August 25th, 2013
10:55 AM ET
9 years ago

N.Y. attorney general suing Trump's school for fraud

(CNN) – New York's attorney general accused Donald Trump in a lawsuit Saturday of defrauding students who studied at the billionaire mogul's investment institute, though Trump's representative said a large majority of the school's alumni were satisfied with their experience.

The $40 million civil suit alleges Trump made false claims about the school, including that he was personally involved in selecting instructors and creating the curriculum.

Eric Schneiderman, the New York attorney general, said Trump had crafted a "bait and switch" with his school, using his well-known name.

"Trading on his celebrity status, Mr. Trump personally appeared in advertisements making false promises to convince people to spend tens of thousands of dollars they couldn't afford for lessons they never got," he wrote in a statement. "No one, no matter how rich or famous they are, has a right to scam hard working New Yorkers. Anyone who does should expect to be held accountable."

The suit names both Trump, the chairman of the school, and Michael Sexton, its former president, as defendants. Schneiderman is seeking $40 million to repay customers who have enrolled in the school, as well as additional penalties and fines.

On Twitter, Trump called Schneiderman a "lightweight" and said the attorney general was "trying to extort me with a civil law suit."

He also linked to a website that claims 98% of Trump University's former students were satisfied with their experience.

Michael Cohen, executive vice president of the Trump Organization and a lawyer for the billionaire, said the suit "has no merit and is nothing more than a cheap publicity stunt to deflect from (Schneiderman's) weak job performance."

"I am shocked he didn't leak it to the Kris Kardashian show," Cohen continued. "Maybe his office should focus more of their attention and the use of our tax dollars on bringing to justice those responsible for the financial meltdown."

Cohen also pointed to the website citing an approval rating of 98% for the Trump investing classes, saying the figure was derived from questionnaires submitted by students upon completing the course of study. He said the website was created in anticipation of the lawsuit.

Trump University became the Trump Entrepreneur Initiative in 2010 after the New York State Education Department said the company could not use the term "university" without its consent. In 2011, the attorney general began investigating it, along with several other for-profit educational institutions.

Former students in California have also sued Trump's school, saying its advertising misled them into spending thousands of dollars on workshops and "mentorships." In a class-action suit filed in 2010, the former students say Trump University is "like an infomercial" that lures customers with the Trump name but fails to deliver on its promises of success in real estate.

The Trump school offered courses in real estate, asset management, entrepreneurship and wealth creation. The courses ranged in price from $1,495 for a three-day workshop to $34,995 for a "full education."

Unlike other for-profit schools, Trump's outfit relies heavily on the brand of its namesake.

Trump made his money by investing in New York real estate, casinos and golf courses around the world. But he is perhaps best known in popular culture for his long-running reality television show, "The Apprentice."

More recently, Trump made headlines for suggesting that President Barack Obama is not a U.S. citizen, part of Trump's public mulling of a presidential bid. He eventually declined to run for the White House.

CNNMoney's Ben Rooney contributed to this report.

Filed under: Donald Trump
soundoff (426 Responses)
  1. borisgv

    In picture 1 above Donald is wearing way too much fake tan lotion on his face (look around his eyes where he missed and you'll see what I mean).

    As far as the rest of the story, I can't imagine anyone in their right mind spending alot of money on a Trump class. From what I've read it appears that Donald inherited most of his money, so it's not necessarily like he's rich because he's a shrewd businessman. I mean didn't his casinos go bankrupt a few years ago?

    Donald Trump is to business what Ronald McDonald is to fine dining.

    August 25, 2013 08:37 pm at 8:37 pm |
  2. Kristal mAC LEOD

    jail 4 the low life snake he's been a ligit crook all his worthless life' bragged about ripping off sadddame hussein

    August 25, 2013 08:39 pm at 8:39 pm |
  3. Adrine Adams

    The Attorney Generals in GA, FL, and NV need to investigate Trump University activities.

    August 25, 2013 08:39 pm at 8:39 pm |
  4. dmf

    Those who decide to go any of Trump school (s) for any trade and skills , should know better ! That is just to keep Trump name in the media , a publicity stunt if there is an opportunity , and and nothing more . He is just hungry for show man ship .

    August 25, 2013 08:41 pm at 8:41 pm |
  5. Chuck

    Anyone remember when Trump was sitting around suing everyone from a former pageant contestant to Maher to everyone else. Guess now he is getting a feedback loop of his own stuff. Hope they clean him out of 40 million. Not that it would even dent him other than being a hit to his psyche.

    August 25, 2013 08:45 pm at 8:45 pm |
  6. Name

    trump is a man who made his money from fraud and stealing from hard working people, there is a big class actuon law suite against him regarding the bajaMexuco resort which he took millions from the investor and did not pay them back.

    August 25, 2013 08:49 pm at 8:49 pm |
  7. iceload9

    "real estate, asset management, entrepreneurship and wealth creation" for Trump. Always read the fine print. There you learned your first lesson.

    August 25, 2013 08:55 pm at 8:55 pm |
  8. Frank

    I believe the attorney general. This is only the beginninv. The hopeful students that went to the seminar, will speak up sooner or later. You can tell by the way Donald Trump acts, that he is not a guy who should be respected.

    August 25, 2013 08:55 pm at 8:55 pm |
  9. Big Ben

    I have always known this guy was a fraud. But he shouldn't be taking money from people like this. I don't think Forbes was ever able to find his money, which means he really doesn't have any.
    Take him down, good ridence and get rid of that quack of a TV show.

    August 25, 2013 08:57 pm at 8:57 pm |
  10. John Vacek

    Mr. Trump continues to amaze me. He reminds me of the old joke......Question: How do you make a million dollars? Answer: Simple. Inherit five milion, and lose four million. Seriously, Mr. Trump's name is licensed around the world, and many people believe that it is only the name itself that is being used to generate investment. Direct licensing can be a definite negative to the company (ask Spotlight 29...formerly Trump 29 near Palm Springs, CA). Once last note: He would be a failure as a politician due to his insistance that the public stay at least 4 feet away pfrom him (germs).

    August 25, 2013 08:59 pm at 8:59 pm |
  11. Mike

    Hopefully, this is the end of The Donald.

    August 25, 2013 09:00 pm at 9:00 pm |
  12. Milad

    he used the same shady technique in Baja Mexico. he lured investors with his name and the idea of a 'trump tower,' overcharging for rooms, only to rip it out from underneath them all and remove his name from the project. classic example of what greed does to people

    August 25, 2013 09:09 pm at 9:09 pm |
  13. Anonymous

    The problem is that 40 M won't put this 2nd generation moron down

    August 25, 2013 09:13 pm at 9:13 pm |
  14. Bud

    An idiot suing another idiot... only in Amerika.

    August 25, 2013 09:14 pm at 9:14 pm |
  15. PR

    So you were stupid enough to fall for an advertisement and dish out thousands of dollars to "Trump University"? Yeah, you ran idiot and you deserve to lose your money. And guess what...welcome to advertisement: Everything also looks better than it actually is.

    August 25, 2013 09:16 pm at 9:16 pm |
  16. Gurgy

    Check this idior's Citizesship.

    August 25, 2013 09:16 pm at 9:16 pm |
  17. Emeljay

    My husband and I were scammed in this very bait and switch... as soon as we got home, we researched it, realized it was not what we were led to believe it was, and immediately called the credit card and cancelled our payment. We learned a valuable lesson that day and really appreciate AmEx helping us out. Needless to say the "university" wasn't happy that we stopped payment and actually called and asked us to reverse that and they would process a refund without involving AmEx. YEAH RIGHT!!!

    August 25, 2013 09:28 pm at 9:28 pm |
  18. Thomas

    Donald Trump made his money the old fashion way, he inherited it. At least he inherited a multi million dollar fortune which gave him the ability to leverage what he has now. Despite his proclaimed image, this guy is no Horacio Alger.

    August 25, 2013 09:36 pm at 9:36 pm |
  19. Sean

    I am blown away by Donald Trump's response to this lawsuit, and in light of that response, how a reasonable and rational person would consider it a good investment to take classes through an institution of his. a lawsuit is filed against him and he (or more specifically his PR team) create a website to respond to the claim. However, the website, rather then focus on the lawsuit and arguing against the merits of it, commits the Ad Hominem fallacy and attacks the character of the person that filed the lawsuit. This is one of the basic logical fallacies, and his website is dedicated to attacking the NY Attorney General.

    The website also claims that, according to a recent Marist poll, 98% of recent Trump University student rated the program "excellent..." The site includes survey questionnaires that were completed, presumably by people who attended the University, but there is no explanation of how those surveys were analyzed and calculated to achieve the claimed 98% rating of excellent. The survey has several questions which are answered from 1 (unsatisfactory) to 5 (excellent) and then asks respondents to write short answers to follow-up questions. No information regarding the methodology of this survey was conducted is available, so that one can verify that the results are truthful and accurate. How were respondents of the survey chosen? was there an incentive for completing the survey? were all survey responses given equal weight? what was the response rate of the surveys that were handed out (if there are 100 surveys turned in, but 1,000 are initially handed out, then that 10% response rate is not a good sample of the views of the entire class.

    August 25, 2013 09:41 pm at 9:41 pm |
  20. GrogInOhio

    The most surprising thing about this story is that there are commenters here actually attempting to defend Donald Trump. Geez, how stupid and blind does one have to be?

    August 25, 2013 09:41 pm at 9:41 pm |
  21. Bill Davis

    Anyone ever look at the success rate of the NY School system.

    August 25, 2013 09:44 pm at 9:44 pm |
  22. derek

    40 mil is like pocket change for this nappy headed d00uche

    August 25, 2013 09:49 pm at 9:49 pm |
  23. Greenspam

    Be careful folks.. if you say anything bad about Trump here, he has the right to sue you for defamation.

    August 25, 2013 09:55 pm at 9:55 pm |
  24. john patrowicz

    this guy has turned into a cartoon character

    August 25, 2013 09:56 pm at 9:56 pm |
  25. Red

    Before they haul him off to jail I want to see his birth certificate!

    August 25, 2013 10:00 pm at 10:00 pm |
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