EXCLUSIVE: documents reveal another Trump land deal nightmare scam

[Jhhnn]

Pretty much this. I'm not a Trump fan, but I think this story has already been brought up - the only thing he really had to do with this development was lend his name to it.

He got paid, right? Some up front & promises down the road, I'm sure. When & if it all falls down, he's already out of the way with a jingle in his pocket. So long, suckers!

 

[Brian Stirling]

I'm not sure what the Donald's involvement in this deal was beyond lending his name for a price.

The timeline of this is right smack dab in the middle of the mortgage and building bust of 2008 and MANY projects in the works came to an end with investors (INVESTORS) losing money.

Did Trump receive any direct payment from the people placing down payments? Was his name on the back transfer or check? Or, were the payments made to the construction/development company for whom Trump was essentially a vendor?

In the end although I have no love for the Donald I see zero chance any of this comes back to him -- ZERO!


Brian

 

[SP33Demon]

OP slobbering over the keyboard again without reading. She got all her money back and then some. Trump org's 483 businesses have a higher profit margin than apple, they're not risking their reputation over stuff like this.

 

[lopri]

Biggest thing I learned is that "Industrial Psychologist" is a thing.

Imagines she adjusts her glasses before focusing on her note pad and saying in a thick Austrian accent, "Now tell me about your parent company."

You are spending an unhealthy amount of time with low-budget porn.

 

[compuwiz1]

People invest everyday. It is their responsibility to conduct some due diligence, prior to investing. If every business venture failed and every investor could blame the business, we'd have no country. There is no such thing as wealth without risk. It's like agreeing to sex, then blaming the guy for having sex, afterward.

 

[Pulsar]

Nice try.. I did not invest $240,000.. but if it was your money, how would you feel?

This is sort of like ordering a TV on Amazon and Amazon keeping your money but not sending you a TV. There are consumer protection laws.

The investors have every right to be angry and get their money back in court but Trump is of course trying to hang on to it and then we wonder how he got 10 billion dollars.

You're right. We're much better off finding someone to elect who has never held even the smallest shred of personal responsibility and has never been in private industry even a single day. That way no one can claim he's ever done anything wrong.

Oh wait. We already elected that asshole and he's in office now. Community organizer. Snort.

 

[compuwiz1]

You're right. We're much better off finding someone to elect who has never held even the smallest shred of personal responsibility and has never been in private industry even a single day. That way no one can claim he's ever done anything wrong.

Oh wait. We already elected that asshole and he's in office now. Community organizer. Snort.

Thank you.

 

[Darwin333]

The buyers were getting in and paying this insane 30% preconstruction were hoping to flip it for an easy profit by selling it quickly.

That's exactly what they were trying to do and they were just a few of the many that got left holding the bag. They are also some of the very lucky few that got anything back much less made whole.

Back then during the boom most preconstructs would change hands a dozen times before the building was ever built. You could usually buy them with very little actual cash and a letter of credit from your bank and then flip it for a nice profit. I remember being in the truck with my father one time when he got a call to sell a preconstruct for a 20% profit. We had to turn around and haul ass to the reality place because he hadn't actually signed the papers to buy it yet.

These people were banking on the condo that they were paying $800K for being worth twice that by the time it was built. If that's not a speculative investment then I don't know what is.

The previous poster said that most people won't get it and I think he's right. But the bottom line is that these people are damn lucky and should be thanking their lucky stars because almost no one in their positions, and a metric fuckload of people were in their position, got jack shit back. That's not even mentioning the rest of the bag holders who bought actual properties for 2 or even 3 times what they can sell them for now. Where is the pity for those "poor fools" living in their million dollar condos that are only worth $400K today? Does anyone think that the developer owes those poor people $600K?

 

[Jhhnn]

I'm not sure what the Donald's involvement in this deal was beyond lending his name for a price.

The timeline of this is right smack dab in the middle of the mortgage and building bust of 2008 and MANY projects in the works came to an end with investors (INVESTORS) losing money.

Did Trump receive any direct payment from the people placing down payments? Was his name on the back transfer or check? Or, were the payments made to the construction/development company for whom Trump was essentially a vendor?

In the end although I have no love for the Donald I see zero chance any of this comes back to him -- ZERO!


Brian

I believe you are correct. The Donald is free to market his name to schemers & scammers of his choice w/o legal liability.

 

[Jhhnn]

These people were banking on the condo that they were paying $800K for being worth twice that by the time it was built. If that's not a speculative investment then I don't know what is.

Or they just wanted a place to retire.

I realize that flippers went wild but that doesn't mean all of the people involved were flippers.

 

[Darwin333]

We don't know that they were made whole, just that settlement was reached.

It's interesting how pre-sales seem to be the big thing at the top of any housing bubble. Having seen market gyrations more than once I think a fair amount of it involves creative bankruptcy.

If they got a dollar back they did better than 99.9% of people.

And as I said, they are damn lucky that the building didn't get built. Had it they would have lost their entire deposits when they refused to buy an $800K unit that they planned on being able to sell for well over a million but now they can only sell for $400K if they are lucky. Every last one of them would have walked away from their deposits with zero recourse to get back a dime of it.

Bottom line is that these people have absolutely nothing to bitch about as they are one of the very very few lucky people that were "happy" with what they were able to recoup.

 

[Moonbeam]

The Chinese will never know what hit them.

 

[Fern]

-snip-

The investors have every right to be angry and get their money back in court but Trump is of course trying to hang on to it and then we wonder how he got 10 billion dollars.

It doesn't seem you read the article you copied.

Trump wasn't the developer. Accordingly he shouldn't have their money "to hang on to". The money went to the developers (Irongate Capital Partners and PB Impulsores).

Trump is the least culpable person involved if the article is to be believed.

Also, this is not an unusual story. Near where I live 2 developments were to be built, one had Arnold Palmer's name associated with it, the other Tiger Woods. Both failed in 2007/2008. The one nearest me was the Arnold Palmer development. The builder/developer, his accountant and lawyer etc are all in prison now.

In similar fashion they pre-sold lots/homes. Those people got nothing AFAIK. To purchase an as yet unbuilt home or condo is risky business for the very reasons you see here; you're betting on the developer to be able to complete the job and the economy to hold. (You're not betting on Trump.) People (pre) paid large sums and were left with a patch of undeveloped forest land, no roads, no infrastructure and no Arnold Palmer golf course.

BTW: Those guys are in jail for defrauding banks. It's not generally against the law to lose money on an investment. And where there's a good reason, in this case a big recession and real estate crash, it's hard to even blame the failure on negligence.

So, while certainly sympathetic to those losing money, they bought pre-construction because the price is substantially discounted (i.e., they could have made a good profit if the project were completed). They took a gamble for profit. If they knew Trump merely licensed his name they have no business relying on him as he has no authority etc in the development. Furthermore, they were investing outside the USA (Mexico). Did they bother to familiarize themselves with Mexican law (or lack thereof) and courts? I bet not.

Fern

 

[Darwin333]

They weren't actually made completely whole it seems. They were out 23M and only got back 7M. This story illustrates Trump can be a lot of hot air. Whether it was these people that could afford a high dollar condo, people that wanted a decent education at "Trump University", or, now, the American public.

This story illustrates what happens when you make a speculative investment at the height of a bubble. As I have said, this exact thing happened to thousands upon thousands of people and they all got jack squat. The fact that they got ANYTHING AT ALL means that they were lucky as hell they invested in Trump instead of one of the thousands of other similar projects at the time. They would have lost even more money had it actually been built.

If you understood the underlying principals you would see that they were the lucky few that recovered anything.

I'm not trying to defend Trump here in the least. I just have a good understanding of the situation and I know people who lost their asses and got bupkiss. You know what, that's the risk you take when you make a speculative investment and make no mistake that is exactly what those people were doing.

 

[Fern]

-snip-
It's interesting how pre-sales seem to be the big thing at the top of any housing bubble. Having seen market gyrations more than once I think a fair amount of it involves creative bankruptcy.

Pres-sales don't cause a bubble or the bursting of such. But they are highly visible when the bubble bursts; as one banker put it to me "you can tell who ain't wearing a bathing suit when the tide goes out". (Meaning insufficiently self-capitalized when the economy goes down.)

The whole pre-sales thing is a type of risk management technique of banks. Development is funded in phases. And banks generally demand that you pre-sell a certain percentage of units before they will release more funds. And anywhere along that process (buying raw land, architectural plans, permitting, putting in roads, sidewalks, sewer, water, electricity, the golf course, the clubhouse, the pool etc.) if the bank balks at lending for the next phase the whole thing goes 'boom'. The bank(s) will grab what there is and the pre-purchasers are screwed.

Fern

 

[Darwin333]

Or they just wanted a place to retire.

I realize that flippers went wild but that doesn't mean all of the people involved were flippers.

Do you really think that they would have went ahead and paid the contract price of $800K for a unit that by the time they took ownership was only worth MAYBE $400K at best? Hell they wouldn't have even been able to get a mortgage on it without coming seriously out of pocket because the asset wouldn't be worth anywhere near the loan amount. The investors bailed because they knew the above, why in the hell would you invest money to build a building that you won't be able to sell even at cost? It was a guaranteed way for everyone involved to lose a ton of money because of the bubble popping.

No, they would have cut their losses and walked away and in doing so would have lost every last penny of their deposits.

All kinds of people purchased property and the promise of property at the peak and they all took a serious hit. The only difference between them and these people is that these people got some of their losses back while everyone else had to eat theirs.

There are many bad things yall can say about Trump, this just isn't one of them in the least. Hell there is an argument to be made that because of Trump these people have more money in their pockets then they otherwise would have if they invested in a different preconstruct.

 

[Jhhnn]

If they got a dollar back they did better than 99.9% of people.

And as I said, they are damn lucky that the building didn't get built. Had it they would have lost their entire deposits when they refused to buy an $800K unit that they planned on being able to sell for well over a million but now they can only sell for $400K if they are lucky. Every last one of them would have walked away from their deposits with zero recourse to get back a dime of it.

Bottom line is that these people have absolutely nothing to bitch about as they are one of the very very few lucky people that were "happy" with what they were able to recoup.

Remarkable that you'd simply return to the assumption that all the people involved were flippers.

That's not likely true at all.

 

[Fern]

This is not some sort of high-leverage speculative investment. They purchased a condo, to be built, and put down nearly 30% up front. It was not some sort of pie in the sky, but failing to deliver as promised is part of the Trump tradition.

The only shocking thing is that the man has any reputation left to sell.

Yeah, it was probably highly leveraged and most certainly speculative. (I say "probably" because I don't know your threshold of debt:equity for when leveraged becomes "highly leveraged".)

The big clue was when the developer offered pre-sales. That means they are building with borrowed funds. So, from the developers perspective this was leveraged, likely fairly highly, and those who pre-purchased are backing the developer.

Fern

 

[Jhhnn]

Yeah, it was probably highly leveraged and most certainly speculative. (I say "probably" because I don't know your threshold of debt:equity for when leveraged becomes "highly leveraged".)

The big clue was when the developer offered pre-sales. That means they are building with borrowed funds. So, from the developers perspective this was leveraged, likely fairly highly, and those who pre-purchased are backing the developer.

Fern

Whom they were led to believe was Trump, but not really-

Even as his empire has expanded into reality television and the clothing aisle, Mr. Trump remains, at least in the public imagination, primarily a real estate developer.

But to a remarkable degree over the last five years, Mr. Trump has retreated from that role, becoming, instead, a highly-paid licensor, who leases his five-letter brand name to other developers in Toronto, Honolulu, Dubai and even his own backyard, New York City.

The arrangements allowed Mr. Trump, who is notoriously competitive, to remain a player in the world of big-city builders without risking his own money — a prospect that seemed especially appealing as the economy began to crater.

“When things got over-inflated in the world,” Mr. Trump’s son Donald Jr., said in an interview, “we removed ourselves from the ground-up development world, where we are risking a lot more.”

“We switched more to a license model,” he said, describing several of the projects, including the Honolulu building, as “big successes.”

http://www.nytimes.com/2011/05/13/n...-over-homes-that-were-trump-in-name-only.html

When the game got too dicey for his own money, the Trump answer was... Rubes, of course.

 

[emperus]

This story illustrates what happens when you make a speculative investment at the height of a bubble. As I have said, this exact thing happened to thousands upon thousands of people and they all got jack squat. The fact that they got ANYTHING AT ALL means that they were lucky as hell they invested in Trump instead of one of the thousands of other similar projects at the time. They would have lost even more money had it actually been built.

If you understood the underlying principals you would see that they were the lucky few that recovered anything.

I'm not trying to defend Trump here in the least. I just have a good understanding of the situation and I know people who lost their asses and got bupkiss. You know what, that's the risk you take when you make a speculative investment and make no mistake that is exactly what those people were doing.

This was a terribly written story.

You're making a lot of assumptions. Nowhere in the article was it written they were making an investment and even if they wanted to flip the house 2 years later for triple, that doesn't change the contract they signed. And given the fact they reclaimed money in a lawsuit, I'll take it the contract wasn't written as an investment they could lose.

And Trump shouldn't get off easy on this. He after all was paid to license his name to this venture. You can't have it both ways, if he lent his credibility via his name he helped lure people into this investment. He should have been wiser with whom he chose to give his name.

 

[Jhhnn]

This was a terribly written story.

You're making a lot of assumptions. Nowhere in the article was it written they were making an investment and even if they wanted to flip the house 2 years later for triple, that doesn't change the contract they signed. And given the fact they reclaimed money in a lawsuit, I'll take it the contract wasn't written as an investment they could lose.

And Trump shouldn't get off easy on this. He after all was paid to license his name to this venture. You can't have it both ways, if he lent his credibility via his name he helped lure people into this investment. He should have been wiser with whom he chose to give his name.

Or maybe he saw some rubes. Maybe he sees more from the podium of his presidential campaign.

A whole shitpile more. I mean, they've been dumb enough to fall for Repub bullshit for decades & now they're hopping mad about it, rendering them even more susceptible to his brand of bullshit.

 

[BoberFett]

Are we talking about Whitewater again?

 

[ivwshane]

Are we talking about Whitewater again?

LOL! What a fucking tool you are!

 

[DrPizza]

T
And Trump shouldn't get off easy on this. He after all was paid to license his name to this venture. You can't have it both ways, if he lent his credibility via his name he helped lure people into this investment.

Meanwhile, Miami Dolphins fans are suing Sun Life, because their name is on the stadium where the Dolphins had a losing season.

 

[Darwin333]

This was a terribly written story.

You're making a lot of assumptions. Nowhere in the article was it written they were making an investment and even if they wanted to flip the house 2 years later for triple, that doesn't change the contract they signed. And given the fact they reclaimed money in a lawsuit, I'll take it the contract wasn't written as an investment they could lose.

I'm making assumptions based on the fact that I know very well how preconstructs, especially luxury condos, were bought and sold during the housing boom. Purchasing real estate is an investment, purchasing the promise of real estate that doesn't yet exist is a speculative investment in my opinion. Please feel free to tell me where you think I'm wrong.

And Trump shouldn't get off easy on this. He after all was paid to license his name to this venture. You can't have it both ways, if he lent his credibility via his name he helped lure people into this investment. He should have been wiser with whom he chose to give his name.

Sigh, I'm not sure if you are just trying to jam something against Trump or if you are truly ignorant of the facts.

It's not "who" Trump licensed his name to it was when. Since the Chairman of the friggen Fed said that there was no bubble I personally find it rather difficult to expect one business man to know the exact timing that the bubble would pop. For the 10th time or so, the developer did them a favor by not completing construction. If construction would have been completed every last one of them would have willfully sacrificed their deposits. That's just the smart play when you are looking at spending $800K on something that is now worth $400K.

The fact that Trump chose a developer to license his name to that weathered the collapse and was still in business to be sued says a hell of a lot more good things about him then you are trying to say bad things. Virtually any other identical situation, of which there were thousands upon thousands, and no one got squat. These people actually recoup a substantial amount of their loses and it's a bad thing?