Monday, March 9, 2009

Investors Fleeced on Trump Project

As egomaniac Donald Trump fires people in the boardroom of his reality show Celebrity Apprentice, real investors were getting scammed on the Trump Ocean Resort Baja. Here's a shocking account of what happened. (article)

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.


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.

It's amazing how low profile this story is considering Trump's celebrity. Who doesn't want to see this guy go down? I'm sure he's lawyered up enough that he will skate on this but it would be nice to see him at least publically shamed. To associate his name with trickery and dishonesty.

His daughter Ivanka was also involved in the project. If you've watched the show, this young woman in her 20's graduates from university and gets a job in daddy's company. Contestants on the show have to kow-tow to her as she dishes out her business advice.

Somebody email this story to Rosie O'Donnell!

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