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Hotel Builder Misled Municipal Bond Investors, Trustee Alleges

  • Hard Rock Hotel developer lied about construction loan: UMB
  • Bonds defaulted when wholesale lender failed to fund loan

The developer of a planned Hard Rock Hotel in a suburb of Kansas City, Kansas, allegedly defrauded investors who bought about $23 million municipal bonds issued to help finance the project, according to a lawsuit filed in federal court. 

Minnesota developer D. Jon Monson said that he had a $52 million construction loan in place when he sold the bonds, but hadn’t closed on that financing, which was only for $48.8 million, UMB Bank NA said in a Nov. 1 lawsuit filed in U.S. District Court in Kansas City. UMB is the trustee for the securities.