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. Hawke

    It would be good if this would take the wind out of Trump's sails but I know it won't. He'll puff up even more & spit when he rants about it. I hope he loses the lawsuit but I know that won't happen either. He's like Rush Limbaugh (who BTW broke his promise & didn't leave our country when President Obama was elected for a 2nd term). He won't go away.

    August 25, 2013 11:10 pm at 11:10 pm |
  2. sam g

    Both parties are at fault.
    Students are stupid enough to believe what they see in advertisement. Trump himself isn't a highly educated guy, so why expect too much from hin university.
    On the other hand, trump is a businessman. He doesn't care if students got worh value for their money. He is running it as a business, nothing else.

    August 25, 2013 11:11 pm at 11:11 pm |
  3. marsha malone

    Don't you love how the Donald purses his lips when when he wants to seem serious? I do, I laugh every time.

    August 25, 2013 11:13 pm at 11:13 pm |
  4. BeverlyNC

    Trump a liar and a fraud? What a shock. Trump doesn't have $40M dollars. He is an arrogant jerk who is as shallow and thin as his hair. It's time something of his fake life brings him down for good. He represents everything wrong with the greed, hate and lies within the Republican 1% who think they are entitled to hold all the power and take away the voice of the People – the real People with jobs they work hard to support their families, to try to own a home, to provide an education for their children and still maintain their most basic right to VOTE and have credible representatives who act on their behalf and not betray them to be corporate-bought puppets.
    No more Trumps and Koch brothers and Sheldon Adelsons and Karl Rove and Citizens United – they are the enemies of democracy.

    August 25, 2013 11:14 pm at 11:14 pm |
  5. Marcus

    This sounds like a trumped-up charge if there ever was one . . . . .

    August 25, 2013 11:21 pm at 11:21 pm |
  6. Nick

    Trump is a total fraud. He should be dumped once and for all. Slogan should be "DUMP THE TRUMP".

    August 25, 2013 11:22 pm at 11:22 pm |
  7. Skarphace

    "On Twitter, Trump called Schneiderman a "lightweight"".

    I find it hard to see how Trump does not realize how immature he so often sounds.

    August 25, 2013 11:23 pm at 11:23 pm |
  8. Ajax

    Maybe this will keep that bigmouth busy for a while.

    August 25, 2013 11:25 pm at 11:25 pm |
  9. Jack

    Does it surprise you, the guy has 6 times declared chapter 11 bankruptcy, he has been fooling you guys for years, stealing, breaking contracts and bankrupting subcontracts and vendors.

    August 25, 2013 11:26 pm at 11:26 pm |
  10. Jacob

    Sounds like the Trump Ocean Resort Baja Mexico, same scam.

    August 25, 2013 11:47 pm at 11:47 pm |
  11. Alan Keisner

    Donald: It's bad enough that you built your empire on the back of tax breaks provided by the people of New York City. It's bad enough that you continue to play the shuckster in Tea Party Repulican't circles. It's bad enough your turkey apprentice show is just a vehicle for your Alice-In-The-Looking Glass self-oriented ego trip. Now this. But what really takes the cake is you eating pizza with a fork! That media clip will live forever on the Daily Show With John Stewart as the most egregious insult to New Yorkers and all pizza-lovers! You've been trumped on your own petard. You're fired! As for the New York Attorney General, just book'em that Trumpster to a cell on Rickers!

    August 25, 2013 11:59 pm at 11:59 pm |
  12. Anonymous

    The Trump bait and switch. You'd think everyone would know about this by now. I've heard of him doing this numerous times but every time someone sues him over it, they always seem to lose.

    August 26, 2013 12:03 am at 12:03 am |
  13. allanhowls

    Just put your name at the bottom of the list and send $5.00 to the person on the top of the list, then mail out copies to everyone you know.

    Why would anyone take an investment course from someone who declared bankruptcy three times on an inherited fortune? All he knows about money is how to flaunt it to impress the gullible.

    August 26, 2013 12:11 am at 12:11 am |
  14. Mark

    Trump is literally a psychopath. I have no doubt in my mind that his only intention in starting the "school" was to scam ignorant sheep out of money and I also have no doubt that he thinks this is a very fine and noble thing to do in his "survival of the fittest" world.

    Donald trump would slaughter school children to make way for a golf course if he thought it was socially acceptable or could be guaranteed it would never be made public. The only thing holding him back is public perception and the threat of being caught and losing everything (psychopath).

    I also have no sympathy for the 'get-rich-quick" materialistic sleazebags who actually gave him their money. If I thought they'd learn a lesson from it I would say it's money well spent. I doubt they will however and most of them are probably on their 3rd bankruptcy by now from putting premium vodka shots on their credit card every Friday night without actually having a job.

    August 26, 2013 12:12 am at 12:12 am |
  15. CA Dude

    Speak against the magical president and they govt. comes after you. Looks like business as usual in an effort to silence the dissidents.

    August 26, 2013 12:22 am at 12:22 am |
  16. No surprise

    Learn how to buy cheap, renovate not so cheap, lose money, then declare bankcruptcy so as not to have to repay your creditors, then do it all again. He milks the system for his gain. Let's see how much he pays out of court for this.

    August 26, 2013 12:23 am at 12:23 am |
  17. Michael Logan

    Why am I not surprised that a democrat controlled Marxist State like mine, NY, would be going after an avowed conservative and enemy of democrats everywhere? It will be interesting to see the outcome of this. Mr. Trump, unlike us average Joes, has the resources to "fight the power". he will not be easy to bully. And I do agree with Mr. Trump. This State is billions and billions in the red, and they are wasting time on a $40 million petty civil suit? I am embarrassed to say I am from NY.

    August 26, 2013 12:29 am at 12:29 am |
  18. Big Guy

    I love the quote: "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."

    No offense, but if you want to follow your own words, you better start prosecuting the politicians of NY, as they have been doing the most damage to NY'ers since the days of George Washington. Donald Trump is a business man and he has been teaching people how to survive in business... oh that's right.. that's the problem.. The first thing he taught them probably was: "If you want to succeed, get out of NY!!!!"

    I have never seen a politician anywhere fix ANYTHING.... Well, except maybe their own speeding tickets...

    August 26, 2013 12:29 am at 12:29 am |
  19. Eric

    Well, he could always play the Joker in the next Batman movie.

    August 26, 2013 12:31 am at 12:31 am |
  20. JC

    Who authorized this lawsuit above schneiderman? What a waste of time. Trumps lawyers will destroy this. First, its hardly illegal to endorse something for money. Do you really think Shaq drives a Buick? Of course not. Being a good salesman means being able to create a fantasy within the consumer that they need your product. The better the fantasy the more successful the product is. Anyone who is smart wouldn't hesitate to learn from a man that deals only in 7 figure investments. The majority if the Trump hate is jealousy. The average guy is jealous of his inheritance and his success from that inheritance. That doesn't make him a bad businessman. In fact, I would argue he's a very good businessman. He's not exactly the sharpest tool in the shed politically, but in the business world he's a demigod.

    August 26, 2013 12:38 am at 12:38 am |
  21. guest2

    amazing how people forget that a suit is not proof of anything, i could sue any one of you and it wouldn't mean squat. Keep that in mind unless you are a bigot who makes up their mind based on political beliefs.

    August 26, 2013 12:42 am at 12:42 am |
  22. Rehan

    Trump is a man of his word. He never steps back or give up what he believes in. He will get over with this and will open an another exciting venture.

    August 26, 2013 12:52 am at 12:52 am |
  23. H Minnoch

    Deepak Chopra does the same thing. Sue him while you're at it.

    August 26, 2013 12:53 am at 12:53 am |
  24. Smeagel4T

    Can the $40M be extracted directly from Trump's ego? This might not be such a good thing. Trump'll turn it into yet another excuse to stroke his ego until it erupts.

    August 26, 2013 01:05 am at 1:05 am |
  25. darknesscrown

    I'd say anyone who paid money to learn about money from a crook like Trump, probably got exactly what they paid for...nothing. The man is completely incompetent with money. 3 bankruptcies, folks. Certain things can be pretty much assumed to be fact in situations where a person declares bankruptcy 3 times in their life and somehow manages to get rich of those assumptions is that they PROBABLY stole from SOMEONE to get back on top again, and another is that, because, in fact, they have been bankrupt 3 times, they have no idea what they are doing with money. No one respects Trump.

    August 26, 2013 01:05 am at 1:05 am |
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