BajaNomad - Trump venture folds, leaving buyers strapped

Trump venture folds, leaving buyers strapped

BajaNews - 3-6-2009 at 04:42 PM

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."

Kinky

Dave - 3-6-2009 at 04:48 PM

Strapped?

Reamed is a better description.

Woooosh - 3-6-2009 at 05:03 PM

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]

BajaNews - 3-6-2009 at 05:09 PM

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)

ALeqM5icuzaYl7_27Fb0bgEutHF80Z9F4g.jpg - 48kB

ALeqM5icuzaYl7_27Fb0bgEutHF80Z9F4g.jpg - 48kB

Woooosh - 3-6-2009 at 05:14 PM

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.

WTF?

Dave - 3-6-2009 at 05:18 PM

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.

Woooosh - 3-6-2009 at 05:20 PM

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.

BajaNews - 3-6-2009 at 05:21 PM

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."

CaboRon - 3-6-2009 at 06:11 PM

Quote:

Originally posted by BajaNews

Quote:

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

Packoderm - 3-6-2009 at 06:19 PM

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.

David K - 3-6-2009 at 06:22 PM

Quote:

Originally posted by Dave

Quote:

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]

David K - 3-6-2009 at 06:25 PM

Quote:

Originally posted by Woooosh

Quote:

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]

Woooosh - 3-6-2009 at 06:27 PM

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.

Bajajack - 3-6-2009 at 06:48 PM

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! :lol:

vandenberg - 3-6-2009 at 07:37 PM

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.

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. :biggrin:

Woooosh - 3-6-2009 at 07:53 PM

The boys are just going to have to slum it in the Cal State system.

Packoderm - 3-6-2009 at 08:31 PM

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.

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. :biggrin:

That's too funny.

Packoderm - 3-6-2009 at 08:33 PM

And anyway, what is the golden rule of investing in Baja? I've seen it written often in these forums.

Woooosh - 3-6-2009 at 08:35 PM

He who has the gold rules? nah

Bob H - 3-6-2009 at 08:53 PM

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.

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]

sd - 3-6-2009 at 09:10 PM

So a single Mom puts up a $200,000 deposit. $467,000 remains to be paid for her agreed upon purchase price of $667,000.
Lets figure if she finances the balance her monthly expense is around $4,000 per month including association fee, taxes, insurance, upkeep. $48,000 per year.
Her kids are 14 and 16.
If everything had worked out, and her condo was delivered to her as agreed upon, how was she going to finance her two sons private university expenses?
I do feel badly she will loose her money, but poor planning.

GREED - Buy it now and double your money. Buy 4 and you will really make BIG bucks! Trump should be punished for his part in false promises.

BUYERS- Be smart. Use an attorney of your choosing, one that is not known by the seller and/or agent.
Do not release money. Pass on the deal if they insist. The market is soft now, the seller will wait. If you are in the US, ask a local attorney their opinion.

Packoderm - 3-6-2009 at 09:13 PM

Who now owns the lot? Do the investors own it, or is the screwing of the investors built into that part of the design as well? If the investors indeed do own it, they could sub-divide the land into 188 lots and distribute it among themselves or hold a lottery amongst themselves to distribute a lesser number of decent sized lots on the property. One thing is for sure, the name Trump should forever be associated with that piece of real estate - whatever it does or does not become. Where did the $32 million go anyway? Is there any accountability at all?

sd - 3-6-2009 at 09:19 PM

$32 mil was spent on hair gel for The Donald, shoes for Ivanka and a few meetings.
All documented expenses and a detailed expense report mailed to each buyer, right?

The Gull - 3-6-2009 at 09:34 PM

Quote:

Originally posted by Woooosh

Quote:

All we can really know from this, is that a man with the last name Negrete got terribly drunk twice about two years apart.

I will side with all of the other Nomads who are thinking that this lady does truly represent all that is wrong with the Cal School system both from an academic as well as from a financial one. She reflects the same kind of society that gave us OCTOMOM.

I have already nominated her for a Darwin award in 2009.

The Gull - 3-6-2009 at 09:48 PM

Quote:

Originally posted by morgaine7
The Trumps are US.
Sales were transacted in San Diego.
Irongate is a "Los Angeles developer".
So apart from the location, how is this a Mexico problem?

Fairly simple to explain. Guadalupe Mendoza and her two boys are Mexican.

Bajahowodd - 3-6-2009 at 10:00 PM

Trump has always sucked. peeed away daddy's money, filing bankruptcies over and over again. It's too bad that the media have universally portrayed him as something special, when that's the last thing he is. How do you spell charlatan? Oh. I just did.

ckiefer - 3-6-2009 at 10:43 PM

Quote:

Originally posted by Woooosh
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]

Bill Maher gave the Don a public shaming tonight on his program Real Time with Bill Maher "New Rules". Maybe you could take a photo of the sign along with the wastewater treatment ponds and send it to him. He'd get a real kick out it! :lol:

bigjohn - 3-7-2009 at 09:27 AM

Trump Dump

BajaGringo - 3-7-2009 at 09:48 AM

I say that all those who invested in the project should camp out on the property and take it over, exercising "squatter rights."

That would make for some great press for the Donald...

Pudgy coiffed Trump needs to go away

Bronco - 3-7-2009 at 09:51 AM

I love how this obese loudmouth has buffaloed the masses. Unbelievable people watch this clown having people make cup cakes on TV. I hope this will forever trash his name and his kids can get real jobs instead of pimping for “poopsy” 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." Obviously Ivanka likes the smell of sewage and poverty. But they did grow up in NY.
The location was a contrast to more expensive Mexican coastal markets such as Puerto Vallarta, Los Cabos and

Bob H - 3-7-2009 at 10:25 AM

Quote:

Originally posted by soulpatch
I voted for Obama, no guessing necessary. After 8 years of whoring our country out to the people who have gotten us where we are now I am somewhat hopeful for change.

You're gonna get your change. Let's just hope it works - we'll see soon enough. My IRA's don't look to good since he was sworn in. He preaches gloom and doom instead of prosperity and success with his stimulus plans. And all the spending scares me.

I am not one to talk politics, but this administration takes the cake if you ask me!

That's all I have to say.... OUT!

Bob H

More Scathing Reporting on the Failed Trump Baja Project

Gypsy Jan - 3-7-2009 at 04:39 PM

From a New York based media site:
http://gawker.com/5166121/trump-baja-condo-project-goes-sout...

Investors / Depositors Trumped

ElFaro - 3-7-2009 at 05:37 PM

Article also talks about projects adjacent to and slowdown on the "Gold Coast" of Baja.

http://www.breitbart.com/article.php?id=D96ONQO00&show_a...

Bajahowodd - 3-7-2009 at 05:38 PM

Slowdown? What a surprise.

Bajahowodd - 3-7-2009 at 05:43 PM

Know what? We're doing the same thing for Trump as the media has. Maybe it's time to ignore him.

BajaGringo - 3-7-2009 at 06:05 PM

Great point...

Woooosh - 3-7-2009 at 06:25 PM

and I don't think it's near Rosario either.

BajaGringo - 3-7-2009 at 06:34 PM

I think that the Realtors in Baja would be thrilled if it were "only" a slowdown...

:lol:

Woooosh - 3-7-2009 at 06:48 PM

Quote:

Originally posted by Packoderm

The site was owned by a Mexico City family. It had no value at all until Trump came along. It was not considered suitable for building. The Trump project never even got past the environmental approval process to pull the building permits. They would have had to pump every bit of wastewaster uphill to the treatment plant on the other side of the cuota.

[Edited on 3-8-2009 by Woooosh]

bacquito - 3-7-2009 at 06:56 PM

Quote:

Originally posted by BajaGringo
I think that the Realtors in Baja would be thrilled if it were "only" a slowdown...

:lol:

Agree, I frequent Ensenada and it is like a "ghost town"-no tourist. BUT, the Wal Mart, Home Depot remain busy.

CaboRon - 3-7-2009 at 07:03 PM

Packoderm - 3-7-2009 at 07:03 PM

Quote:

Originally posted by Woooosh

Quote:

Originally posted by Packoderm

That can't possibly be true. The following quote and photo was taken from one of the Trump sales websites: "TRUMP OCEAN RESORT · BAJA, MEXICO Situated on 17 acres of pristine land, overlooking the Pacific and the Coronado Islands, Trump Ocean Resort is North Baja 's first condo/hotel luxury resort."

Packoderm - 3-7-2009 at 07:13 PM

I'd say that this lady owes society for her involvement in the scam. She can begin to repay by giving her investors her proceeds from a Penthouse magazine photo spread.

Oh Dear, Ivanka

Gypsy Jan - 3-7-2009 at 07:20 PM

Fake boobs, botox, collagen injections and etc.

Do you have daddy issues?

Baja Gringo

Bronco - 3-7-2009 at 08:35 PM

Your one liners, are you going for a record or do you really have a germane comment you seem to have a semi backgroud in some area's - why not use it to illuninate the forum on subjucts that you are truely familiar?

Barry A. - 3-7-2009 at 09:05 PM

Quote:

Originally posted by Gypsy Jan
Fake boobs, botox, collagen injections and etc.

Do you have daddy issues?

Wow, it all looks great to me. :yes:

Barry

The Gull - 3-7-2009 at 10:38 PM

Quote:

Originally posted by Bronco
Your one liners, are you going for a record or do you really have a germane comment you seem to have a semi backgroud in some area's - why not use it to illuninate the forum on subjucts that you are truely familiar?

Full of sentense likely too well formed four to be understood. Truely, think not?

Bajahowodd - 3-8-2009 at 12:04 AM

Anyone who watches The Apprentice will be rendered blind.

EnseNADAslim - 3-8-2009 at 12:20 AM

Now if just Tiger would go under-------- :rolleyes:

Wishful thinking.
I have no idea how that Home Depot stays busy.

Bajahowodd - 3-8-2009 at 12:23 AM

It gives all the gringos hanging around outside a chance to get a day's worth of work :tumble:

Skip_Mac - 3-9-2009 at 06:56 PM

Well, looking ahead, it seems we Baja travelers will have several new landmarks to remind us not to stop north of Ensenada...massive rotting vacant towers...monuments to greed and ego. It would be nice to see Trump's name (semi) permanently emblazoned on one of the vacant Hi rises, I saw on my drives south and north. I suppose they will provide nice roosting aqnd nesting places for birds and launching places for Mexican fireworks, perhaps even party sites for vacationing juvenile North Americano's. All is not lost, there is a lesson and some useful wildlife environment created.

As for the lost investments, well, I am not particularly worried. I'm sure the Donald is holding enough of the cash to stay comfortable as well. All negative experiences have some potential to become a lesson. I expect the Nomads are more likely to learn from this than most.

ckiefer - 3-9-2009 at 08:55 PM

Very short news clip tonight on a local Atlanta channel. Rushed through it, no comment.

BajaGringo - 3-9-2009 at 09:50 PM

Quote:

I am still trying to figure out if I have been dissed???

Dennis, you are the expert in the one liners category; help me out. Should I be offended or not???

:lol:

DENNIS - 3-9-2009 at 10:14 PM

Quote:

Originally posted by BajaGringo

Dennis, you are the expert in the one liners category; help me out. Should I be offended or not???

Well............it just all depends.

Bajahowodd - 3-9-2009 at 11:33 PM

I'm just wondering when this thread is going to die of natural causes.

castaway$ - 3-10-2009 at 10:18 AM

I'm suprised our government has offered poor Trump a bailout for all of his losses! Lord knows he needs one more than the rst of us. :mad:

CaboRon - 3-10-2009 at 04:34 PM

Perhaps we could just put the poor Donald out of his misery

Bajahowodd - 3-10-2009 at 04:38 PM

Just don't watch his insipid circus of a show. That's voting with your feet.

fishbuck - 3-10-2009 at 04:48 PM

Quote:

Originally posted by Packoderm
I'd say that this lady owes society for her involvement in the scam. She can begin to repay by giving her investors her proceeds from a Penthouse magazine photo spread.

I'd buy anything she was selling! What is she selling?

Barry A. - 3-10-2009 at 04:51 PM

She is a graduate of the Wharton School of Finance---------I would like to discuss her studies with her anytime.

Barry

CaboRon - 3-11-2009 at 08:38 AM

Quote:

Originally posted by Barry A.
She is a graduate of the Wharton School of Finance---------I would like to discuss her studies with her anytime.

Barry

I want to discuss something else with her :lol:

Donald Trump project Collapses

Nancy Drew - 3-11-2009 at 05:40 PM

http://www.hotelsmag.com/articleXml/LN937098028.html

http://blogs.iht.com/tribtalk/properties/roof/?p=664

Anyone watching The apprentice these days?
:bounce:

From the Union Trib

CaboRon - 3-15-2009 at 08:11 AM

Trump sued by investors over failed resort
69 believed they were buying into his project
By Leslie Berestein (Contact) Union-Tribune Staff Writer
2:00 a.m. March 14, 2009
Nearly 70 plaintiffs who invested millions of dollars in the Trump Ocean Resort, a planned luxury oceanfront development in Baja California that was never built, are now suing Donald Trump, his son and daughter, and the project's developers on a fraud claim.
The lawsuit was filed yesterday in Los Angeles Superior Court. It alleges, among other things, that buyers who put down deposits on the planned development's 526 condo-hotel units were deceived into believing they were buying into a Trump development when the Trump name was merely licensed by the developers.
Included among the defendants are Trump, Donald Trump Jr. and Ivanka Trump, as well as principals of the project's Los Angeles-based developers, Irongate Development, its partner company Punta Bandera Investors USA, and its real estate brokers S&P Destination Properties.
Among the 41 causes of action listed are allegations of fraudulent inducement, negligent misrepresentation, deceit and breach of fiduciary duty.
The developers of the Trump Ocean Resort lost their financing after a construction loan of about $150 million from a German bank fell through last summer. Late last year, buyers learned their deposit money had been spent; last month, they received a letter saying the project had been scrapped because of the poor condition of the financial markets.
Aside from some ground preparation and foundation work, there is nothing on the site, 10 miles from the border.
The Trump Organization terminated its license agreement with the developers in January, after the project had gone belly-up.
However, beginning in 2006, the project was marketed as a Trump development, said Bart Ring, an attorney representing 69 plaintiffs.
"The Trump name appears ubiquitously in marketing for the project, including on advertisements, on billboards advertising the project, on letterheads, stationery, and cover letter," the 197-page complaint says.
A DVD was taken from the project's Web site of Donald and Ivanka Trump plugging the development, Ring said. The Trump brand name provided a sense of security for buyers who would not have otherwise considered investing in Mexican real estate, he said.
"None of these people would have done a thing without Trump being substantially involved," Ring said.
In a phone interview yesterday, Donald Trump maintained his distance from the developers, saying he was "not happy" with what occurred.
"I have never been there," he said of the site. "They licensed my name."
Trump, who had not seen the complaint, said buyers were informed in writing, on a project fact sheet, that he was a licensor and not the developer. Trump had already partnered with Irongate for a project in Hawaii; he said he decided to work with them in Baja California because he considered the Hawaii project a success.
He said he terminated his licensing agreement with the developers because they were in default.
"They did not live up to the terms of the agreement," Trump said.
An attorney for Irongate and a former company principal did not return phone messages seeking comment.
Nearly 200 buyers are believed to have deposited more than $32 million for ocean-view units priced at $300,000 to $2.5 million.
Tammy Willis, 38, a city employee in Oakland, put down three installments totaling $150,000 for a one-bedroom unit costing $525,000. She said she paid her last installment in early 2008.
By that time, the developers were already in financial trouble, Ring said.
Willis, who has not yet taken legal action, traveled to San Diego for a sales reception in December 2006, where prospective buyers were served appetizers and drinks as they chose color schemes. She paid her first $50,000 then.
"I was never told the (Trump) name was only licensed," she said. "It could have been in the legal documents, but I didn't know that. I thought it was what it said, Trump." Leslie Berestein: (619) 542-4579; leslie.berestein@uniontrib.com

Leslie Berestein: (619) 542-4579; (Contact)

oldlady - 3-15-2009 at 08:26 AM

That last paragraph says it all..people will stand in a supermarket reading teeny print on the ingredients of a can of Campbell's Soup, but fork over thousands for another brand...no questions asked.

David K - 3-15-2009 at 08:35 AM

>>> "I have never been there," he said of the site. "They licensed my name."
Trump, who had not seen the complaint, said buyers were informed in writing, on a project fact sheet, that he was a licensor and not the developer. Trump had already partnered with Irongate for a project in Hawaii; he said he decided to work with them in Baja California because he considered the Hawaii project a success. <<<

Hawaii is not Baja... Maybe he didn't know Baja was not part of the United States? :wow:

Have you seen it called: Baja, California ? That makes it look like a town: Santee, California for example! :?:

k-rico - 3-15-2009 at 08:58 AM

The lawsuit alleges violation of federal disclosure laws; i.e, the buyers were not told of the true arrangement until December 2008. It would be interesting to read the contracts that were used when deposits were made.

Where's the $32 million collected? American or Mexican hands? The fact the parties involved are saying the money is "gone" sure adds fuel to the fraud accusations. Nothing was built.

http://biz.yahoo.com/ap/090314/trump_mexico.html

[Edited on 3-15-2009 by k-rico]

Woooosh - 3-15-2009 at 09:53 AM

Quote:

Originally posted by k-rico
The lawsuit alleges violation of federal disclosure laws; i.e, the buyers were not told of the true arrangement until December 2008. It would be interesting to read the contracts that were used when deposits were made.

Where's the $32 million collected? American or Mexican hands? The fact the parties involved are saying the money is "gone" sure adds fuel to the fraud accusations. Nothing was built.

http://biz.yahoo.com/ap/090314/trump_mexico.html

[Edited on 3-15-2009 by k-rico]

Lots of new coverage on the Trump debacle in todays (Sunday) Union Trib. Seems the buyers may have recourse through the CA courts- since everything took place there.

Where did the money go? What's the going commission on Real Estate sales in Baja these days? I'll bet every Trump salesperson was paid upfront from the deposit money- so there goes a third of the $32 Million right away. I'll bet the Meixco City family got paid for that worthless piece of polluted land too.- there went the other $20 Million.

Packoderm - 3-15-2009 at 10:16 AM

Quote:

Originally posted by David K
>>> "I have never been there," he said of the site. "They licensed my name."
Trump, who had not seen the complaint, said buyers were informed in writing, on a project fact sheet, that he was a licensor and not the developer. Trump had already partnered with Irongate for a project in Hawaii; he said he decided to work with them in Baja California because he considered the Hawaii project a success. <<<

Hawaii is not Baja... Maybe he didn't know Baja was not part of the United States? :wow:

Have you seen it called: Baja, California ? That makes it look like a town: Santee, California for example! :?:

So, what Trump is saying is that when his name is put on a project, it doesn't mean squat. His name, therefore, doesn't stand for squat. I say they should do an investigation and see if his name needs to be placed on the list of people in need of arrest and imprisonment. They put Martha Stewart in prison for less.

Woooosh - 3-15-2009 at 11:40 AM

I think the Donald and his investors in Trump Baja both got what they deserve- nothing. Plenty of greed and bankruptcies top go around now that the bubble has burst.

Pucker Factor

Bronco - 3-15-2009 at 12:53 PM

I am too a billionaire, wha, wha,wha

Donny Trumpr.JPG - 19kB

Bajahowodd - 3-15-2009 at 04:15 PM

Trump has never meant squat. It's all about celebrity. So, who are the fools?

CaboRon - 3-15-2009 at 05:51 PM

Quote:

Originally posted by Bajahowodd
Trump has never meant squat. It's all about celebrity. So, who are the fools?

Why the buyers, of course :lol:

nancyinpdx - 3-16-2009 at 12:06 AM

I never could stand Donald Chump. I soooo wish they would have to experience excruciating poverty for the rest of their lives!

Woooosh - 4-10-2009 at 10:35 AM

What a prince this guy Trump is! He sues the Mexican developer today for just $10 Million when the Mexican crooks he was working with took and ran with over $32 Million. Maybe he was just suing to get Ivankas money back from her penthouse purchases. Since over 100 "owners" are suing him directly- I gues he figures why help them recover their losses too.

"Real estate mogul Donald Trump filed suit in New York yesterday against a Mexican developer that he said took $32 million in buyers' deposits but failed to build an oceanfront resort in Baja California that was to bear the Trump name.

The lawsuit, filed in Manhattan federal court, said the developer, PB Impulsores, and its principals, Jason Grosfeld and Adam Fisher, breached an agreement with Trump to develop and build the Trump Ocean Resort Baja, about 10 miles south of the border. The lawsuit seeks at least $10 million in damages.

The lawsuit was filed in response to a series of lawsuits filed in California by more than 100 buyers of the resort's condominiums. They sued the developers for skipping out on the project and Trump for attaching his name to it.

Izwyers for Trump said the Mexican developer was responsible for overseeing all aspects of the project. "

[Edited on 4-10-2009 by Woooosh]

k-rico - 4-10-2009 at 10:41 AM

Mexican developers and crooks Jason Grosfeld and Adam Fisher???

hahaha

Dave - 4-10-2009 at 11:14 AM

Quote:

Originally posted by k-rico
Mexican developers and crooks Jason Grosfeld and Adam Fisher???

hahaha

Don't know about Grosfeld but Fisher was a principal in Irongate that has done business with Trump. PB Impulsores was simply a Mexican shell. Der Donald filed against PB 'cause PB sued Donald. Anyways, it's all for show. Grosfeld, Fisher and Trump are probably a$$hole buddies. After they couldn't get the construction permits and the financing fell through, the three probably cut up the 32 mil.

Doesn't Look Like Any Mexicans were Involved

Bajahowodd - 4-10-2009 at 11:28 AM

From LA Times

REAL ESTATE
Donald Trump sues developer of Baja California condo project bearing his name

A billboard advertises the site of Trump Ocean Resort Baja Mexico about 10 miles south of the border.
The tycoon accuses Irongate Wilshire's principals of failing to follow through on promises to build a five-star resort called Trump Ocean Resort Baja Mexico.
By Stuart Pfeifer
April 10, 2009
Real estate tycoon Donald Trump filed a lawsuit Thursday against a Los Angeles developer that paid to use his name for an oceanfront condominium project in Baja California but then failed to build it.

Filed in federal court in New York, the lawsuit comes one month after dozens of buyers sued Trump and Los Angeles developer Irongate Wilshire, demanding return of $32 million of down payments they made in 2006 and 2007 for the planned luxury condos.

The earlier lawsuit accused Trump and Irongate of misleading buyers about Trump's role in the project, having described him as a co-developer when he had merely accepted a licensing fee to lend his famous brand to the 525-unit project.

In his $40-million lawsuit, Trump accuses Irongate principals Jason Grosfeld and Adam Fisher of failing to follow through on promises to build the five-star resort, at which units sold for $275,000 to $3 million. Grosfeld and Fisher could not be reached. Trump declined to comment.

The legal battle centers around plans for a three-tower project to be built on 17 oceanfront acres about 10 miles south of the U.S. border. Trump Ocean Resort Baja Mexico was intended to achieve a five-star rating, with a fine-dining restaurant, full-service spa, swimming pools, tennis courts and hiking trails.

Buyers lined up at a San Diego hotel in 2006 for the first opportunity to buy, snapping up 80% of the available units. Many units in a second tower were sold in 2007. Buyers were required to make 30% down payments to secure their purchases.

In February, Trump announced that he had withdrawn from the project because the developer had run out of money and was not able to complete the job.

A month later, the developer disclosed that it was not going to complete the Baja development.

Trump said in an interview Monday that he was unfairly targeted in the buyers' lawsuit. He said he played no role in managing the development and was unhappy with what happened.

"We're looking into the whole situation because it doesn't make me happier than it makes them. I don't like to see people lose money," Trump said.

His lawsuit seeks $40 million in compensatory and punitive damages and a full accounting of what the developer did with the $32 million in down payments it collected from condo buyers. Trump has told associates in his organization that he wants to use the lawsuit as a mechanism to help buyers recover those down payments, according to a source familiar with the lawsuit.

"Defendants, as the developers of the project, were entrusted with ensuring that the project would be constructed and developed in accordance with the buyers' purchase contracts and in keeping with the high standards of luxury, quality, reliability and dependability associated, throughout the world, with the Trump name," the lawsuit said.

Concerns about the project surfaced in mid-2008 as buyers started to grumble about a lack of progress. In December, Irongate's subsidiary, PB Impulsores, disclosed in a letter to buyers that Trump did not invest in the project and had no role in managing it. The company said it had spent all of the deposits and was unable to secure additional financing to complete the job.

In a one-page accounting provided to buyers, the developer said it had spent $45.3 million and was out of money. The accounting said that $8.7 million went to advertising and marketing, $8.3 million to acquire the land, $6.9 million on architecture and engineering, $6.4 million on loan fees and $2.6 million on "site and building costs."

An attorney representing dozens of buyers in the lawsuit against Trump and Irongate said he hoped that Trump's efforts would make it easier for buyers to recover their down payments.

"We would welcome any and all efforts by anyone, including Donald Trump and his organization, to rightfully return the deposits that were made," said Bart I. Ring, one of the attorneys representing buyers.

"It doesn't matter where the money comes from. If Mr. Trump was able to do that, it would be good for everyone."

stuart.pfeifer@latimes.com

Bloomberg News was used in compiling this report.

vandenberg - 4-10-2009 at 12:01 PM

Quote:

Originally posted by k-rico
Mexican developers and crooks Jason Grosfeld and Adam Fisher???

hahaha

Wonder if they knew Madoff. :?:

Dave - 4-10-2009 at 12:19 PM

Quote:

Originally posted by vandenberg

Wonder if they knew Madoff. :?:

With names like Grosfeld and Fisher? I'd bet money on it. :biggrin:

I'd also bet that Madoff gave them a haircut.

When Madoff got P-nched the JDP went down 10%.

Bajahowodd - 4-10-2009 at 12:24 PM

I suppose it is possible that Trump's only involvement was a licensing fee. After all, he did file bankruptcy not too long ago. But the alleged accounting for all the money seems incredible. An awful lot of money for a billboard and a bulldozer.

Donald Trump did not declare bankruptcy

thebajarunner - 4-10-2009 at 02:46 PM

Quote:

Originally posted by Bajahowodd
I suppose it is possible that Trump's only involvement was a licensing fee. After all, he did file bankruptcy not too long ago. But the alleged accounting for all the money seems incredible. An awful lot of money for a billboard and a bulldozer.

Better check your facts.
Trump Entertainment Resorts, Inc. (whatever that might be) declared bankruptcy.

The Donald is not only made of Teflon but is no doubt very well layered to prevent his inner core of assets from being touched by those he screws over.

Live and learn, he is a scummy operator,
but who says "Scum does not pay?"

Woooosh - 4-10-2009 at 03:32 PM

Quote:

Originally posted by thebajarunner

Quote:

scum and crime both pay. that's why we have laws and religions.

Bajahowodd - 4-10-2009 at 03:46 PM

Wasn't trying to defend him. Personally, I think he's mierda. Never could understand the celebrity aspect. Just posing the idea that he may not have had the cash laying around to be a real investor in this project. Perhaps someone knows what his actual commitment is to that Palos Verdes golf project is.

CaboRon - 4-12-2009 at 08:55 AM

The Legacy :lol: