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. VCMD

    A lot of liberals gunning for Donald Trump's head using taxpayer (some paid by him) money. You may dislike Trump but it's clearly a misuse of Government to try to silence your adversary! All the students who feel cheated can file a class action lawsuit against Trump's institution!

    August 25, 2013 10:02 pm at 10:02 pm |
  2. DaveW

    I am tired of Trump. He represents the worst of American business.

    August 25, 2013 10:03 pm at 10:03 pm |
  3. Kathy, AZ

    All that money & he STILL looks like that.

    August 25, 2013 10:04 pm at 10:04 pm |
  4. jennifer in Houston

    Couldn't happen to a nicer guy..

    August 25, 2013 10:08 pm at 10:08 pm |
  5. Oakspar

    Meanwhile, the Mayor of NYC is using taxpayer money and public employees to maintain his pet lobbying PAC despite the fact that he is a billionare and could afford to support it without embezzeling from the taxpayers of New York.

    If these charges are true, it is a shame so many fine New Yorkers were ripped off – but while ignoring ALL New Yorkers being ripped off and stolen from, this charge from the DA rings hollow.

    August 25, 2013 10:10 pm at 10:10 pm |
  6. U.S. Citizen

    The independently wealthy are a threat to the ruling oligarchy.
    We will see more assaults on the independently wealthy and any who believe in personal liberty.

    August 25, 2013 10:10 pm at 10:10 pm |
  7. dot8

    This lawsuit has greed written all over.

    August 25, 2013 10:10 pm at 10:10 pm |
  8. Thatguy371

    (face palm).... how anyone would thing Trump is credible after all his blowhard comments in recent years... beyond me. Oh well, guess I should be thankful I'm not easily duped.

    August 25, 2013 10:14 pm at 10:14 pm |
  9. Smart Guy

    Anyone who takes Trump seriously deserves to be scammed. I'm sorry but its true.

    August 25, 2013 10:15 pm at 10:15 pm |
  10. iconoclast1

    Conscience of a Conservative said: "Schneiderman clearly isn't familiar with the term 'puffery.' Calling the three day seminar a university taught with ivy league credentials is just good salesmanship, exactly what Trump is offering to teach his students."

    Yes. Fraud is just "good salesmanship." Unbelievable. You just can't make this stuff up.

    August 25, 2013 10:20 pm at 10:20 pm |
  11. iconoclast1

    Conscience of a Conservative said: "Schneiderman clearly isn't familiar with the term 'puffery.' Calling the three day seminar a university taught with ivy league credentials is just good salesmanship, exactly what Trump is offering to teach his students."

    Yeah, it's OK to defraud people if you're a "conservative." You can just call it "puffery." Unbelievable. These people have no shame.

    August 25, 2013 10:23 pm at 10:23 pm |
  12. joe d

    donald trump the man from new york. bla,bla,bla, the man is a blow bag. with some kinda comb over that is so lame ! is this guy all you got ? whats next a -rod plaza bla,bla,bla, new york, new york,

    August 25, 2013 10:23 pm at 10:23 pm |
  13. Sadly Trump will win

    I invest in real estate and I've heard about this up-sell for $35K course couple of years back; so finally he is being sued. No real estate course worth more than few hundred bucks! Sadly, Trump will come out of this victorious 🙁

    August 25, 2013 10:25 pm at 10:25 pm |
  14. Really.

    Donald Trump is total trash and anyone who thinks he's not is stupid.
    It is really that basic.

    August 25, 2013 10:26 pm at 10:26 pm |
  15. buck cameron

    Somebody gave this fat farce money for an education. That is way dumb. Maybe they wanted a comb-over lesson.

    August 25, 2013 10:27 pm at 10:27 pm |
  16. Anonymous

    anyone who goes to a school named after trump deserves to be scammed

    August 25, 2013 10:27 pm at 10:27 pm |
  17. anonymous

    He has no money. His is only "wealthy" on paper. He has filed bankruptcy four times. Why anyone would give this guy money is a great mystery to me. Who would want to be "educated" by this guy?

    August 25, 2013 10:28 pm at 10:28 pm |
  18. Republicans Are The American Taliban

    What a loser

    August 25, 2013 10:31 pm at 10:31 pm |
  19. Denverdriver

    Trump is a disgusting fraud. Too bad we can't send him back to Bulgaria.

    August 25, 2013 10:51 pm at 10:51 pm |
  20. sandalista

    Couldn't happen to a nicer guy.

    August 25, 2013 10:52 pm at 10:52 pm |
  21. TomNPitt

    We need to see his Certification for being a school and university. Does he have them or not? Why can't he just show everyone – then we'll all know if his school is certified. Is there something wrong with showing the certification> Is he hiding it? Is it a clever forgery?? Where is the documentation??

    August 25, 2013 10:57 pm at 10:57 pm |
  22. Dan Ronan

    How many times does Trump have to defraud the American public into thinking he is some sort of business genius? Four trips into bankruptcy court, hundreds of millions of dollars in loses, plus countless lawsuits, and now a high profile fraud lawsuit. Trump has long drifted into complete irrelevance for me and anyone that associates with him or does business with him deserves whatever they get.

    August 25, 2013 10:57 pm at 10:57 pm |
  23. Name Rick

    just like what my beloved mother always said, a typical successful businessman is a LIAR, THIEVE, & MANIPULATOR, all signs of the so called Trump !! I'm really surprised no one hasn't dug further and see what else this scum bag done, someone should check if he also manipulated homeless shelters, businessmen will steal a dollar even from a newborn child !!

    August 25, 2013 10:59 pm at 10:59 pm |
  24. UriNation

    Donald Trump is like an elixir salesman seen in old western movies. If the public is dumb enough to buy his elixir, that's their choice. Let the buyer beware.

    August 25, 2013 11:05 pm at 11:05 pm |
  25. Liz in Seattle

    CNN, you really needed to do some homework for this article. Find some students who were and were not satisfied and interview them. Find out what was on the syllabi of the courses and whether any useful information was actually taught. Right now this article is just a claim and a counter claim with no attempt to figure out what actually happened.

    August 25, 2013 11:08 pm at 11:08 pm |
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