Trump investors allege ‘gross misrepresentation’
Buyers claim they were misled into believing pricey T.O. condo units would be great investments
About a half-dozen buyers of pricey condo/hotel rooms in Toronto’s five-star Trump International Hotel & Tower will be in court Thursday, hoping that an Ontario Superior Court justice will agree to fasttrack their efforts to renege on real estate deals gone bad.
The case is a complex one dating from 2012. It has involved lawsuits and counter suits, an investigation by the Ontario Securities Commission and even the disappearance and apparent death of the investors’ first lawyer, Javad Heydary, after more than $3 million in trust funds was found to be missing from his downtown law firm.
Just two buyers’ cases will be before the court in Thursday and Friday’s motions for summary judgment — a legal route aimed at fast-tracking lawsuits, where appropriate, so that they don’t result in unduly lengthy and costly trials. The two plaintiffs will act as test cases for the 22 other, similar cases and are seeking damages ranging from about $200,000 to $1 million, based on their individual losses.
Affidavits filed so far on behalf of buyers Andrew Lee, 45, of Richmond Hill, and Sarbit Singh, 51, of Milton, paint a detailed picture of how the costly Trump units — the most expensive condos per square foot in Toronto back in 2007 — were marketed like Hollywood gold to naïve, first-time investors
The cases claim a “gross misrepresentation” by many involved in the glitzy, oft-delayed hotel project at Bay and Adelaide Sts. That includes businessman and TV personality Donald Trump, as well as the major backers of the more than $393-million project, Talon International Development Inc., its chairman, Alex Shnaider, and former president Val Levitan.
The affidavits point to almost identical sales tactics in both cases: PowerPoint or marketing materials created the impression that Trump was directly involved in the project.
They also note tactics that spelled out the money to be made from room rates averaging more than $500 a night and rented out 55 to 75 per cent of the time.
Instead, Lee’s affidavit says, the investment has “been a disaster for our family.”
So far he and his wife, who borrowed $171,400 from her parents for a down payment they couldn’t afford on his single and unreliable income, have racked up almost $135,000 in losses on their 653-square-foot, $857,000 corner suite. Singh also borrowed much of the $173,400 deposit for his 571-square-foot, $869,000 unit from his father, a welder. But, unlike Lee, he never closed on the unit. By August 2012 he had simply run out of money to keep up with the costs. That November, he consulted a lawyer, concerned that the estimates of gains on which he’d based his purchase were a “gross misrepresentation.”
Two affidavits from former Talon sales representative Adina Zakstress that “it is important to understand that in our sales discussion with purchasers we did not sell the unit as an investment.”
She also denies Singh’s claims that she touted the unit’s money-making potential as being akin to having “an extra person in the family bringing in money.”
Whether the Trump hotel-condos were, in fact, being sold as cash-generating investments rather than just an usual form of real estate in the city, has long been a key issue in this case.
The Ontario Securities Commission ruled in 2004 that Talon would be exempted from basic regulatory requirements, such as undergoing an independent review of its business plan, on condition it market the 276 hotel-condo units “primarily as first-class luxury hotel-condominium units to be used for shortterm transient hotel occupancy or for longer-term occupancy.”
After Talon launched a lawsuit in November 2012, trying to force seven buyers to close on their deals, and buyers launched their lawsuit, claiming they were “victims of an investment scheme and conspiracy,” the OSC launched an investigation.
On Dec. 4 that year, it issued a short statement saying simply that, after a thorough review, it would not pursue regulatory action against Talon.