Trump could be targeted by Toronto condo buyers
Lawsuit alleges investors misled about billionaire’s involvement
Republican presidential nominee Donald Trump could be in the sights of investors who lost money on units in Toronto’s glitzy Trump hotel and condo project, even though the property is a Trump development in name only.
Mitchell Wine, a lawyer representing plaintiffs who bought Trump hotel suites with the hopes of renting them out for profit, said if a receiver sells the complex as expected for less than the amount of the defaulted mortgage — and if funds cannot be recovered from the developers — damages could be sought from individuals connected to the project.
“We’d have to take really hard look at everyone else,” Wine said Friday, after the Ontario Superior Court of Justice earlier in the week approved the appointment of a receiver to oversee the sale of the Trump International Hotel and Tower and Trump Residences.
The receiver said it is prepared to submit an offer if no other party steps up with a bid greater than the $301-million senior indebtedness.
The hotel portion of the project is managed by the Trump Organization, which has licensed its brand but has no equity interest in the property, according to a lawyer for Talon International, the Ontario investment group that developed the project. The hotel-condo hybrid on Bay St. was plagued by delays and cost overruns until it finally opened in 2012 amid a glut of new five-star hotels in the city. Occupancy was below projections and room rates were slashed.
In a lawsuit filed against principals that include Trump as well as Talon and other corporations, Wine alleges that his clients were “victims of an investment scheme and conspiracy.”
The lawsuit, which sought to cancel the deals and recover losses, claims that Talon sales agents presented misleading marketing materials and led them to believe they were buying a piece of real estate directly from Donald Trump. The suit says Trump was obligated to ensure Talon had “the experience and integrity to develop the Trump Hotel properly.”
Retiree Herbert Crockett, who put a large down payment on a $1.2-million unit, said he felt cheated.
“He owned hotels everywhere,” Crockett said in an earlier interview with the Star.
“The Trump name was all over the marketing materials. That was a big factor in the investment. I felt deceived.”
Talon and its executives have denied the allegations, arguing that all investments are risky and the purchasers were experiencing an extreme case of buyer’s remorse. They have filed counterclaims seeking the balance of payment.
Trump’s lawyer said he “had nothing to do with the sales process,” but added the lawsuit appeared to be “a desperate, last-ditch attempt by a small group of buyers to get out of what were clear and unequivocal purchase contracts.”
Wine, however, said deep-pocketed individuals could be targeted for losses, like Talon chair Alex Shnaider and Trump, who, he said, “likes to brag on TV that he has a lot of money.”
The Ontario Appeals Court in October reversed a lower-court deci- sion and said Trump could face claims.
But Alan Garten, general counsel for the Trump Organization, said the self-proclaimed billionaire has no liability because he “did not enter into a contract with any of the buyers, did not sell anything to any of the buyers and did not receive any money from any of the buyers.” Symon Zucker, a lawyer representing Markham-based Talon, said the company “is co-operating with the restructuring and the appointment of the receiver is a positive step.”
Lesley Duckworth, a spokesperson for Trump Hotels, said the company has a long-term agreement to manage the property, no matter who owns it after the receivership process.
“Regardless of any capital partner or ownership changes that may take place, we will continue to operate the property under our luxury hotel brand flag,” Duckworth said in an email.
“This has been a record year for the hotel and we look forward to its continued success.”
Hamilton-based developer Harry Stinson, whose proposed Sapphire Tower was seen as a potential rival to the Trump development, said the hotel portion of the Trump project has been well managed and occupancy rates today are “very high.”
He said investors in the pricey condo units were “blinded by the glamour,” calling it inevitable that people will point at Trump if investments go sour.
Stinson said Trump’s mistake may have been to lend his name to a project led by inexperienced developers, suggesting that the Trump Organization is rethinking its approach to licensing deals following its Toronto experience. With files from Alicja Siekierska