BajaNomad

The Trumpster- back in the headlines- what a guy!!

thebajarunner - 5-5-2009 at 08:34 AM

http://www.latimes.com/news/la-fi-trump5-2009may05,0,2422317...

From the Los Angeles Times
COURTS
Trump Baja project is turning into a legal battle of Trump proportions
To angry buyers, the heart of the dispute over the failed luxury vacation home complex is this: If Donald Trump is identified as a project's builder, is he liable if the actual builder fails?
By Stuart Pfeifer

May 5, 2009

Reporting from Tijuana — Waves crash against a rocky shore while a couple stroll hand in hand on the beach. Poolside, a bartender is mixing up a batch of margaritas.

Then comes Donald Trump, smooth and confident, singing the praises of the new Trump Ocean Resort Baja Mexico north of Rosarito Beach, an area he touts as "the next Cabo."

"I'm very proud of the fact that when I build, I have investors that follow me all over," he says in the eight-minute marketing video produced for potential buyers. "They invest in me. They invest in what I build, and that's why I'm so excited about Trump Ocean Resort.

"This is going to be something very, very special."

So special that 80% of the first phase sold within hours in a 2006 presale. Many of the buyers were Southern California residents looking for affordable oceanfront vacation property.

But three years later, the only progress is a gigantic hole in the ground and a heap of dirt.

Instead of a 525-unit luxury vacation home complex with pools and tennis courts, this project is shaping up to be a legal battle of Trump proportions.

Dozens of angry buyers have sued Trump for failing to complete the project. He, in turn, sued the Los Angeles-based builders, saying he had only lent his name to the project, and it was the developers who allowed the project to fail.

To the buyers, the heart of the dispute is this: If Trump is identified as a project's builder, is he liable if the actual builder fails?

Yes, says Hamed Hoshyarsar, a Northridge accountant who bought one of the units.

"That's the reason why we went with this project: Trump's name was on it," said Hoshyarsar, 30. "If we would have known he just licensed his name and he wasn't the developer, then we wouldn't have bought it."

Now he changes the channel when Trump appears on television.

"I can't believe a person with the reputation of Donald Trump and all that he represents on 'The Apprentice,' that he let this happen to us," Hoshyarsar said. "It's unbelievable."

Trump said in an interview that sales contracts made it clear that he was not the developer. He said he licensed his name because the developer had a "good reputation" and had been a reliable partner in a similar project on Waikiki Beach.

"The documents state very clearly that we were not the developer," Trump said. "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."

Before the reality-TV hit "The Apprentice," the premium vodka and the signature clothing line at Macy's, Trump in fact did make a name for himself building luxury office towers, hotels and casinos. Over time, the Trump name became a symbol of glamour and success.

In his newly released book "Think Like a Champion," Trump wrote about the power of his name.

"My buildings sell out before they are built," Trump wrote. "People recognize the brand name and know what they will be getting: the best for their money."

Developers pay handsomely to stamp that Trump cachet on their projects. Such deals have proved profitable for both Trump and builders who paid to use his name.

The Baja project was developed by Irongate Wilshire and PB Impulsores, which both operate from offices in Westwood. Irongate principals Jason Grosfeld and Adam Fisher did not respond to requests for comment.

Irongate and PB Impulsores have not filed a response to the buyer lawsuits. In an e-mail to buyers in February, which a plaintiff provided to The Times, the developers blamed the project's failure on the "global meltdown of the credit markets," making it impossible to obtain financing.

But the buyers say Trump's liability is clear. "Nobody ever said anything about this being a licensing deal," said Daniel J. King, a lawyer for the buyers. "None of them would have bought if they knew the real arrangement."

In February, the developers notified buyers that they had spent their deposits -- $32 million -- and were abandoning the project because they could not obtain financing to finish it.

Sixty-nine people who paid for units at Trump Ocean Resort Baja Mexico filed suit in March in Los Angeles County Superior Court against Trump and the developers, accusing them of falsely portraying Trump as the builder. Although the project was to be in Mexico, the suit seeks to apply U.S. law because the properties were marketed and sold here.

Trump, the 62-year-old symbol of capitalistic success, sued developer PB Impulsores in U.S. District Court in New York, accusing it of failing to make good on its promise to build the project and demanding an accounting of how the buyer deposits were spent.

Bart I. Ring, another lawyer for the buyers, said he considered Trump's suit a "publicity stunt" that would not relieve him of culpability in the Baja project.

"If Trump is truly interested in the best interests of the buyers, he could reach in his pockets and make the buyers whole," Ring said.

Meanwhile, 10 miles south of the border, Trump's smiling face and famously big hair can still be viewed on a billboard at the resort site, alongside the slogan "Owning here is just the beginning."

On a recent weekday, the paved road that leads to the 17-acre property was blocked by a single strand of steel chain. A security guard cautioned in Spanish that no one was allowed on the property.

If things had gone as billed, the first of three towers -- a monolith of marble and glass rising above the coast and providing picturesque views of the Pacific Ocean and the Coronado Islands -- would have been completed by now.

In January, Trump backed out of the project after it became clear that the developers were not going to complete it.

"This was not a deal where I could control things," Trump told The Times. "I am personally looking into it."

As for buyers who appear to have lost their investments, Trump said: "They'll have to speak to the developer."

George Lefcoe, a USC law professor who specializes in real estate financing and land use, said the buyers might have a difficult time pursuing damages against Trump.

"He doesn't promise unconditionally that if anything goes wrong, he'll give you the money back," Lefcoe said. "What this controversy shows is you need to be sure your money is held by a third party, not controlled by the seller."

Some people familiar with Baja real estate said they thought the project was doomed from the outset.

Trump or not, northern Baja was not the place for a five-star resort, said Brian Flock, a Baja California real estate agent. It's a place where people wear flip-flops day and night, buy Coronas by the bucket and barter for serapes, ceramics and other souvenirs.

"Frankly, we're not in the tropics. We're not an international resort destination. They don't land in the airport and walk along a polished marble floor and shops like Gucci and Louis Vuitton," Flock said. "The project didn't fit the profile at all of Baja California north. . . . I never sold a single unit there. I never promoted it at all."

Still, buyers swamped a December 2006 sales event at a posh San Diego hotel and purchased about 80% of the units in the first tower.

Trump Baja buyer Lupe Mendoza, a single mother with two teenage boys, said she started to become concerned by late 2007 when there had been little progress at the construction site.

"I would always get these responses, 'Yes, it's happening, but it's underground. You can't see anything,' " Mendoza said. "To me, the word is 'unbelievable.' I was led to believe I was investing with a multimillionaire. I believed my investments were as safe as safe could be. I believed the man was a man of his word."

Bajahowodd - 5-5-2009 at 10:19 AM

While this is mostly a rehash of previous articles, I do find one thing interesting. It states that the LA-based developers have not filed a response to the lawsuit. If true, it may be in default. Just guessing here, but they may default on this, file bankruptcy (or may already have), and actually leave Trump as the only viable, if maybe not proper party to the suit. Any way you cut it, caveat emptor.

Woooosh - 5-5-2009 at 10:44 AM

The Mexican gov't is doing nothing about this at all? Don't they see the downside if similar mega-developments fail? Who would buy into any new mega-projects pre-construction again? (i'm sure there is no shortage of fools or greed though).

The owners of the plot of polluted land were given $9.1 Million for it and all the sales staff got their commissions.

Wrong Info Woosh

Gypsy Jan - 5-5-2009 at 11:06 AM

Irongate, the American developers, promised to pay a certain amount for the land and never delivered on that.

wilderone - 5-5-2009 at 11:57 AM

"I would always get these responses, 'Yes, it's happening, but it's underground. You can't see anything,' " Mendoza said

Apparently that was a blatant lie by the developers Mendoza spoke with. That misrepresentation would not impute liability on Trump. I'm sure Trump was as confident as the buyers at the time he made his come-ons and inducements to buy. I don't think he was making knowing false and misleading statements. And Mendoza knew who to call to inquire about her investment - it wasn't Trump. And who knows what they were telling Trump.

"But the buyers say Trump's liability is clear. "Nobody ever said anything about this being a licensing deal," said Daniel J. King, a lawyer for the buyers."
Regardless, those business arrangements aren't illegal. I'll bet there are cautionary statements in their contracts which the buyers chose not to read or ignore, simply blindly believing everything the real estate agents - not Trump personally - told them. Instead, Trump himself became a victim of the developers' ignorant plans. Kinda falls into the same scenario as the Tiger Wood Punta Brava plans. Tiger's not peddling lots there.

wilderone - 5-5-2009 at 12:11 PM

The dialogue at the end of this is very telling. The salespeople were also lying to the buyers, telling them the title company safely held their money.

http://quepasabaja.com/?p=490

wilderone - 5-5-2009 at 12:39 PM

And a Canadian firm was marketing the property. Nobody mentions Trump's liability in this:

http://www.6717000.com/newsArticle-5476.html

"Tuesday, February, 17, 2009
Bad news for investors in the Trump Ocean Resort Baja, a proposed luxury condo-hotel development in Mexico that has hit the skids.
The project was being marketed exclusively by Vancouver-based S&P Destinations Ltd., owned by Sid Landolt and Peter Dupuis.
In an interview Monday, Landolt said his firm had "considerable success" marketing the project, but he couldn't recall the total dollar amount of pre-sales."

CaboRon - 5-5-2009 at 01:22 PM

wilderone - 5-5-2009 at 01:40 PM

Billboard = marketing

Same set-up, same marketing, same players in Waikiki: http://www.6717000.com/newsArticle-2692.html

But you won't find all the names of the actual people making it happen. What's hyped to the public is simplistic showmanship.

And around the same time Trump Baja was getting off the ground, Irongate was negotiating on the Trump Waikiki project. Note how many players make this deal:
http://www.hyporealestate.com/pdf/PI_Trump_Waikiki_Endfassun...

Do you think any of the Trump Waikiki condo buyers will have a clue as to the financial underpinnings of their deal?

Baja contracts state that buyers’ deposits were not refundable, and that they were to be used for construction costs (not advertising, not loan fees). They bought the land AFTER they sold the units?

http://blog.luxuryproperty.com/donald-trump-files-lawsuit-ag...
“Irongate says it has spent $45.3 million and is now broke - $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.” Either way - that is one expensive hole.”

Or maybe they spent the money on buying up this property in Oahu with plans to subdivide it. Was ultimately foreclosed on around the same time Trump Baja folded. These people are unscrupulous or stupid business people, maybe both. Creating financial havoc doesn’t seem to slow them down. An “LLC” for any purpose.

http://pacific.bizjournals.com/pacific/stories/2008/11/10/da...

Maybe they used some of the Trump Baja money to grease the skids through political donations in Hawaii:
http://ilind.net/2007/08/01/wednesdayupdate-on-the-mayors-co...

24baja - 5-5-2009 at 04:55 PM

Once avid Apprentice watchers, we have boycotted all things Trump since this happened. I even turned the channel when he was on Letterman recently. I think everyone should boycott him.

bajalou - 5-5-2009 at 05:17 PM

Once again, If you want the protections? of US law, buy only in the US. Don't expect other countries to have the same rules.

vandenberg - 5-5-2009 at 05:24 PM

Quote:
Originally posted by 24baja
Once avid Apprentice watchers, we have boycotted all things Trump since this happened. I even turned the channel when he was on Letterman recently. I think everyone should boycott him.


Watching "the Apprentice", and any program this jerk is associated with, shouldn't win you an intelligence award.

But maybe it gets the "Donald" shaking in his boots.:biggrin:

[Edited on 5-6-2009 by vandenberg]

24baja - 5-5-2009 at 05:29 PM

As I said we no longer watch his program.

Dave - 5-6-2009 at 09:51 AM

Quote:
Originally posted by thebajarunner
Many of the buyers were Southern California residents looking for affordable oceanfront vacation property speculators looking for vacation rentals.


For the most part, these units were marketed as income generating.

Greed

CaboRon - 5-6-2009 at 03:48 PM

Quote:
Originally posted by Dave
Quote:
Originally posted by thebajarunner
Many of the buyers were Southern California residents looking for affordable oceanfront vacation property speculators looking for vacation rentals.


For the most part, these units were marketed as income generating.


They all want something for nothing ......

It's all about speculative greed .....

I feel nothing for the suckers who bought ....

There is one born every min :lol::lol::lol:

CaboRon