Is Jason Grosfeld’s Costa Palmas Resort the newest Ponzi Scheme?

Some lavish structures have been built on Los Cabo’s East Cape, including Costa Palmas, a luxury resort managed and owned by Los Angeles real estate firm Irongate. Existing homes in Costa Palmas cost between $2.5 million and more than $25 million for seaside properties.

Jason Grosfeld

Interviews with Jason Grosfeld, the founder and CEO of Irongate, in 2021 indicated that the pandemic significantly impacted the $1 billion in real estate sales in Costa Palmas. Nevertheless, many Costa Palmas locals charge Irongate as a contemporary Bernie Madoff and use the millions of euros it receives for luxury homes in a sham Ponzi scheme to defraud or siphon money from home buyers for Irongate’s benefit.

Costa Palmas Brings Legal Action:

Sources claim that civil and criminal legal actions have been brought against Irongate and its Mexican subsidiaries in Mexico for fraud, racketeering, extortion, conspiracy, and other wrongdoing or are currently being brought. At least two Costa Palmas homebuyers have brought legal actions against Irongate and some of its American agents. Numerous law enforcement agencies from Mexico and the US, as well as other authorities, may still be looking into the matter.

In public filings this year that they made against Irongate in the federal courts of California, two home buyers in Costa Palmas, GS 1975 LLC and TRG CP, LLC, accuse Jason Grosfeld, the company’s founder and CEO, Michael Radovan, David Waller, the head of development, and Mitch Laufer, the corporate counsel, among others, are accused of tricking home buyers into giving Irongate and its affiliates tens of millions of dollars for construction.

These lawsuits contend that Irongate misled clients by stating that their homes would be constructed within 18 months but that it afterward used the owners’ funds or supplies for other purposes or to build additional homes. The buyers in both situations contend that they paid Irongate millions of dollars for houses that are still being built and cannot be moved into for several years.

The Lawsuits That Hurt Jason Grosfeld’s Online Reputation, According To The Claims:

In addition, it is alleged in these claims that Irongate 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 tried to defend themselves against Irongate’s wrongdoing, Irongate immediately retaliated against them by comping other Irongate affiliates to terminate their memberships and subscriptions to their priceless Costa Palmas Beach & Yacht Club.

Irongate’s Request:

On Irongate’s request, the case has been referred to arbitration in Mexico, according to the state court documents for GS 1975 LLC. Steve Anderson, a representative for GS 1975 LLC, claims that Irongate has been the focus of arbitration proceedings in Mexico. GS 1975 LLC is suing Irongate for more than $20,000,000 in damages.

We contacted TRG CP, LLC, but they chose not to respond. Jason Grosfeld’s father, James Grosfeld, was a well-known investor in the asset management firm Black Rock, where he invested $94 million in stock, according to The Real Deal. James Grosfeld was PulteGroup’s chairman and CEO from 1974 until he resigned from his seat on the board due to internal disagreement over Pulte’s corporate governance. For 16 years, James Grosfeld served in both capacities.

Given the number of properties Irongate has sold in Costa Palmas and the more than $1 billion in sales the company has generated, these homeowner complaints might only be the beginning.

Final Judgments in the Litigation

To get payments of millions of dollars, the lawsuit alleges that Irongate made several false promises about the price and timeline for the completion of the property’s construction. It also asserts that after receiving approximately $5 million from the plaintiff, the home is now little more than a bare concrete shell.

These fees are comparable to those GS 1975 LLC has imposed. Irongate allegedly holds the plaintiff’s house hostage and refuses to work on it unless the plaintiff pays millions of dollars in additional costs, according to the lawsuit. We contacted TRG CP, LLC personnel for comment but received no response.

Our sources indicate that there may be numerous additional Costa Palmas home buyers with similar claims or experiences and that Irongate and its representatives may face other legal actions. We’ve also been told that Mexican and American federal officials are looking at this issue.

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