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Investors In Donald Trump's Failed Mexico Resort Speak Out

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July 14, 2016 1:50 p.m.

Investors In Donald Trump's Failed Mexico Resort Speak Out


Steve Walsh, reporter, KPBS

Related Story: Investors In Donald Trump's Failed Mexico Resort Speak Out


This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

Several years ago, 250 people, mostly from Southern California but TA one oceanfront condos sold under Donald Trump's name. The condos were never built now, ahead of the Republican National Convention, disgruntled buyers have decided to speak up. They say they were deceived by Trump and they fear voters face the same disillusionment. Jean Guerrero has more.
Sylvia Villavicencio celebrated her birthday at her home in Madera, California. The main event, the breaking of a piñata, dachshund after Donald Trump.
Everyone wanted to participate. But it broke. It broke right away.
A few years ago in 2007, she and her husband Michael Rodriguez, were fans of Trump.
We were like the people that follow him now. I did not question anything he said or did. He was Donald Trump
When they heard he was building an oceanfront resort in Tijuana, were both have family, they rush to buy two units. Trump was a billionaire. They were sure it was a solid investment.
Trump Ocean resort is a place to arrive and relax. A place where your every need is taking care of.
The resort was never built. It failed with a 2008 financial crisis. When the deposits of 250 buyers disappeared, many sued for fraud, including the couple.
After that I started getting high blood pressure.
Trump and double settled under confidential terms. Most try to move on. Trump began to rise in the primaries. The couple felt obligated to speak up. They think American voters are under the same spell they were under.
One of the things I most love about this project is the fact that it's in Baja, Mexico. And Baja is one of the really hot places.
Most of the condos or sold at lavish parties. Buyers like Mike thought he was a codeveloper.
All the literature and brochures we had indicated that he was the developer.
After the project failed to materialize, Trump announced he was not the developer. He only at least the right to his name. Trump's campaign did not respond to remit -- comment. He has denied wrongdoing in this as he failed in other ventures. Trump and his band tout his skill at amassing wealth as evidence he would make Americans more prosperous.
We will make America great again. It's going to happen. It's going to happen.
Critics argue there is a pattern to his business strategy. And he will destroy the economy for personal gain.
There are millions and millions of people that follow him and believe in him. Like we did. Just like we did.
Sophia was born in San Diego. Mike is from Fresno County. Both are Mexican-American. Trump's comments about Mexican immigrants, likening them to criminals and rapist, added fuel to their anger.
This guy is saying this about Mexicans and Hispanics. Look what he did.
Prospective buyers were not the only ones hurt. The head of the Baja California real estate Council then said the region's real estate community took a hit.
Absolutely. He did damage. The reputation of Baja.
He said business leaders use the project to market the region to tourists and investors. When developers managed, Americans became wary of buying property south of the border.
Most of the people were blaming the Mexicans.
Other developments failed too. He said it was the collapse of such a high-profile project that had the biggest impact. Both the Baja region and the Rodriguez couple has recovered
It is a bad experience in our lives. But we are okay. I'd hate for him to get in there and hurts a lot of other people.
Jean Guerrero, KPBS news.
Joining me is Steve Walsh who also worked on the story of Donald Trump's Ocean resort, Baja project. Welcome.
It's good to be here.
I think one of the most startling things about the report we just heard is that Donald Trump licensed his name to this project without being involved in the development. You tell us more about that?
This is common. We've heard a lot about this during the presidential election. This is out here and many people know this now. Back when this development was starting, this was new. Think back to my Donald Trump in the 2000's. He was starting to see success from the apprentice. He had issues with his deceit is in Atlantic City in the 90s which had filed for bankruptcy. He was climbing his way back. He started at this point using his name more and more as a way to create his personal brand. Trump Baja resort was the second development that he licensed his name to with these same developers. The first one was in Wikiki and was very successful. The second time around they bought this land in Baja and this project was not doing well back in 2006. Then they brought in Trump.
Was there anyway for someone who wanted to buy one of these condos or put a down payment on one of these condos that did not actually exist yet -- to look at the Trump website and find out that he was not really involved in the development?
This is like a lessons learned. Now you can go on the website and see which of his projects or development are owned by Trump and which ones he is licensing his name to. CBS estimate in October that 40% of the 62 buildings that have Trump's name on it are licensed projects. Back then, those distinctions were not there. the Wikiki project makes it clear that this is only Trump licensed project. Back then it was murkier. There is a story in the Union Tribune where the mentioned him being a significant equity investor in the project. He was not.
The promotional things that were put out for this particular development apparently had Trump and his family on them.
It did. Donald Trump probably never came to San Diego for this although his daughter and son were both here for marketing events in 2000 with this project was getting underway and they were selling it hard. There is a video that features Donald Trump where he talks about Baja and talks about the quality of Trump developments.
When I build I have investors that follow me all over. They invest in me. They invest in what I build. And that's why I'm so excited about Trump Ocean resort. This is going to be something very, very special.
And so from that, Ivanka is also in that same video where she talks about how the Trump name stands for quality and the Trump organization puts everything behind the things they are involved with.
We are really creating northern Baja as the new combo and the new resort destination. This was a deal that in conjunction with my brother and of course my father and the strength of the Trump organization, we are bullish on this.
In the timeline of this you say 2006 is when Trump got on board but by 2008 the investors were already getting antsy about this project?
Right. It starts in 2006. In 2007 there are three events, one of those, Ivanka goes to in Delmar. Donald Trump Junior goes to an event in San Diego. There is a third one at the Manchester Hyatt that kicks off the whole thing. They are promoting it heavily and pre-selling condos before it is built at some point they excavate a basement for this in Baja. But investors, people who bought these condos started looking around and want to see if there was more than just a hole in the ground. By 2008 they are starting to ask questions. The 2009, it starts to unravel.
To the investors lose their down payments?
Yes. They lost everything. There was a $32 billion worth of deposits that went into this project. They lost all of that. That is when the lawsuits started in 2009.
Donald Trump said he does not settle lawsuits against him. Did that hold true in this case?
It did not hold true in this case. It did not hold true in other licensing cases that he's been involved with around the same time. He does hold out for a long time. The investors Iron Gate partners, Adam Fisher and Jason Gus felt settled first. And leaving Trump as the last person standing. Ultimately, he doesn't settle as well. Admitting no wrongdoing.
This failed project in addition to the lawsuit pending over the defunct Trump University -- is all of this in any way tarnishing, do you thing, the image of Trump as a great this is men?
Obviously the Trump University case has a lot of roots in San Diego with that lawsuit that is ongoing. There was a hearing this week on that case talking about whether they will release videotaped depositions. What does it say about Donald Trump? That is the bottom line. Is he a shrewd businessman who knows how to create his own personal brand and make money off of that brand? Is he a smart investor? Or is he someone who makes exaggerated claims which they can't always be trusted? When you are talking about the presidential election, that is the question that voters will need to answer.
Okay. I have been speaking with Steve Walsh. Thank you so much.
Thank you.