Trump Organization is walking away from its floundering Trump SoHo hotel

Remember when Ivanka and Don Jr. were almost charged with felony fraud?

Credit: (AP Photo/Seth Wenig)
Credit: (AP Photo/Seth Wenig)

The Trump Organization is severing ties with the owner of the struggling Trump SoHo hotel, the New York Times reported Wednesday. It’s the latest in a long list of setbacks for the struggling luxury hotel and marks the second time this year a Trump development has had the family name stripped off; in June, the Trump International Hotel and Tower in Toronto was bought out and will be renamed the St. Regis Toronto.

In press release following the announcement, the Trump Organization called the SoHo property “one of the finest in New York City”  with “recognition among top critics.”

In April, the building’s main restaurant announced it would close. Lawyers for the restaurant cited a decline in business “after the election.”

The reality is, the property was failing, and had been, even before Donald Trump announced the project on an episode of The Apprentice in 2006. Back then, Trump promised the SoHo condominium would be a “work of art […] an awe-inspiring masterpiece.”

The project was doomed from the start. At the beginning of construction, excavators found human remains at the site and discovered it was where the Spring Street Presbyterian Church, an abolitionist church, once stood in the 1800s. This started a weeks-long battle between New York residents who wanted to a keep a part of New York history and the Trump Organization, which wanted to move on with the construction of their condo property. Another setback for the Trump Organization came when a construction worker fell 42 stories to his death while working on the property. The safety manager the Trump Organization contracted to work on the property had previously been responsible for fire that occurred because of building code violations. The fire took the lives of two firefighters.

Apart from construction struggles, Trump SoHo wasn’t actually in the trendy neighborhood of SoHo, but rather near the entrance ramp to the Holland Tunnel, which made it a tough sell. The units were also over-priced and not at all practical. To get around zoning laws, the organization was forced to make the property a hybrid hotel and condo, which meant buyers would be prohibited from staying in the building for more than 120 nights out of the year.

The units were selling terribly, but Ivanka and Donald Jr. were telling potential buyers and investors the opposite. In 2008, Donald Jr. told The Real Deal magazine that 55 percent of the units had been purchased. That same year, all three Trump kids gathered at Trump Tower in Manhattan and announced that 60 percent of the building had been purchased.

Unfortunately for the Trump family, this constituted fraud and larceny. According to joint reporting by ProPublica and WYNC, prosecutors in the Manhattan District Attorney’s office had worked for two years to build a criminal case against Ivanka and Donald Jr.  for misleading prospective buyers. The two were very close to being charged with felony fraud, but were saved when the district attorney, Cy Vance, dismissed the case after he was approached by a top donor: longtime Trump attorney Marc Kasowitz.

As part of his investigation into Russian interference in the 2016 U.S. election, special counsel Robert Mueller is looking into the Trump SoHo property after it was revealed Felix Sater, a former business partner of Trump with deep ties to the Mafia and Russian government, was partner in the Trump SoHo development.