By Richard Engel, Aggelos Petropoulos, Julie Cerullo and Kennett Werner
Owners of a Trump-branded skyscraper hotel in Panama are suing the hotel arm of President Donald Trump's business, according to a complaint filed in federal court in New York on Tuesday. The owners are demanding the termination of the management contract with the Trump Organization and the removal of Trump’s name from the property.
The reason for the demand? They say Trump's name is bad for business.
“Nobody wants to stay in a Trump hotel,” a representative of one of the owners told NBC News, asking for anonymity because the dispute is ongoing. “Maybe it works in Washington, D.C., but not in Panama, when he’s offended half of the Latin American population.” (He was referring to disparaging remarks Trump has made about immigrants.)
In the complaint, filed in U.S. District Court in Manhattan late Tuesday, the owners of the hotel, called the Trump Ocean Club International Hotel and Tower, alleged they are being bullied into bearing the costs of "gross mismanagement" and financial misconduct by the Trump companies. The hotel's majority owner, Miami-based private equity firm Ithaca Capital Partners, cited "collapsed occupancy” and “significantly depressing revenues” in seeking to terminate the contract with Trump. Ithaca demanded more than $15 million in damages.
The complaint said a termination letter was issued to Trump Hotels in November, just days after NBC News released a monthslong investigation into how the same building was used as a money-laundering hub by Russian mafia and drug cartels.
The building contains a mix of high-end condo units and hotel rooms. While Trump doesn’t own the property, his company continues to earn fees from licensing his name to the building as well as managing the hotel.
Orestes Fintiklis of hotel unit majority owner Ithaca Capital called Trump Hotels “an incompetent operator whose brand has been tarnished beyond repair,” in an email to other hotel-unit owners earlier this month that was obtained by NBC News.
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In response to Fintiklis’ emails and actions, Trump Hotels refused to give up the contract and filed a previously undisclosed complaint in an arbitration court seeking up to $150 million in damages.
“It is YOU, the unit owners, who will ultimately bear the responsibility for the bad acts of Mr. Fintiklis,” read one of the Trump Hotel business letters to the owners, obtained by NBC News.
Alan Garten, executive vice president of the Trump Organization, said there was no merit to the owners' claims.
"The allegations are simply not true," he said. "They allege bullying and harassment? If anyone is exercising harassment and bullying it’s them." He called the court filing "just another product of Ithaca's continuing fraud."
After the termination notice in November, Fintiklis courted Marriott International to take over the management of the hotel. A Marriott spokesman confirmed to NBC News that six Marriott representatives visited the property in Panama on Dec. 4.
But according to two people familiar with the issue, Marriott backed out of talks following pressure from Trump's hotel business. The pressure, they said, was expressed in a call between Eric Danziger, CEO of the Trump Hotel Collection, and Marriott CEO Arne Sorenson.
Both Marriott and the Trump Organization, however, denied there was any pressure exerted.
"Eric informed Arne that there is a valid management agreement in place at the hotel and Arne agreed to stand down — which is completely consistent with our normal business practice," the Marriott spokesperson wrote in an email to NBC News.
"The conversation was very straightforward and friendly," the spokesperson added.
Garten said Marriott left the talks because the company found out the Trump group had a valid management contract. He said the owners had misrepresented the status of the contract to Marriott.
But ethics experts raised concerns about the incident, and particularly about the pressure Trump exerted on Marriott.
"A competitor like Marriott that has extensive interests before the Trump administration is put in an intolerable position if they face a clash with the Trump businesses," said Norman Eisen, a White House ethics lawyer during the Obama administration who has been sharply critical of Trump's business relationships.
"No company should have to make commercial decisions based upon considerations of offending the president’s personal business interests," Eisen added. "That is a characteristic of kleptocracies — not the free market."
The hotel owners fought another legal battle with Trump a few years ago, when they managed to cancel the Trump Organization’s management contract with the condo side of the building. But tensions at the hotel since Trump became president are running even higher.
“The perception is that he’s a racist,” said Al Monstavicius, owner of a penthouse in the property. “Panama is a Latino country. And on top of that we get the 'shithole' comments. It’s got to have a negative reflection. We are linked to whatever Trump does."
Richard Engel has been NBC News' chief foreign correspondent since 2008.
Julie Cerullo is a researcher for National Correspondents Kate Snow and Harry Smith at NBC News in New York.