana's sewage treatment plant, and buyers, mostly from Southern California,
won't get any of their $32 million in deposits back. The single mother says the loss means she can't afford to send her two sons: Francisco Negrete,
16, and Carlo Negrete, 14, to private university. (AP Photo/Damian Dovarganes) |
Can anyone explain how this single 47 year old "county education administrator" came up with $200K cash to put down on an investment condo while
raising two teenage boys? And this will prevent the boys from attending private universities? She had a two year high-risk one-shot investment plan
for her kids college funds? I don't get it- but maybe that's why she is single.
\"The only thing necessary for the triumph of evil is for good men to do nothing\"
1961- JFK to Canadian parliament (Edmund Burke)
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BajaNews
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| Quote: | Originally posted by BajaNews
"I did it in less than a minute," said Mendoza, an administrator in the Los Angeles County Office of Education. "I remember my head was hurting and
thinking, 'My God, what was that?' I was thinking maybe I should have asked questions. It was like a roller-coaster ride." |
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CaboRon
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| Quote: | Originally posted by BajaNews
| Quote: | Originally posted by BajaNews
"I did it in less than a minute," said Mendoza, an administrator in the Los Angeles County Office of Education. "I remember my head was hurting and
thinking, 'My God, what was that?' I was thinking maybe I should have asked questions. It was like a roller-coaster ride." |
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People really did leave their brains at the door to the presentation center ....
It's all about speculation and GREED ...
I don't have a lot of compassion for the chumps ....
CaboRon
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Packoderm
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Compassion or not, I'm sure that Donald Trump himself has a little bit of left over spending money he can place forward to help his customers recoup
at least part of their deposits. If he doesn't offer to help, then he is a scoundrel.
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David K
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| Quote: | Originally posted by Dave
| Quote: | Originally posted by BajaNews
The single mother says the loss means she can't afford to send her two sons: Francisco Negrete, 16, and Carlo Negrete, 14, to private university. (AP
Photo/Damian Dovarganes) |
She could afford the 200k deposit plus the 467K balance yet she can't afford to send the boys to college?
I don't understand her math...Or her priorities. |
This explains it all Dave: "...an administrator in the Los Angeles County Office of Education"
Calif. schools are F*&*$'d up thanks to people like her... my kids got *^%$# education... I can imagine who she voted for too... We are screwed up
for a long time!
[Edited on 3-7-2009 by David K]
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David K
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| Quote: | Originally posted by Woooosh
| Quote: | Originally posted by BajaNews
Guadalupe Mendoza, 47, of Downey, Calif., an administrator in the Los Angeles County Office of Education who lost her $200,000 deposit on a $667,000,
two-bedroom condo in Trump Baja poses for a photo with Trump Baja brochures at her home in Downey, Calif. on Sunday, March 1, 2009. Donald Trump is
scrapping plans for a luxury-hotel oceanfront condominium across from Tijuana's sewage treatment plant, and buyers, mostly from Southern California,
won't get any of their $32 million in deposits back. The single mother says the loss means she can't afford to send her two sons: Francisco Negrete,
16, and Carlo Negrete, 14, to private university. (AP Photo/Damian Dovarganes) |
Can anyone explain how this single 47 year old "county education administrator" came up with $200K cash to put down on an investment condo while
raising two teenage boys? And this will prevent the boys from attending private universities? She had a two year high-risk one-shot investment plan
for her kids college funds? I don't get it- but maybe that's why she is single. |
Who knows?... Her pay is too high and that's why the teachers don't have the equipment or room they need to teach the kids... ADMINISTRATION takes it!
Face it, we are screwed up in California... even the Terminator can't fix it!
[Edited on 3-7-2009 by David K]
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Woooosh
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| Quote: | Originally posted by Packoderm
Compassion or not, I'm sure that Donald Trump himself has a little bit of left over spending money he can place forward to help his customers recoup
at least part of their deposits. If he doesn't offer to help, then he is a scoundrel. |
It shouldn't have gotten that far. The Donald should have reviewed the sales contracts- insisting on escrow for the deposits. The people signed a
contract they didn't read, for a cmplex that hadn't broke ground on a site they hadn't inspect. I do think Ivanka is culpable- she claimed to have
bought a penthouse during the sale event. The sales event was held in San Diego and the contracts were negotiated and signed in the USA with US
Dollars- so they may be able to recoup something from IronGate through civil US courts.
\"The only thing necessary for the triumph of evil is for good men to do nothing\"
1961- JFK to Canadian parliament (Edmund Burke)
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Bajajack
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I can't bring myself to have any sympathy for any of em, most of em who bought into it were super sure they could dump in 6-12 months and double their
money.
Sorry suckers, do a little research next time!
\"take what you can, give nothing back!\"
We have room for but one language here, and that is the English language... and we have room for but one sole loyalty and that is a loyalty to the
American people.\'
Theodore Roosevelt 1907
We can have no \"50-50\" allegiance in this country. Either a man is an American and nothing else, or he is not an American at all.
Theodore Roosevelt
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vandenberg
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| Quote: | Originally posted by BajaNews
The single mother says the loss means she can't afford to send her two sons: Francisco Negrete, 16, and Carlo Negrete, 14, to private university.
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Somewhere I have the feeling some ex husband is the typical, Californian, short end of the stick poor sucker, that is feeding most of her financial
dealings. 
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Woooosh
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The boys are just going to have to slum it in the Cal State system.
\"The only thing necessary for the triumph of evil is for good men to do nothing\"
1961- JFK to Canadian parliament (Edmund Burke)
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Packoderm
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| Quote: | Originally posted by vandenberg
| Quote: | Originally posted by BajaNews
The single mother says the loss means she can't afford to send her two sons: Francisco Negrete, 16, and Carlo Negrete, 14, to private university.
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Somewhere I have the feeling some ex husband is the typical, Californian, short end of the stick poor sucker, that is feeding most of her financial
dealings. |
That's too funny.
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Packoderm
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And anyway, what is the golden rule of investing in Baja? I've seen it written often in these forums.
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Woooosh
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He who has the gold rules? nah
\"The only thing necessary for the triumph of evil is for good men to do nothing\"
1961- JFK to Canadian parliament (Edmund Burke)
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Bob H
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| Quote: | Originally posted by BajaNews
http://www.miamiherald.com/business/nation/story/936320.html
Mar. 06, 2009
By ELLIOT SPAGAT
Buyers pressed for updates as construction fell behind schedule. They got a bombshell letter in December that said negotiations for a construction
loan from German bank WestLB AG collapsed and Trump Baja had only $556,000 left. It quoted a contract clause that gave the developer a right to spend
their deposits.
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I would LOVE to see the contract clause that was quoted, that obviously the buyers did not read before signing. I would NEVER EVER agree to anything
like that.
I read every word on anything that I sign. But, that's probably because I was a contract negotiator when I was a working dude.
I hate to say this, but I do not feel a bit sorry for any of them that agreed to this. Stupidity, if you ask me!
Bob H
[Edited on 3-7-2009 by Bob H]
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