MANHATTAN (CN) - An investment group that has balked at the “objectively horrific mismanagement” of the Trump Panama Hotel claims in a federal complaint that the president’s business empire is trying to bully them into arbitration.
“Trump is unable to defend against the claims of mismanagement, and, thus, Trump’s only apparent defense is to deflect focus from the actual issues – Trump’s mismanagement of the Trump Panama Hotel and the termination of its management agreement – and to create a circus by threatening plaintiffs
and others) with baseless fraud and conspiracy claims that entirely lack merit and have already been rejected by the Panamanian courts,” the complaint states. “In other words, Trump is being Trump.”
Represented by attorneys at Akerman, the Panamanian outfit Ithaca Capital Investments brought the complaint against Trump International Hotels Management on Jan. 16 in Manhattan.
Though President Donald Trump is not a party to the action, his name is used as shorthand for the actions of his onetime company.
Representatives from Trump International Hotels Management have not responded to request for comment on the case, which details “gross mismanagement” of Trump’s 70-story property overlooking Panama Bay in an area the country known Punta Pacifica. The hotel was Trump’s first international hotel venture, and has reportedly earned the president between $30 million and $50 million.
Ithaca says it acquired 202 of the hotel’s 369 units about in early 2017, and that fellow unit owners began raising management concerns with Trump by the summer.
The complaint accuses Trump of “having lined its pockets with ill-gotten management fees” while failing to drive occupancy.
“The hotel has steadily been losing market share and stands in last place among its peer luxury hotels in all the relevant metrics for success in the hotel industry,” the complaint states. “This decline in occupancy has had and continues to have a direct impact on the hotel’s bottom line. The resulting decline in revenues has been particularly precipitous in the past two years.”
Ithaca says the 78 percent of the hotel’s beneficiaries discussed Trump’s failings at an October meeting where they decided unanimously to commence a $15 million arbitration against Trump.
Because it is not a party to a 2008 hotel-management agreement, Ithaca notes that it is not participating in the arbitration. Trump nevertheless attempted to join it to that arbitration in a December counterclaim.
“Trump’s allegations against the third-parties in the arbitration are a conspicuous effort to bully the hotel’s owners into dropping their well-supported claims of mismanagement against Trump and to divert attention from Trump’s failures as a hotel operator,” the complaint states. “To that end, Trump filed a 73-page complaint in the arbitration alleging an outlandish conspiracy theory that threatens these third-parties with damages of up to $150 million for conduct that amounts to a supermajority of the beneficiaries attending a meeting and voting (unanimously) to remove Trump as operator of the Trump Panama Hotel.” (Parentheses in original.)
Ithaca Capital wants Trump enjoined from asserting any claims agains it in arbitration, noting that the terms of its 2017 purchase agreement require Trump to bring such claims in New York, either before a state or federal court.
Ithaca Capital is represented by Joshua Bernstein from Akerman LLP.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.