Trump was a minority investor in the 65-story tower with Russian billionaire Alex Shnaider.
Shnaider is co-founder with Ukrainian billionaire Eduard Shifrin of the Midland Group, an international trading and investment holding company.
The company owns a number of subsidiaries located in Russia and Eastern Europe that are deep into agriculture, manufacturing, real estate, shipping and steel.
Last month (Oct 26), Putin granted Russian citizenship by decree to Shifrin and his daughter, who was surprised by Justin Bieber at her 16th birthday party.
JCF Capital ULC, which had purchased the construction loan on the building, said last month it planned to put the tower–mired in more than $301 million in debt–into receivership.
The Ontario Superior Court of Justice approved the request today (Nov. 4), just four days before the U.S. presidential election.
Because no U.S. bank will loan money to Trump or the Trump Organization in the wake of four bankruptcies, the Republican presidential candidate has turned to overseas sources for financing or partnerships.
That’s raised concerns that Trump will be beholden to foreign financiers with close ties to Putin, or at the very least faces serious conflict-of- interest questions.
Trump has refused to release his tax returns unlike presidents going back to 1976, which might shed some light on his finances.
Trump has also denied substantial ties to Russian businessmen. But the Toronto tower illustrates his deep involvement in a multi-million dollar deal.
Shnaider put up the money and bought a license to use Trump’s name. The Trump Organization retained the management contract, according to news reports and bankruptcy court papers.
Trump and children Eric, Donald Jr. and Ivanka led the ribbon-cutting ceremony when the tower opened in 2012, although it’s still unfinished to this day, according to local press reports.
The building ran into trouble almost immediately. The Trump Organization failed to sell condos as promised; nearly two-thirds still remain vacant.
Investors, many middle-class, claimed the were induced into buying time-share hotel units based on inflated projections regarding the performance of the hotel-portion of the project.
Trump promised “worst case scenario” occupancy rates of at least 55 percent, but rates never exceeded 45 percent and fell as low as 15 percent, according to court papers. Hotel rooms have been renting at $100 below market.
Trump and Shnaider, who owns the property through a subsidiary known as Talon International, are also locked in litigation, over management issues, according to Politico.
Small investors, who were misled by a investment prospectus and other “deceptive documents,” were granted the right to sue Trump and Talon, after a judge called the offering “a trap to these unsurprisingly unwary purchasers.”
The city of Toronto has pleaded with the hotel to change its name. Over the past year union workers, women’s groups and Muslim groups have staged protests at the property. Trump, meanwhile, is widely disliked in Canada, because of his misogyny, racism and sexism.
As things now stand, the building is heading for an auction to satisfy creditors. The Trump Organization, however, could still retain its long-term deal to manage the property, although allegations of mismanagement and fraud are at the root of a number of lawsuits.
But don’t count on the next owner to keep the building’s tarnished name.
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