Tags: Donald | Trump | Sued | Fraud | SoHo | Condo

Donald Trump Sued for Fraud Over Trump SoHo Condo

Tuesday, 03 Aug 2010 01:38 PM

Donald Trump and the promoters of his Trump SoHo hotel-condominium were sued by buyers who accused them of fraudulently touting out-sized sales figures to encourage them to buy units and inflate the project's financial health.

The lawsuit by 15 plaintiffs was filed late Monday in Manhattan federal court, less than four months after the 46-story building opened and three months after the offering plan went effective, allowing closings to begin.

Trump SoHo is a joint venture between the Trump Organization, Bayrock Group LLC and Sapir Organization LLC. Its smallest units start at $1.2 million.

According to the complaint, the defendants maintained in sales pitches and to the media during the first 18 months of marketing that the building was "30, 40, 50, 60 percent or more sold."

Instead, when the offering plan went effective, buyers learned that just 62 of the 391 units, or 16 percent, had been sold, the complaint said. A minimum 15 percent was needed.

Many banks will not lend to buyers of condominium units when sponsors still own a large percentage of the units, often 50 percent. Lawyers believe there can be greater risks when that happens because of the sponsors' obligations to their own lenders and to the condominium itself.

"Not only were the plaintiffs individually misled into signing their contracts and submitting their additional deposits," lawyer Adam Leitman Bailey wrote, "the defendants' collective efforts to pump up sales through false and misleading statements caused all buyers to miss an option to revoke their contract that they all should have had in the absence of fraud."

The complaint seeks to rescind purchase contracts, a refund of $1.75 million of deposits and punitive damages.

"The Trump Organization is not the developer of the project but merely the manager of the hotel, which has done exceedingly well since opening four months ago," Trump said in a statement. "Despite this, I know that numerous people have closed on their units and this case is simply a matter of buyers' remorse."

Other defendants include his children Ivanka Trump, Eric Trump and Donald Trump Jr., as well as the condominium sponsor Bayrock/Sapir Organization LLC. Bayrock, Sapir and their lawyer did not immediately return calls seeking a comment.

Trump SoHo is unusual in that owners are limited to staying in their units no more than 120 days a year and no more than 29 consecutive days in any 36-day period. Units are rented to hotel guests when owners are away.

© 2017 Thomson/Reuters. All rights reserved.

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Donald Trump and the promoters of his Trump SoHo hotel-condominium were sued by buyers who accused them of fraudulently touting out-sized sales figures to encourage them to buy units and inflate the project's financial health. The lawsuit by 15 plaintiffs was filed late...
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