Possess your own SoHo

Pro Publica, the New Yorker, and WNYC have collaborated on an investigation of that time a few years ago when New York prosecutors were considering bringing a felony fraud case against Ivanka and Donald Junior Trump, but didn’t.

In the spring of 2012, Donald Trump’s two eldest children, Ivanka Trump and Donald Trump Jr., found themselves in a precarious legal position. For two years, prosecutors in the Manhattan District Attorney’s office had been building a criminal case against them for misleading prospective buyers of units in the Trump SoHo, a hotel and condo development that was failing to sell.

Oh surely not. Real estate grifters never mislead prospective buyers.

By which I mean, they do that routinely; I’m surprised to learn that anyone even considers prosecuting them. I thought they had some kind of Real Estate Grifters’ Exemption to lie to people about the product.

In June 2006, during the season finale of “The Apprentice,” Donald Trump Sr. unveiled the Trump SoHo as a visionary project. The luxury development was intended to mark the ascension of Ivanka and Donald Jr. — then 24 and 28 years old, respectively — as full players in the Trump empire. They signed the licensing deal alongside their father, and photographs of Ivanka were featured in the Trump SoHo’s advertising, under the tagline “Possess your own SoHo.”

A rather tasteless double meaning there.

The Trump SoHo was beleaguered from the start: Named for one of Manhattan’s trendiest neighborhoods, the development wasn’t really in SoHo, but located just west of it, near the entrance ramp to the Holland Tunnel.

Ummmyeah, “just west” but a world away, because who the fuck wants to live near the entrance ramp to the Holland Tunnel? Plus that business of naming it SoHo when it’s not SoHo – that’s so Trump. So, not surprisingly, people didn’t rush to snap up these hot properties. That’s where the lying and fraud comes in…well, that plus the massively undesirable terms.

Zoning laws wouldn’t allow a residential tower at the location, so the Trumps fell back on an alternative: a “condo-hotel,” in which buyers got a hotel room rather than an apartment, and were legally prohibited from staying there more than 120 nights per year. Worse, the high-priced condos hit the market in September 2007, just as the global economy began to crater in what became the largest financial crisis since the Great Depression.

Oh, awesome – who wouldn’t want to pay an inflated price for a third of a hotel room overlooking the entrance to the Holland Tunnel? Besides absolutely everyone?

And yet…

Business was slow, but the Trump family claimed the opposite. In April 2008, they said that 31 percent of the condos in the building had been purchased. Donald Jr. boasted to The Real Deal magazine that 55 percent of the units had been bought. In June 2008, Donald Jr. and Ivanka, alongside their brother Eric, gathered the foreign press at Trump Tower in Manhattan, where Ivanka announced that 60 percent had been snapped up. “We’re in a very fortunate position,” she said, “where we have enough sales and now we are strategically targeting certain buyers.”

That’s amazing!

But not true.

None of that was true. According to a sworn affidavit by a Trump partner filed with the New York attorney general’s office, by March of 2010, almost two years after the press conference, only 15.8 percent of units had been sold.

This was more than a marketing problem. The deal hinged on selling at least 15 percent of the units. By law, the sales couldn’t close with anything less. The Trumps and their partners would have had to return the buyers’ down payments.

Some buyers concluded that they’d been cheated. In August 2010, some sued the Trump Organization and others involved in the project in New York federal court. “This action seeks to redress the substantial and ongoing pattern of fraudulent misrepresentations and deceptive sales practices” by the Trumps and the other defendants, the suit charged. The plaintiffs argued that there’s a vast difference in value between a unit in a building that is 15 percent sold and one that is 60 percent sold. Their complaint accused the sellers, including the Trumps, of “a consistent and concerted pattern of outright lies.”

I guess the deal with real estate grifting is that they can talk whatever bullshit they like about what’s going to happen, because who can demonstrate they knew it wouldn’t happen? But lying about what has already happened is not quite so easy to get away with.

They did get away with it though.

After the civil suit was filed, the Manhattan district attorney’s office opened a criminal investigation. Prosecutors are often wary of getting involved in a dispute between wealthy litigants. But in this instance, according to a person familiar with their thinking, the lawyers in the Major Economic Crimes Bureau quickly concluded that there was enough to warrant an investigation. They believed that Ivanka and Donald Jr., might have violated the Martin Act, a New York statute that bans any false statement in conjunction with the sale of a security or real estate. Prosecutors also saw potential fraud and larceny charges, applying a legal theory that, by overstating the number of units sold, the Trump were falsely inflating their value and, in effect, cheating unsuspecting condo buyers.

But then Marc Kasowitz paid a call on the DA, who told the prosecutors to drop the case. Kasowitz had contributed $25 k (which seems like a trivial sum to me) to the DA’s re-election campaign; the DA returned it after that meeting.

I recommend reading the whole article. It’s not an “aha!” about the money; it’s not at all clear that that made a difference. But. The whole thing is just skeevy as hell. It’s typical Trumpiana – lying, gilding, puffing, cheating, hyping, thieving, manipulating, backrooming, sleaze sleaze sleazing. It just sickens me that people like this are running the government. They’re cheap crooks and they should be selling used cars in Perth Amboy.

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