David Baines
Sun
Bad news for investors in the Trump Ocean Resort Baja, a proposed luxury condo-hotel development in Mexico that has hit the skids.
The project was being marketed exclusively by Vancouver-based S&P Destinations Ltd., owned by Sid Landolt and Peter Dupuis.
In an interview Monday, Landolt said his firm had “considerable success” marketing the project, but he couldn’t recall the total dollar amount of pre-sales.
Forbes reported that 70 per cent of the units in the first tower, worth $122 million, were sold in one day, bringing in $25 million in deposits. In the second tower, one-third of the units were sold in the first day.
While the marketing campaign was a success, the actual development was a bust.
The developer, Irongate Wilshire LLC of Los Angeles, advised investors late last year it was still looking for financing. It also told investors that their deposits, totalling more than $32 million, had been spent.
What happened to the money is not clear. According to the San Diego Union-Tribune, the developer didn’t even break ground. Forbes reported there are “only holes in the ground.”
It is now clear that the project is dead, and investors will not get their deposit money back.
Landolt said most investors are located in the southern U.S. One Vancouver man told me last week that his sister, who lives in Orange Country, Calif., had lost her deposit of $220,000.
Landolt says his firm was simply the middleman. It collected the deposit cheques and forwarded them to the developer. He said investors were informed in writing that the deposits would be used for construction purposes, rather than being held in trust.
“This situation is completely out of our control,” he said. “It was not manufactured by us, but we are finding ourselves right in the middle.”
He said his firm has received several complaints, and one investor has already filed a lawsuit against the firm.
“This is an extremely difficult situation,” said Landolt. “Nobody at S&P feels good about this.”
Meanwhile, another mega-project that was being marketed by S&P has come to a crashing halt.
The Wyndansea Ocean Front Golf Resort in Ucuelet, a $650-million project being developed by Marine Drive Properties, sought creditor protection last month, hoping it could restructure its affairs and salvage the project.
“Despite an inventory of readily saleable real estate, we are unable to meet our current liabilities,” Marine Drive president and CEO Elke Loof-Koehler said in an open letter.
Last week, B.C. Supreme Court Justice Bruce Butler determined that any compromise plan was “doomed to fail” and revoked the creditor protection, which means the project will be liquidated.
Landolt said S&P sold residential lots only, and those sales were completed and title transferred to the owners, so no deposits were lost.
“Personality is not all that Mr. Petrossian has going for him,” Eddie Petrossian, B.C. Conservative party candidate for West Vancouver-Capilano, immodestly states in his biography.
“Eddie has worked for several Fortune 500 companies such as Primus Telecommunications, Canaccord Capital, and Sprint Canada.”
When I mentioned to Petrossian that Primus and Canaccord have never made the Fortune 500 list, he didn’t disagree. “I stand to be corrected on that,” he said.
I also noted he made no mention of Edward Jones, the investment firm where he worked from November 2002 to November 2004.
That job did not have a happy ending. He was fired and ended up facing a disciplinary panel struck by the Investment Dealers Association, the regulatory body for errant brokers.
In its decision, the panel said Petrossian had been rooting around mailboxes in the lobby of his girlfriend’s apartment building when he noticed an unopened letter from a brokerage firm, addressed to a woman he had never met.
He opened the letter and found a statement of her account. He reviewed the statement, put her name on his prospect list, located her new address and forwarded the statement to her, along with a typed note:
“It’s been some time since we last discussed your investment,” he wrote, even though he had never even talked to her, let alone discussed her statements. “I feel now is a good time to get together and review how those investments are doing.”
In handwriting, he added, “I’M SURPRISED BILL HASN’T CALLED YOU TO UPDATE YOUR ADDRESS! SO MUCH FOR HIS SERVICES! I LIVE AT #703-1415 W. GEORGIA. I REC’D YOUR MAIL. AREN’T YOU LUCKY? THANKS.”
In fact, he didn’t live at that address, and he didn’t receive her mail. He had intercepted it.
Referring to her portfolio, he made several notations: “THIS STUFF IS TOO RISKY! … GOING NOWHERE! … DIVIDENDS FALLING!”
The woman’s sister found out what he had done and complained to Edward Jones. Petrossian initially denied opening the mail, but when confronted with the evidence, he admitted he had. Several days later, he was fired.
The disciplinary panel said his actions amounted to fraud: “We agree with counsel … that this conduct nullifies any implied presumption of good moral character.”
The panel noted that, after being fired, he was unable to find brokerage work in Vancouver. In April 2005, he moved to Toronto and joined Canaccord as a broker’s assistant. A condition of his employment was that he get re-registered, but he couldn’t because his disciplinary problem hadn’t been resolved. After three months, Canaccord dismissed him. This was the extent of his employment at this so-called Fortune 500 company.
The panel also found that, while working at Edward Jones, he knowingly prepared and published advertisements promoting coupon rates for bonds, when he had been expressly told he could only advertise yields to maturity.
He had also been told not to advertise himself as a Certified Senior Advisor, but he nevertheless used the designation to promote himself in four ads over the next three months.
Although he admitted his breaches and expressed remorse, the panel said he still didn’t seem to “fully comprehend the gravity of his conduct.”
The panel fined him $30,000, assessed $5,000 in costs, and suspended him for 12 months. He never returned to the brokerage industry and is now working for his family’s business, an auto-wrecking company on Mitchell Island.
“Everybody makes mistakes in their career,” he told me Monday. “I didn’t defraud anybody. I admitted to my mistakes. I just want to put this behind me.”
Petrossian is running for the provincial legislature in the upcoming election, to be held on May 12.
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