Donald Trump (Melanie Bell)
New York real estate mogul and television personality Donald Trump defended himself on the witness stand Monday against claims by investors in a failed Fort Lauderdale beachfront condo-hotel project.
Trump’s appearance started the sixth day of a two-week trial in a dispute over lost construction deposits in Trump International Hotel & Tower, a 24-story resort that never opened.
Throughout the testimony, the celebrity witness, who successfully completed similar projects elsewhere, blamed the housing crash for the project’s failure.
“I had high hopes for it,” Trump said. “It was a nice location. It was a nice design, and unfortunately the market crashed like never before since 1929.”
Trump entered a licensing agreement in 2004 with another New York developer, Roy Stillman, who headed SB Hotel Associates LLC.
J. Michael Goodson and John Taglieri, who placed deposits on units, accused Trump of fraud for allegedly posing as the developer when he limited his involvement to use of his name and managing the hotel component.
Investors put down 20 percent. Half went into escrow and was eventually returned. They are suing for the other half.
Plaintiffs attorney Elizabeth Lee of Beck & Lee in Miami tried to establish the attraction of the Trump name and how it was used to induce people to invest. She also tried to establish how investors could have been misled by the information in marketing materials.
Trump acknowledged his projects commanded a premium compared to other condo-hotels but disputed Lee’s assertion that his projects are always completed.
“I’ve walked away from projects where I was the developer,” Trump said, although he later conceded other aborted projects were in planning stages and none was stopped after construction began.
The plaintiff’s case relies on the marketing brochures and letters that imply or state Trump was the developer. All the legal documents identify SB Hotel as the developer and Stillman was the project manager. They also identify the Trump Organization as the licensor with the right to terminate its management agreement.
Read The Paperwork
To show how investors could be misled about roles, Lee discussed the use of ambiguous business names and various possible relations a licensor might have in a project.
“Even when you develop a project, you never develop in your personal name?” Lee asked. Trump agreed.
He also acknowledged it was possible for a project licensor to be the developer but didn’t concede he would do such a thing.
“If I’m doing a licensing agreement, the developer would be someone else,” Trump said. “If I own them, there would be no reason to give myself a license.”
Defense attorney Herman Russomanno of Russomanno & Borrello in Miami went back to the legal documents and had Trump emphasize explanations in the prospectus.
“Even a nonsophisticated buyer would read the prospectus,” Trump said. “It’s the most important document.”
Lee and Trump were constantly at odds over whether the project was finished. Trump commended Stillman for obtaining the certificate of occupancy from the city. That, however, only set the stage for closings and most investors were by then unlikely to show.
Trump pulled out a year before the project halted altogether in 2009. He insisted the reason only one investor closed on a unit was because the value of the condominiums plummeted during the market crash.
Lee asked Trump if he had the financial means to finish the project himself. He said he did, but reminded the jury it wasn’t his project even though he was part of the development team. He added that anyone who closed would be “very stupid.”
40 Percent Loss
When Trump ended his testimony, Broward Circuit Judge Jeffrey Streitfeld stole a Trump line from his show, “The Apprentice,” and said, “Sir, you may step down. You’re fired.”
Defense expert witness Hank Fishkind, an Orlando economist, followed, stating, “The economy and the crash of the real estate markets doomed the project.”
Fishkind explained the condominium market was at an all-time high when the project began in 2004. But when it was time for closings, the Broward condo market was at a near-historic low. Anyone who would have purchased at Trump International would have lost 40 percent of their equity, he said.
The tower at 551 N. Fort Lauderdale Beach Blvd. was sold in a 2012 auction. On Dec. 19, CFLB LLC bought the tower from Corus Construction Venture LLC for $120 million. Plans call for a major renovation and the hotel component opening under Hilton’s Conrad brand.
The trial is expected to end Friday. Another trial is set for this summer for another 81 investors seeking about $8 million in damages from Trump.