More trouble for Trump: Families go into hock investing in his name
The Trump Ocean Resort Baja, a condo tower planned for Rosarito, Mexico, has gone belly-up even before it was built. The luxury development was supposed to have 526 units on a cliff-side tower about 10 miles south of the border by San Diego, but instead, $32 million from investors and hopeful condo owners has gone down the drain. They were informed last week that their money was gone for good. Spent.
Trump will likely escape scot-free because the condo was not technically his, but a joint venture with Los Angeles-based Irongate Development, which apparently failed to properly secure funds. Trump never put his own money in the project bearing his name. Still, he participated aggressively in the collection of funds for the doomed development, and he used his name to lure investors in exchange for a licensing fee. He and his daughter Ivanka made personal appearances in support of the project (selling $188 million in units in single day at a 2006 launch event in San Diego), and plenty of everyday people took the bait. A few weeks ago, Trump said he wanted his name off the development.
That's too late for single mom Guadalupe Mendoza of Downey, California, who refinanced her home, got a loan from her sister, and put down $200,000 to pay for a deposit on a Trump condo. Her biggest mistake was trusting the Trump brand name. (A second warning sign: the phrase "Mexican real estate venture.") That money has been spent and will not be returned, and she says that now she can't afford to send her teen-age sons to college. Gawker posted a pitiful photo of Ms. Mendoza lamenting over a condo sales catalog. The page is open to a full-page photo of Trump seated on a golden throne.
Not that it's causing Trump to lose any sleep. He is the master of Houdini-like escapes from moral and financial responsibilities, after all. A month ago, Trump's casino venture filed for Chapter 11 bankruptcy protection. He's also facing a clamor from Deutsche Bank, which fed the cash to build his 92-story Chicago skyscraper, now the city's second-tallest. It said Trump was long past the deadline to start paying back the money he borrowed and personally guaranteed. When the market tanked in the fall, Trump had only sold $204 million of condos in the $847 million building on the Chicago River.
To get out of paying, Trump said he shouldn't have to because of the "force majeure" clause in his loan contract. Normally, force majeure applies to so-called acts of God or natural disasters, but Trump is trying to argue that the market freeze qualifies. (Try that, homeowners.) Last week, for reasons undisclosed, Deutsche Bank and Trump suspended the lawsuits flying between them for at least 90 days.
For all his skin-of-his-teeth escapes, Trump's naked P.R. efforts aren't gaining traction with the public anymore. The second episode of his Celebrity Apprentice on NBC lost 21% of the people who tuned in for the premiere. I guess Americans are showing they can walk away from Trump as skillfully as he can walk away from the financial train wrecks bearing his name.
So where do The Donald and Ivanka want you to put your life savings now? Panama!