Donald Trump, the real estate mogul and reality TV star, says he's "honored" to be a subject in a lawsuit brought by about 80 buyers of luxury condominiums who say they're victims of a fraudulent sales program.
The lawsuit, which does not name Trump as a defendant, claims the developers of the Trump Towers complex in Sunny Isles Beach, Fla. -- a partnership including the Related Group and Dezer Development -- used the celebrated Trump name to attract buyers. But according to the suit, the billionaire's name can only be used temporarily and for promotional purposes and may be changed once the units are sold out, the buildings are completed and the developers are no longer associated with the project. The lawsuit was filed Tuesday in Miami-Dade Circuit Court.
The buyers are seeking cancellation of sales contracts for units with prices totaling more than $100 million and the return of about $20 million in deposits.
Reached in Scotland where he was pushing his plan for a $2 billion golf resort, Trump said he was "honored" by the lawsuit and the fight over his name.
"Everybody wants to have the name Trump," he said.
Representatives of the Related Group did not respond to several phone calls or an e-mail seeking comment.
Gil Dezer, president of New York-based Dezer Development, which owns dozens of acres in Sunny Isles Beach, was not available for comment. Gil Dezer's father, Michael Dezer, said he couldn't comment because he had not seen the lawsuit. A copy of the lawsuit was e-mailed to the developer, who did not call back before deadline Wednesday.
Trump said he had a "great involvement" with the three-building, high-rise project but wouldn't say if he has invested in it. The developers have a licensing agreement to use the Trump name and trademark to market the project, he said. He would not say if he would seek to have the Trump name removed from the project once all the units have been sold
Although the Trump name was part of all promotional material, including banners, letters and document cover sheets, it is not included in any of the actual condo documents or the purchase contract, said Robert Cooper, an Aventura attorney who is representing the buyers in the lawsuit.
"There is no license agreement in existence between the association and Trump that would give them the right to call it the Trump Towers once the developers leave," Cooper said.
Trump has licensed his name to various developments across the world. In some cases, he is a direct investor and partner in the project. In other instances, he licensed his name to developers for a share of the profits -- about 8 percent to 15 percent of gross condo sales -- plus millions of dollars in upfront payments, according to a September 2006 article in Forbes magazine.
Condos in buildings that carry the Trump name are worth 36 percent more than units in similar buildings that do not carry the Trump flag, according to the lawsuit.
The lawsuit also alleges purchasers in Trump Tower II and III overpaid for their units because the developer "operated a fraudulent and misleading resale program by manipulating" asking prices in Trump Tower I to support vastly inflated prices of units in the second and third buildings.
"Let's say someone bought a unit in Tower I for $700,000 and wanted to resell it for $900,000," Cooper explained. "The person would sign an agreement with a minimum price of $900,000, but the [brokerage firm and the developers] would list it for $1.4 million. So when buyers looked at Tower II they said, ‘Wow, the prices for these units are going up fast."
The alleged fraud not only hurt buyers in the Towers II and III -- who overpaid based on the manipulated listing prices of units in Tower I -- but also harmed owners of units in Tower I who couldn't sell their units at the inflated asking prices and were prohibited from trying to sell their units through other venues, Cooper said.
Buyers of units in the first tower received letters stating, "They were strictly prohibited from listing units on any Multiple Listing Service, including Internet advertising, and that such advertising would constitute a breach of the contract unless the purchasers first obtained the developers written consent," according to the lawsuit.
Exclusively Baronoff Realty is the brokerage that handled the sales for the three towers.
Elena Baronoff, the brokerage's president, did not return phone messages and e-mails seeking comment before deadline Wednesday. The company operates in the Trump International Sonesta Beach Resort.
Baronoff's Web site claims units in Trump Towers I and II are sold out, and the third tower is nearly complete.