Several opulent constructions have sprung up on Los Cabo’s East Cape, including Costa Palmas, a luxury resort run and owned by Los Angeles real estate company Irongate. Existing residences in Costa Palmas start at $2.5 million and go up to ocean-front sites for more than $25 million.
In 2021, interviews with Jason Grosfeld, the founder and CEO of Irongate, revealed that the pandemic played a significant role in Costa Palmas’ $1 billion in property sales. However, several Costa Palmas residents accuse Irongate of being a modern-day Bernie Madoff, utilizing the millions of euros it gets for opulent homes in a loosely organized Ponzi scheme to steal or divert money from home buyers for Irongate’s own personal gain.
Costa Palmas Files Lawsuit:
At least two Costa Palmas home buyers have filed lawsuits against Irongate and some of its representatives in the United States, and 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 in the process of being brought. Investigations by numerous Mexican and US law enforcement agencies, as well as other authorities, may be ongoing.
Two home buyers in Costa Palmas, GS 1975 LLC and TRG CP, LLC, accuse Irongate and its Founder and CEO, Jason Grosfeld, Director of Marketing, Michael Radovan, Director of Development, David Waller, and General Counsel, Mitch Laufer, among others, of defrauding home buyers into paying Irongate and its affiliates tens of millions of dollars for construction in public filings this year that they have put out against Iron Gate in the federal courts of California.
These lawsuits claim that Irongate made false promises to the customers that their homes would be built within eighteen months, but that Irongate then took the owners’ money and/or supplies and utilized them for other reasons or for other homes. In both cases, the buyers claim they paid Irongate millions of dollars for homes that are still under construction and cannot be occupied several years later.
Claims On The Lawsuits That Damage Jason Grosfeld’s Internet Reputation:
Jason Grosfeld – These lawsuits further claim that Irongate and its representatives extorted millions of dollars from them by threatening to declare contract defaults or to halt all construction work if the amounts were not paid. In both cases, the buyers claim that when they attempted to protect themselves from Irongate’s wrongful conduct, Irongate instantly punished them by causing other Irongate affiliates to forcefully cancel their subscriptions and memberships to their valuable Costa Palmas Beach & Yacht Club.
According to the state court records for GS 1975 LLC, the dispute has been referred to arbitration in Mexico on Irongate’s application. According to Steve Anderson, a spokesman for GS 1975 LLC, arbitration proceedings against Irongate have been initiated in Mexico. Irongate is being sued by GS 1975 LLC for more than $20,000,000 in damages.
TRG CP, LLC, who we contacted, declined to comment. The Real Deal reports that James Grosfeld, the father of Jason Grosfeld, was a well-known investor in Black Rock, an asset management firm, where he spent $94 million on stock. James Grosfeld served as chairman and CEO of the PulteGroup for 16 years beginning in 1974 before resigning from his position on the board due to internal conflict over Pulte’s corporate governance.
These home-owner concerns may only be the beginning given the volume of properties Irongate has sold in Costa Palmas and the more than $1 billion in sales that the company has made.
Final Verdicts Of The Lawsuit
This lawsuit claims that Irongate repeatedly made false promises about the costs and timing of completion of construction of the home to induce payments of millions of dollars and that after taking almost $5 million of the plaintiff’s money, the home is nothing more than a bare concrete shell. These allegations are similar to those made by GS 1975 LLC. The lawsuit also claims that Irongate is holding the plaintiff’s house hostage and refusing to continue working on it unless the plaintiff pays millions of dollars in additional fees. TRG CP, LLC representatives were contacted by us for comment, but we got no answer.
According to our sources, there may be a large number of other Costa Palmas home buyers with comparable accounts or experiences, and additional legal actions against Irongate and its representatives may be taken. We have also been informed that this subject is being looked into by federal officials in both Mexico and the United States.
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