Is Jason Grosfeld’s Costa Palmas Resort The Newest Ponzi Scheme?
On Los Cabo’s East Cape, a number of lavish structures have been built, including Costa Palmas, a luxury resort managed and owned by Los Angeles real estate firm Iron Gate. In Costa Palmas, existing homes range in price from $2.5 million to more than $25 million for oceanfront locations.
Jason Grosfeld
Interviews with Jason Grosfeld, the founder and CEO of Iron Gate, in 2021 indicated that the pandemic had a big impact on the $1 billion in real estate sales in Costa Palmas. Many Costa Palmas locals, however, charge Iron Gate with being a modern-day Bernie Madoff, using the millions of euros it receives for luxury homes in a loosely orchestrated Ponzi scheme to steal or divert money from home buyers for Iron Gate’s own personal gain.
Costa Palmas Brings A Claim:
Sources claim that civil and criminal legal actions have been brought against Iron Gate and its Mexican subsidiaries in Mexico for fraud, racketeering, extortion, conspiracy, and other wrongdoing, or are currently being brought against Iron Gate and some of its representatives. At least two Costa Palmas home buyers have filed lawsuits against Iron Gate and some of its representatives in the United States, and sources claim that more legal actions are being prepared. Numerous law enforcement agencies in Mexico and the US, as well as additional authorities, may be conducting investigations.
In public filings this year that they made against Iron Gate in the federal courts of California, two homebuyers in Costa Palmas, GS 1975 LLC and TRG CP, LLC, accuse the company’s founder and CEO, Jason Grosfeld, as well as its directors of marketing and development, David Waller and Michael Radovan, and general counsel, Mitch Laufer, among others, of defrauding homebuyers into paying Iron gate and its affiliates tens of millions of dollars for construction.
These lawsuits contend that Iron Gate misled clients by stating that their homes would be constructed within 18 months, but that it afterward used the owners’ funds and/or supplies for other purposes or to build other homes. The buyers in both situations contend that they paid Iron Gate millions of dollars for houses that are still being built and cannot be moved into for several years.
Statements Regarding The Court Cases That Hurt Jason Grosfeld’s Online Reputation:
In addition, it is alleged in these claims that Iron Gate and its agents threatened to declare contract defaults or stop all construction activity if the amounts owed were not paid, extorting millions of dollars from the plaintiffs. In both instances, the buyers contend that when they made an effort to defend themselves against Iron Gate’s wrongdoing, Iron Gate immediately retaliated against them by compelled other Iron Gate affiliates to terminate their memberships and subscriptions to their priceless Costa Palmas Beach & Yacht Club.
On Iron Gate’s request, the case has been referred to arbitration in Mexico, according to the state court documents for GS 1975 LLC. Iron Gate has reportedly been the subject of arbitration proceedings in Mexico, according to Steve Anderson, a representative for GS 1975 LLC. GS 1975 LLC is suing Iron Gate for more than $20,000,000 in damages.
Jason Grosfeld’s Father:
We reached out to TRG CP, LLC, but they chose not to respond. According to The Real Deal, Jason Grosfeld’s father, James Grosfeld, was a well-known investor in the asset management company Black Rock, where he spent $94 million on stock. James Grosfeld was the Pulte Group’s chairman and CEO from 1974 until he resigned from his seat on the board as a result of internal disagreement over Pulte’s corporate governance. James Grosfeld held both positions for 16 years.
Given the number of properties Iron Gate has sold in Costa Palmas and the more than $1 billion in sales the company has generated, these homeowner complaints could only be the beginning.
Final Judgments In The Case
This complaint asserts that Iron Gate made numerous untrue statements on the price and timeline for finishing the property’s construction in order to get payments totaling millions of dollars. It further alleges that after spending nearly $5 million of the plaintiff’s money, the home is nothing more than a basic concrete shell. These accusations resemble those put out by GS 1975 LLC. Iron Gate is allegedly holding the plaintiff’s house hostage and refuses to work on it until the plaintiff pays it millions of dollars in additional costs, according to the lawsuit. We reached out to TRG CP, LLC personnel for comment, but we received no response.
Our sources indicate that there may be numerous additional Costa Palmas home buyers with similar claims or experiences and that Iron Gate and its representatives may face additional legal actions. Additionally, we’ve been told that both Mexican and American federal officials are looking at this issue.
