The Canadian Supreme Court has upheld a lower court’s ruling that Donald Trump and a real estate developer misled two Canadian investors who thought they’d become fabulously wealthy by buying units in the Trump International Hotel and Tower in Toronto, but instead lost big money. The hotel isn’t owned by Trump, but his name is licensed to be on the thing, and it’s managed by a Trump company. Following last Thursday’s decision, it remains unclear whether the president has explored options for a nuclear attack on our neighbors to the north, or will be content with Tweeting an accusation that Justin Trudeau wiretapped him.
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The Ontario Court of Appeal found in the plaintiffs’ favor last year, and last week the Canadian SCOTUS rejected an appeal by Trump, Talon International Development, and former executives targeted by the lawsuit.
In the original appeals court ruling from October, Justice Paul Rouleau wrote,
fleecing Americans who dream of sharing his great business success — he’s happy to rip off anyone, no matter where they live, which makes him a truly egalitarian con artist. We can only assume Trump’s defense was that these suckers were simply begging to be taken for everything:
Neither Mr. Singh nor Mrs. Lee were sophisticated investors, in real estate or otherwise. Both had to borrow heavily from family to finance their purchases. Both believed that buying into the Trump project would be an excellent investment. And in time, both came to realize that they were wrong.
Mr Singh had been discharged from bankruptcy three years before making the purchase and was earning around C$55,000 a year as a warehouse supervisor, [the case summary] said.
He did not have enough money for the deposit for the unit and had to receive help from his father, a retired welder, who agreed to help and took out a line of credit on his own home to finance the loan.
Ms Lee was a homemaker, whose husband worked as a mortgage underwriter at the time. Her parents loaned her money for the deposit.
Pfft, losers! Neither ever lived in the condos they purchased, instead expecting to get rich off the investment.
In ruling for Singh and Lee, the court emphasized that in 2004, Talon International Development had asked that their condo scheme, which involved renting out investors’ luxury apartments when the owners weren’t living there, should be exempt from Canadian regulations on securities, since the rooms were going to be sold as real estate, not as investments. In that 2004 application for the exemption, Talon’s attorneys promised the units would be marketed as luxury apartments, with the rental scheme only mentioned as a secondary benefit.
In reality, the marketing materials presented to Singh and Lee included a document focusing on what a terrific investment the condos would be, including a line in bold stating the annual “return on cash invested” would range from 6.46% to 21.57% (the estimate also included a line stating that the returns were not guaranteed). The salesperson told Mr. Singh the hotel was sure to be a hit, because after all it would be a Trump property and a brand-new hotel, almost certain to have full occupancy from day one. She promised at least a 75% occupancy rate to Ms. Lee. Both testified the written document and the sales pitch were key in their decisions to invest. The court document notes,
As it turned out, the Estimates bore no relation to financial reality. The motions judge found as a fact that the Estimates were “deceptive documents” and “replete with misrepresentations of commission, of omission, and of half-truth” […]
Contrary to Mr. Singh’s belief that the Estimates were based on “whatever channels that they got their information from”, the motions judge found that the figures in the Estimates were merely hypotheticals dreamed up by Talon’s [CEO and President Val] Levitan who, it will be recalled, had no previous experience in the hotel business.
Hmm! More echoes of Trump University, whose “instructors” weren’t real estate whizzes handpicked by Donald Trump, but high-pressure sales experts hired for their ability to extract money from unsuspecting “students.” We wonder if the investors were also pressured to give the investment a high satisfaction grade.
The Ontario appeals court ruled in favor of the investors, and ordered that Singh be refunded the cost of the unit he bought and that Lee be paid damages for “negligent misrepresentation.” Now that the appeal has been rejected, the original ruling will be enforced.
Politely enough, the court refrained from pointing out no one should ever trust either Donald Trump or a real estate developer named after the claws of a predatory bird.
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