Investors In Donald Trump's Failed Mexico Resort Speak Out
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.
On her 65th birthday last year, Sylvia Villavicencio — once a Donald Trump devotee — pummeled a Mexican piñata of the presumptive Republican presidential nominee. Her guests poked out the eyes and tore off the legs.
“We wanted to express our feelings and vent our anger,” said her husband, Mike Rodriguez, a retired real estate builder. They live in Madera, in California's Central Valley.
The couple are unlike most buyers of Trump piñatas, which have found a market on both sides of the border since Trump's political rise. They dislike him not because of his hard-line immigration policy proposals or his remarks about minorities, although those have added fuel. The root of their anger is a sense of profound, personal betrayal. They believe millions of Americans will soon experience it, too.
In 2007, Villavicencio and Rodriguez considered themselves among Trump’s biggest fans. When they heard he was building an oceanfront resort on a cliff in Tijuana, where both had family, they rushed to purchase two condominiums. About 250 other people, mostly from Southern California, also bought units.
Trump was one of the world’s most famous magnates. They were sure the project would prove a solid investment. A brochure for the Trump Ocean Resort Baja Mexico described Trump as “the very definition of the American success story.” Rodriguez and Villavicencio ascribed to this notion. “I gave him all of my trust,” Rodriguez said. “When I heard it was him, I dropped all of my defenses.”
Trump: 'Baja is one of the really hot places'
They believed Trump was a co-developer of the project — the brochures, videos and other promotional materials prominently featured his name. In August 2007, buyers received a letter that identified Trump as a co-developer, signed by Trump.
Another fact sheet said, “Mr. Trump is personally involved in everything that his name represents.”
In a promotional video, Trump appeared on camera, praising the project and its location in Mexico: “One of the things I most love about the project is the fact that it’s in Baja, Mexico, and Baja is one of the really hot places,” Trump said.
When the U.S. housing bubble collapsed and the three-tower project failed, Trump claimed he was not a developer on the project — that he had only licensed the rights to his name. When their deposits disappeared, the Rodriguez couple and about 100 others sued for fraud in separate lawsuits. The builders had spent their deposits on construction. Trump, the developer Irongate and its affiliate PB Impulsores settled under confidential terms.
Rodriguez said the presidential candidate’s proposal now to build a 2,000-mile wall along the U.S.-Mexico border confounds him after the way Trump extolled the Mexico resort in 2007.
“My opinion about the wall is they need something to keep him out of Mexico. Because of what he did. They need for him to build some kind of wall around him,” Rodriguez said.
Most of the buyers tried to put the incident behind them. Some said they felt embarrassed and duped. Others feared Trump would sue them if they talked to journalists. But then Trump began his rise in the GOP presidential primary polls. The Rodriguez couple decided to share their story with KPBS.
“It’s scary, you know? It’s very scary. There’s millions and millions of people that follow him and believe in him, just like we did,” Rodriguez said. “I was like the people who follow him now. I didn’t question anything he said or did, because he was Donald Trump.”
'He's big money'
Neither Trump’s campaign nor his company responded to requests for comment on this story. Trump has said he did nothing wrong in the Trump Ocean Resort Baja Mexico project — just as he has said about a string of failed ventures in everything from real estate to education that have led to lawsuits. He touts his skill at amassing wealth as evidence that he would decrease unemployment in the United States and make Americans more prosperous.
“We are going to bring back jobs like we haven’t seen in this country for many, many decades,” Trump said at a May rally in San Diego. “People that aren’t doing well, they’re going to start doing very, very well, believe me.”
Millions of his supporters cite his business acumen as an impressive credential. Among them is Temecula resident Nonnie Tavisola, who works in real estate.
“He’s big money. He’s one of the investors in a major industry that’s supporting the U.S. economy,” Tavisola said, referring to his work in real estate. “But Trump, even though he’s a billionaire, is just a regular guy — he’s just like me.”
She said Trump empathizes with hard-working business owners such as herself because of his own entrepreneurship. She adds that buyers who lost money in the Trump Ocean Resort Baja Mexico should blame themselves, not Trump.
“It’s just like you telling me, ‘I got a Louis Vuitton out of Chinatown.’ You know what I mean? It says ‘Louis Vuitton,’ but you failed to consider that you bought it off Chinatown,” Tavisola said.
Trump warns that the United States is becoming a “third world country” and promises to “make America great again.”
A predatory business pattern?
Meanwhile, critics say he will destroy the U.S. economy for personal gain. They say the bankruptcy of his Atlantic City, N.J., casinos, the failure of his Florida hotels and the Trump Ocean Resort Baja Mexico reflect a pattern of deliberate predation as a business strategy.
The presumptive Democratic presidential nominee, Hillary Clinton, ran an ad last month highlighting Trump’s business failures.
“He’s gotten rich driving companies to the ground,” the ad says, adding that he will do the same to the country.
Rodriguez and Villavicencio echo these sentiments. They fear voters are going to be disillusioned with Trump — like they were — if he becomes president.
“I’d just hate for him to go in there and hurt a lot of other people,” Rodriguez said.
Rodriguez and Villavicencio are Mexican-American, with deep roots south of the border. The first time they heard Trump describe Mexican immigrants as “rapists” and “criminals,” Villavicencio said she started cussing in Spanish. Rodriguez said it made his blood boil.
“This guy’s saying all this about Mexicans and Hispanics — look what he did,” he said.
In exchange for their deposits on the Trump condos, the Rodriguez couple says they got a bottle of tequila and a black duffel bag featuring Trump logos.
“That’s all we got right there,” Rodriguez said, laughing.
“That’s all we got,” Villavicencio said bitterly.
Villavicencio said she hasn’t been able to drink the tequila, but she keeps it in case she ever meets Trump in person — so she can return it with a theatrical gesture.
She said she developed high-blood pressure while awaiting news on the Trump condominiums. Each time they visited the coastal site, they held their breath to see the progress, which never went beyond soil mounds and a large hole in the earth that remains to this day.
“Me and my husband, we even got into arguments,” Villavicencio said. “I would say, ‘Be patient. It’s going to happen. It’s going to happen.’ But it never happened. It was a dream that never came true.”
Rodriguez was building another house just footsteps from the proposed Trump site on the same coastal cliff, and every time he would go check on that property’s progress, he would notice the dwindling staff and paralysis of the construction next door.
“They were just moving dirt around,” he said.
Then the developers disappeared. The couple had planned to use one of the Trump condos to celebrate their honeymoon. The failure of the project forced them to postpone their wedding.
Impact on the Baja real estate industry
Condo buyers weren’t the only ones disappointed when the Trump Ocean Resort Baja Mexico failed. The real estate community in Tijuana and Rosarito also was hurt.
“It did a lot of damage for the real estate community here,” said Victor Loza, who was the president of the Baja California Real Estate Council when the project was announced about a decade ago.
He said officials and business leaders started using the Trump project to market the region to tourists and investors. Property values near the proposed Trump site skyrocketed. The Baja California Tourism Ministry issued the project a certificate of praise.
“If you went to a coffee shop, that’s what people were talking about — Trump is coming, great! Everybody was excited. Everybody was like, we need that. Trump is coming. Pretty soon we’re gonna have the Rockefellers,” Loza said.
After the project fell apart, investors became wary of buying property in Baja California, Loza said. Other real estate projects in the region failed during that time period because of the U.S. housing market crash. But it was news of such a high-profile development failing that had the most long-lasting and far-reaching effect on perceptions, Loza said. “Absolutely, it did damage the reputation of Baja,” he said.
Compounding the situation was that between 2008 to 2010, Tijuana saw the worst wave of violence in its history. Investments in the region plummeted, and it wasn’t until the city began to reinvent itself in recent years around culture and cuisine that tourism began to flow at pre-2008 levels.
At the time of the Trump project’s failure, Loza said, many condo buyers believed Mexico’s domestic corruption was somehow to blame for their losses. He said it’s foreign developers who misbehave.
“The foreigners that come here and invest, they pull out the minute they see there’s no business going on, and they don’t care who they damage,” Loza said. “Most of the Mexican (developers) live here, so they do care what we think about them.”
Since the Trump project failed, Baja California has passed legislation to further formalize the real estate industry. In 2010, officials started requiring real estate agents to register with the state. As of 2015, real estate agents must be formally licensed to practice.
Loza said he was not among the real estate agents who helped connect California buyers to the Trump condos. The proposed location was across the highway from a sewage treatment plant that emits smells and pollutes water offshore from the cliffs.
“It just made me think the project was not a project that the buyers I had would be interested in,” he said.
Most of the condos were sold in San Diego County, at lavish parties held at hotels like L’Auberge in Del Mar and the Manchester Grand Hyatt in downtown San Diego, where many were unaware of the proposed site's proximity to a sewage treatment plant.
'This is Donald Trump's'
The Rodriguez couple has since recovered from the Trump ordeal. They own an ocean-view condominium in Tijuana just a few miles south of the proposed Trump site.
“It’s a bad experience in our lives, but we’re OK, you know. We’re OK,” Rodriguez said.
They visit about once a month.
Outside their window, the ocean shines silver and dolphins rupture the surface. Seagulls glide over the horizon. The Coronado Islands glow in the sunset.
“This is where we come and enjoy our beautiful view,” said Villavicencio, a painter and retired flamenco dancer. “Just to be by the ocean is one of my passions. I love being by the ocean when I paint.”
Rodriguez said he enjoys having a place in Tijuana because of the rich Mexican culture he can experience and the tranquility he feels next to the beach.
Just a short drive away from their condo, the sales office at the proposed Trump site still stands, featuring posters of Trump and models of the towers, as well as the certificate of praise from the Baja California Tourism Ministry.
When KPBS reporters recently went to the site, a security guard appeared and asked them to leave.
“You can’t be here,” the security guard said in Spanish. “This is Donald Trump’s.”
Trump never owned the coastal property, and it has since been sold.
When asked the name of his boss, the security guard shrugged. He said he only knows Trump’s name.