Trump venture folds, leaving buyers strapped

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mathwhiz
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Trump venture folds, leaving buyers strapped

Post by mathwhiz »

http://www.google.com/hostednews/ap/art ... gD96ONQO00
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.
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.
Last edited by mathwhiz on Sat Mar 07, 2009 5:30 pm, edited 1 time in total.
chaz
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Post by chaz »

Maybe a class action v. Trump for fraud and/or breach of contract.
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Wagnerjb
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Post by Wagnerjb »

A single mother in suburban Los Angeles lost $200,000 and won't be able to send her sons to private universities.
Oh well, I guess she will just have to send her sons to the same public university that my son attends.

The millionaires invest in speculative real estate plays in Mexico....now we are supposed to feel sorry for them? Not me. They took their chances with a speculative investment, and the risk "showed up". How is their loss any different than the loss you and I have in our 401k plans? It isn't.
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doubleback
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Post by doubleback »

Wagnerjb wrote:
A single mother in suburban Los Angeles lost $200,000 and won't be able to send her sons to private universities.
Oh well, I guess she will just have to send her sons to the same public university that my son attends.

The millionaires invest in speculative real estate plays in Mexico....now we are supposed to feel sorry for them? Not me. They took their chances with a speculative investment, and the risk "showed up". How is their loss any different than the loss you and I have in our 401k plans? It isn't.
I think you are right; although putting a deposit down on a house usually gives you a little more comfort to see a tangible result.

California has some great public schools -- UCSB, UC Berkeley, UC San Diego, UC Davis. They are just as good as many private schools.
bengt
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Post by bengt »

chaz wrote:Maybe a class action v. Trump for fraud and/or breach of contract.
Why? I don't know the contract details, but I'd assume that it is written safely from Trump's perspective. Besides, all circumstantial evidence indicates that this was nothing more than unsuccessful investment, caught in the global credit crisis. Businesses (and investments) fail everyday. It is not a fraud.

I have no sympathy for those greedy speculators who made the risky investment. Had their gamble paid off, they would have boasted how smart they are.
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Post by runner26 »

bengt wrote:
chaz wrote:Maybe a class action v. Trump for fraud and/or breach of contract.
Why? I don't know the contract details, but I'd assume that it is written safely from Trump's perspective. Besides, all circumstantial evidence indicates that this was nothing more than unsuccessful investment, caught in the global credit crisis. Businesses (and investments) fail everyday. It is not a fraud.

I have no sympathy for those greedy speculators who made the risky investment. Had their gamble paid off, they would have boasted how smart they are.
Mexico consumer protection laws apply. There is very little in the way of consumer protection in Mexico. Buyer beware.
bengt
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Post by bengt »

Actually, the contract may have been signed in the US, with US counterpart so US laws would apply.

Still, this does not seem to be nothing else than risky investment. I doubt Trump gave 100% guarantees that the gamble will succeed.
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Post by chaz »

bengt wrote:Actually, the contract may have been signed in the US, with US counterpart so US laws would apply.

Still, this does not seem to be nothing else than risky investment. I doubt Trump gave 100% guarantees that the gamble will succeed.
Trump agreed to erect a condo complex and accepted money from buyers. That's a contract. Trump recently completed construction of a highrise in Las Vegas. The buyers of the Mexico condos were not speculating. They were buying with serious money down payments.
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Post by chaz »

doubleback wrote:
Wagnerjb wrote:
A single mother in suburban Los Angeles lost $200,000 and won't be able to send her sons to private universities.
Oh well, I guess she will just have to send her sons to the same public university that my son attends.

The millionaires invest in speculative real estate plays in Mexico....now we are supposed to feel sorry for them? Not me. They took their chances with a speculative investment, and the risk "showed up". How is their loss any different than the loss you and I have in our 401k plans? It isn't.
I think you are right; although putting a deposit down on a house usually gives you a little more comfort to see a tangible result.

California has some great public schools -- UCSB, UC Berkeley, UC San Diego, UC Davis. They are just as good as many private schools.
Why leave out my alma mater, UCLA?
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page
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Post by Adrian Nenu »

Trump - the real estate Madoff.

Adrian
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bengt
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Post by bengt »

chaz wrote: Trump agreed to erect a condo complex and accepted money from buyers. That's a contract. Trump recently completed construction of a highrise in Las Vegas. The buyers of the Mexico condos were not speculating. They were buying with serious money down payments.
The contract was surely written so that it did not guarantee the end result. It only guaranteed the results if the project succeeded (which it did not). Downpayment is always risky and it is lost if there is bankruptcy. There is nothing strange in that.

Besides, if you bought pets.com shares and lost everything, was it a fraud?

Businesses fail everyday without fraud.
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Post by chaz »

Adrian Nenu wrote:Trump - the real estate Madoff.

Adrian
anenu@tampabay.rr.com
Madoff has retained Daniel Horowitz as part of his legal team, and there will be a court hearing on Thursday. A guilty plea is expected.
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Post by chaz »

bengt wrote:
chaz wrote: Trump agreed to erect a condo complex and accepted money from buyers. That's a contract. Trump recently completed construction of a highrise in Las Vegas. The buyers of the Mexico condos were not speculating. They were buying with serious money down payments.
The contract was surely written so that it did not guarantee the end result. It only guaranteed the results if the project succeeded (which it did not). Downpayment is always risky and it is lost if there is bankruptcy. There is nothing strange in that.

Besides, if you bought pets.com shares and lost everything, was it a fraud?

Businesses fail everyday without fraud.
Maybe no fraud, but still looks like a breach of contract.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page
Beagler
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Post by Beagler »

chaz wrote:
bengt wrote:
chaz wrote: Trump agreed to erect a condo complex and accepted money from buyers. That's a contract. Trump recently completed construction of a highrise in Las Vegas. The buyers of the Mexico condos were not speculating. They were buying with serious money down payments.
The contract was surely written so that it did not guarantee the end result. It only guaranteed the results if the project succeeded (which it did not). Downpayment is always risky and it is lost if there is bankruptcy. There is nothing strange in that.

Besides, if you bought pets.com shares and lost everything, was it a fraud?

Businesses fail everyday without fraud.
Maybe no fraud, but still looks like a breach of contract.
How do you know? Are you familiar with the contract?
“The only place where success come before work is in the dictionary.” Abraham Lincoln. This post does not provide advice for specific individual situations and should not be construed as doing so.
overpar
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Post by overpar »

As much as I detest "the Donald" in his defense he was not the developer. He only licensed his name.
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mathwhiz
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Post by mathwhiz »

The full article states that the buyers have already sued or are planning to sue Trump. Looks like a class-action suit will come.
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.
Some pretty damaging stuff as far as Trump's "brand." The best recourse for these buyers is probably to get on every news show and radio show make a lot of noise about how big of a sham Trump is. He may pay them their deposits just to shut up.
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.
bengt
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Post by bengt »

Beagler wrote:
How do you know? Are you familiar with the contract?
Well, I clearly said I don't know the details but I have yet to see a contract that guarantees success. That's what the small print is for.
Speculators can lose money in the case of bankruptcy. Again, this is what bankruptcy is for: You can only get back whatever money is left. It is perfectly legal.

Anyway, glad to see BH public lynching squad is ready without bothering with those tedious facts.

So far, nothing indicates anything but failed investment. Accusing Trump (or anybody other) of fraud is libel. I hope Trump sues those.

I cannot see any future with that lawsuit against Trump (unless something new comes up, e.g. Trump promised 100% success or he forged documents or intentionally misled).
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sergeant
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Post by sergeant »

Wagnerjb wrote:
A single mother in suburban Los Angeles lost $200,000 and won't be able to send her sons to private universities.
Let's say they would have built them. The 200k is still not available for their education. I guess she could have borrowed against the condo but heck, if they are getting close to college age the money ought to be in something a bit less speculative.
AA- 20+ Years of Expenses Fixed Income/The remainder in Equities.
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Post by GeekedOut »

doubleback wrote:I think you are right; although putting a deposit down on a house usually gives you a little more comfort to see a tangible result.

California has some great public schools -- UCSB, UC Berkeley, UC San Diego, UC Davis. They are just as good as many private schools.
Having attended UCSD, I can tell you that the ratings have it as one of the best in the world. Last number I saw was 17th in engineering from that Shangai ratings.

However, don't expect to learn a damn thing there from the faculty. I approached every single member in my department for research when I first got there and was roundly told "I only work with grad students."

I could have gotten a better education at the local library. At least they have a decent beer bar on campus...
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Post by Wagnerjb »

bengt wrote: Anyway, glad to see BH public lynching squad is ready without bothering with those tedious facts.
There are as many people in this conversation that aren't "lynching" as those who are. Maybe after all those articles about the people who lost money with Madoff, the people whose 401k accounts lost money, the people who can't afford to retire, the people who can't send their child to college, the people who lost money with Stanford, the people who invested too much in one individual stock, the people who are being evicted for not paying the mortgage.....that the disciplined savers and investors here are worn out and sick of commenting on these "poor poor pitiful me" articles.

Best wishes.
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Post by avalpert »

Wagnerjb wrote:
bengt wrote: Anyway, glad to see BH public lynching squad is ready without bothering with those tedious facts.
There are as many people in this conversation that aren't "lynching" as those who are. Maybe after all those articles about the people who lost money with Madoff, the people whose 401k accounts lost money, the people who can't afford to retire, the people who can't send their child to college, the people who lost money with Stanford, the people who invested too much in one individual stock, the people who are being evicted for not paying the mortgage.....that the disciplined savers and investors here are worn out and sick of commenting on these "poor poor pitiful me" articles.

Best wishes.
Yep, empathy is definitely an emotion that has been (largely) lacking on this site of late. It's not like any of today's bogleheads came to these revelations through their own hard life lessons in investing, right, I mean they always have made the prudent decision and are sick of hearing from those mere humans whose frailties have been exposed.
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Post by jh »

...
Last edited by jh on Sun Mar 29, 2009 4:04 pm, edited 1 time in total.
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Post by Kevinaom »

let me guess.. the "buyers" did not have a lawyer review the contract before they put down a deposit. You can bet Trump spent millions having lawyers draw up the agreements those people signed and that was not to protect the buyer.

The biggest lesson in this is something I learned a long time ago. Never, ever, ever.. engage in any real estate transaction without a lawyer representing you. I am sure a lawyer would have advised against signing a contract that put you at this type of risk.

I have bought 4 homes in my life and each time, once i found the home I wanted, I handed the real estate agent the card of MY attorney (not one they recommend) and from then on I just dealt with my attorney. There are at least two items I would have been screwed on had I not done this.

I know, many will respond, "I have never used an attorney and everything has worked fine" and that probably is true, but why take the chance on such a huge decision? People are willing to spend $500K + on a home but do not want to spend an extra $1K on an attorney??
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Post by SP-diceman »

Donald: Your fired!!!


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Post by grumel »

Trump is hardly ever involved in this stuff. He is a big merchandising company. Idiots pay 20% more for real estate with "trump" on it, so developers pay him to use his name.
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Post by Kevinaom »

grumel wrote:Trump is hardly ever involved in this stuff. He is a big merchandising company. Idiots pay 20% more for real estate with "trump" on it, so developers pay him to use his name.
If by this you mean he allows sloppy developers to use his name then he is even a bigger idiot. When you brand is your name you better make sure everything is done to exacting standards (Remember Martha Stewart).
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Post by Gekko »

how long before we start hearing cries for a bailout for these poor "victims"?
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Post by Sam I Am »

Message deleted.
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Post by edge »

Trump is a slime ball.
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Post by chaz »

http://gawker.com/5166121/trump-baja-co ... goes-south

The story is the same as earlier posts, but this site has a couple of pics.
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Post by cato »

SP-diceman wrote:Donald: Your fired!!!


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SP-diceman

No. You're fired for your abuse of our language..
Citigroup delenda est.
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Post by bottlecap »

chaz wrote: Maybe no fraud, but still looks like a breach of contract.
It probably is a breach of contract, but the only way to recover is in the bankruptcy. Sounds like there isn't much there, though.
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Post by chaz »

bottlecap wrote:
chaz wrote: Maybe no fraud, but still looks like a breach of contract.
It probably is a breach of contract, but the only way to recover is in the bankruptcy. Sounds like there isn't much there, though.
Trump is clever; he only licensed the use of his name and face; he didn't put up any of his own money.
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Post by aupanner »

That was a mighty expensive fish taco.
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