Investors in Trump Tower Request Investigation by Ontario Securities Commission
TORONTO, Nov. 25, 2012 /CNW/ - Some of the investors in the Trump International Hotel & Tower Toronto ("Trump Hotel"), in a last-bid effort to obtain immediate assistance before their looming November 29th closing dates, have sought the assistance of the Ontario Securities Commission ("OSC"), which oversees the offering of investments in Ontario. The investors are asking the OSC to launch a formal investigation into the investment scheme offered as part of the Trump Hotel.
Immediate action by the OSC has become urgent in light of the fact most of the investors have a November 29, 2012 closing date, and every Canadian bank has refused to offer financing to investors. Though promised by the developers of the hotel, Talon International Inc., that the hotel units could be easily financed as residential condominium units, and the agreements structured as such, investors have come to learn that Canadian banks are treating the hotel project as a commercial enterprise, and have all refused financing as a condominium purchase.
To make matters worse, the investors have also discovered that their investments are running at losses of upwards of $175 a day per unit, due to the current shortfall between the maintenance fees and the hotel unit revenues.
With a looming closing date of November 29, 2012, and banks refusing financing, investors are faced with either having to either come up with substantial amounts of cash to close or resort to secondary financial institutions which will only provide partial financing for this project as a commercial investment at prohibitively high interest rates.
Some of these investors have already commenced a multi-million dollar lawsuit against Talon and their directors, as well as a number of Trump organizations and their directors, including Donald Trump Sr.
Without conventional mortgage financing, these investors will be unable to close on the hotel units on their November 29th closing date. Talon has already initiated legal proceedings against a number of investors who have tried to rescind their agreements and/or have notified Talon of their inability to close on November 29th. Meanwhile, the plaintiffs' claims allege that investors were persuaded into investing in the Trump Hotel on the basis of alleged negligent or reckless misrepresentations by all the parties involved, and that the promises and projections offered were not only allegedly inaccurate, but in contravention of securities regulations.
Back in 2004, when the hotel project was first being planned, Talon sought permission from the OSC to be exempt from the strict (and costly) regulatory requirements for commercial investments, and provided a number of promises and conditions to the OSC in order to obtain those exemptions.
In granting an exemption, the OSC made it a strict condition that Talon and Trump Hotel not market the hotel units as a cash-flow investment. Immediately thereafter, the plaintiffs allege that the developers ignored those promises and actively marketed and sold hotel units on the representation of a sizeable return on investment, proposing anywhere from 5% to more than 20% returns as soon as the hotel opened.
The plaintiffs in this case, represented by the law Toronto-based law firm of Heydary Hamilton PC, have formerly requested that the OSC conduct a full and immediate investigation to determine whether or not the investment scheme is in violation of the Securities Act, or the 2004 OSC ruling. If so, the OSC has the capacity to immediately order that all further transactions relating to the hotel units, and any closings, be halted.
Meanwhile, Ontario courts have declined to hear the matter on an urgent basis, notwithstanding the upcoming November 29th deadline, and have pushed any preliminary hearing of this dispute into late 2013.
Although many of the investors have lost all hope of a timely response in light of looming closing date, Javad Heydary, the lead counsel for the plaintiffs' is optimistic as to the OSC':
|"I have full confidence in the Ontario Securities Commission in that they will take all the necessary steps which, in our opinion, requires a close examination of this project. Whether the Commission decides to act or not is not for us to comment on, but we (as lawyers acting for the investors) do know that they will give this matter the serious attention that the circumstances mandate, and for that the Commission has our clients' appreciation and gratitude - even if the Commission's final decision is not one that involves the immediate intervening steps as requested by our clients."|
This press release is issued on behalf clients represented by Heydary Hamilton PC including those named in Ontario proceeding Kim et al. v. Trump et al., CV-12-468175.
More information on the plaintiffs' claim can be found at www.tlawsuit.ca.
All allegations therein are unproven until determined by a court of law.
A sample Trump Tower presentation, including investment projections:
SOURCE: Heydary Hamilton Professional CorporationFor further information:
If you are a member of the media, and are seeking more information on the lawsuit or the OSC investigation, please contact Javad Heydary or Jeffrey Landmann at email@example.com or by calling 416-972-9001.