Buying a Trump Property, or So They Thought
For many middle-class Americans, it is the most coveted brand in real estate, synonymous with sky-piercing luxury and can’t-miss quality: Donald J. Trump.
Far from the New York City towers that bear his name, in cities like Tampa, Fla., and Philadelphia, house hunters clamor to buy into his developments, sometimes exhausting credit lines and wiping out savings for a chance to own a piece of his gilded empire.
But as Mr. Trump, who is weighing a bid for the White House, has zealously sought to cash in on his name, he has entered into arrangements that home buyers describe as deliberately deceptive — designed, they said, to exploit the very thing that drew them to his buildings: their faith in him.
Over the last few years, according to interviews and hundreds of pages of court documents, the real estate mogul has aggressively marketed several luxury high-rises as “Trump properties” or “signature Trump” buildings, with names like Trump Tower and Trump International — even making appearances at the properties to woo buyers. The strong indication of his involvement as a developer generated waves of media attention and commanded premium prices.
But when three of the planned buildings encountered financial trouble, it became clear that Mr. Trump had essentially rented his name to the developments and had no responsibility for their outcomes, according to buyers. In each case, he yanked his name off the projects, which were never completed. The buyers lost millions of dollars in deposits even as Mr. Trump pocketed hefty license fees.
Those who bought the apartments in part because of the Trump name were livid, saying they felt a profound sense of betrayal, and more than 300 of them are now suing Mr. Trump or his company.
“The last thing you ever expect is that somebody you revere will mislead you,” said Alex Davis, 38, who bought a $500,000 unit in Trump International Hotel and Tower Fort Lauderdale, a waterfront property that Mr. Trump described in marketing materials as “my latest development” and compared to the Trump tower on Central Park in Manhattan.
“There was no disclaimer that he was not the developer,” Mr. Davis said. The building, where construction was halted when a major lender ran out of money in 2009, sits empty and unfinished, the outlines of a giant Trump sign, removed long ago, still faintly visible.
Mr. Davis is unable to recover any of his $100,000 deposit — half of which the developer used for construction costs.
Another casualty: his admiration for Mr. Trump, whose books and television show Mr. Davis had devoured. “I bought into an idea of him,” he said, “and it wasn’t what I thought it was.”
Alan Garten, a lawyer for Mr. Trump’s company, said that, regardless of what Mr. Trump himself or any marketing materials had suggested, his role was disclosed in lengthy purchasing documents that buyers should have carefully scrutinized. But in an interview, Mr. Garten acknowledged that, “without a lawyer, it can be difficult” to understand such documents. He suggested that the housing market collapse, not Mr. Trump, was the cause of their troubles.
“They are people who lost money and are looking for somebody to blame,” Mr. Garten said.
Mr. Trump’s Midas touch as a businessman, sometimes real, other times perceived, is central to his presidential aspirations, which have become increasingly hard for Republicans to ignore, even as some of them cringe at his blunt remarks and boastfulness. In the next month, he is scheduled to visit two key primary-season states, South Carolina and Iowa, as he further tests the waters. “I have made myself very rich,” he said recently, sitting in his palatial suite at the Trump International Hotel in Las Vegas. “And I would make this country very rich.”
But regardless of whether Mr. Trump ultimately seeks the presidency, his attempt to promote himself as a savvy financial manager who can lead America out of its economic rut is bringing new scrutiny to his own business practices.
Despite high-profile stumbles, like the bankruptcy of Atlantic City casinos bearing his name, Mr. Trump has nurtured plenty of successful projects, in real estate and beyond: memberships to his golf clubs sell briskly, his men’s suits are a hit at Macy’s, and his NBC series, “The Apprentice,” is a ratings smash. Mr. Trump, in an interview, said the show had earned him well over $100 million.
Yet in recent years, as his brand has experienced an “Apprentice”-fueled resurgence, it appears that Mr. Trump, 64, has taken an expansive approach to putting his name on products big and small. There are Trump mattresses, Trump ties, Trump video games, Trump bottled water and Trump chocolates (designed to resemble bars of gold, silver and copper.)
But it is Mr. Trump’s real estateand education products that have enticed many Americans to invest life savings and dreams of quick riches. And it is with these products, according to a string of lawsuits and complaints filed around the country, that Mr. Trump has disappointed his fans most deeply.
Did Trump "Prey on Consumers’ Fears"?
Opening a ‘University’
As the American housing market climbed toward its peak, in 2005, Mr. Trump opened a for-profit school, called Trump University, to impart his wisdom about real estate and moneymaking to the general public.
In marketing materials, he promised students that his handpicked team of instructors would “teach you better than the best business school,” according to the transcript of a Web video. The same year, Mr. Trump licensed his name to an affiliated program, called the Trump Institute, which offered similar classes.
Dozens of complaints about both schools have rolled into the offices of attorneys general in Florida, Texas, New York and Illinois, officials said. And last year, the Better Business Bureau gave Trump University a D-minus, the second-lowest grade on its scale, after it fielded 23 complaints.
A lawsuit filed in 2010 by four dissatisfied former students, who are seeking class-action status, accuses Trump University of offering classes that amounted to extended “infomercials,” “selling nonaccredited products,” and “taking advantage of these troubled economic times to prey on consumers’ fears.”
According to the court papers, the university used high-pressure sales tactics to enroll students in classes that cost up to $35,000, at times encouraging them to raise their credit card limits to pay for them. It promised intensive one-on-one instruction that often failed to materialize. And its mentors recommended investments from which they stood to profit.
“It was almost completely worthless,” said Jeffrey Tufenkian, 49, who along with his wife, Sona, enrolled in a $35,000 “Gold Elite” class at Trump University to jump-start a career in real estate.