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. lean6

    I really hate this guy. I really really really REALLY hate this guy.

    August 26, 2013 01:13 am at 1:13 am |
  2. bcape

    In addition to the 40 million dollar fine, Trump should go to jail for stealing money from these people

    August 26, 2013 01:22 am at 1:22 am |
  3. Carol Peterson

    I knew I didn't trust Trump for some reason!

    August 26, 2013 01:42 am at 1:42 am |
  4. AJinFLa

    When Trump built his hotel in Tampa he ripped off all the contractors. Trump's management company in charge of construction filed bankruptcy after the project was completed, despite the fact another of Trumps companies owns the building. Meaning he only ever paid any of the contractors the upfront amount, about 30%. He owes a business partner of mine about 300K for doing all the electrical work in the building. Apparently, this is his normal business model. Got to love U.S. Corporate Law.

    August 26, 2013 01:46 am at 1:46 am |
  5. Fools deserve to loose their money; well done Donald

    Trump has written books on how to get rich, gven seminars with expensive ticket prices on how to get rich, and etc etc etc and the fools who purchased those books and/or attended those shows don't even realise that Donald Trump did not make himself rich but that he was born into it. Donald Trump's father is the real genius who made his son a billionaire. The real estate business that Trump runs today was inherited from his father an dany small business that Trump has been able to start is a result of the name and fame that he inherited from and due to his father. If a self -made billionaire was offering these seminars, wrting these books, etc; then I might have considered buying / joining (even if the seminars don't deliver, it would be an honour to meet Donald Trump's father Fred Trump) but I am certainly not interested in a kings and queens and princes and princesses or anyone else like Donald Trump who was born rich and then claims to teach you how to become rich. If the queen starts offering you lessons tomorrow titled "How to become rich", only fools would sign up for them. These fools who lost money deserved to loose it. If Bill Gates starts offering such lessons, then I would gladly sign up as Bill Gates is a genius and a self made billionaire. I wish Donald's father (Fred Trump) offered these lessons.

    August 26, 2013 01:57 am at 1:57 am |
  6. Apologists Are Idiots

    Gotta love all these clueless apologists trying to defend Trump! Typical right wing nuts! Go ahead, defend the rich criminal because "some day" you might be rich too!

    Meanwhile, you get fleeced like sheep and used as tools to do the bidding of your right wing millionaire masters.

    Do you realize how pathetic you look to the rest of us?

    August 26, 2013 02:04 am at 2:04 am |
  7. Rebecca

    Trump gives me a headache with his stupidity and cupidity.

    August 26, 2013 02:08 am at 2:08 am |
  8. Tom

    Trump is rich, that makes him a god in the eyes of right-wingers.

    August 26, 2013 02:43 am at 2:43 am |
  9. zenreaper

    My mother ran the ARC in Salem County. New Jersey 20+ years ago. One of the projects they did was to bulk purchase truffles, and the handicapped individuals took the bulk truffles, placed four of them in a nice gift box, wrapped it and delivered the gift boxes to the Trump Taj Mahal in Atlantic City, to be sold in the gift shop and left in high end rooms. Because of this, she dealt DIRECTLY with Mr. Trump. I have PERSONALLY met and dined with Mr. Trump on a number of occasions. I will say that he is one of the most SAVVY and INTELLIGENT people in his field. He is polite, and treats ALL people with the respect that they EARN, regardless of their assets or position in life. He is detail oriented, and I learned quite a bit in the short time we spent together. The problem with this is that the graduates of his school, like MANY in the current generation, want a guarantee of success, and there simply IS NONE. If attending his school ASSURED you or wealth and success, I ASSURE you it would cost more than a few thousand dollars, or even tens of thousands of dollars. One comment I thought was funny was the reference to what a failure he was because he has been broke a few times over the years. Al that tell me is that he is willing to put it ALL on the line, risking GOING BROKE, in order to succeed. That is the sign of a GOOD business man, not a greedy or untalented one. Very few TRUE businessmen, over the years, don't find themselves on their back at some point. They get up, dust themselves off, and start over.

    August 26, 2013 03:20 am at 3:20 am |
  10. Maripil

    Donald Trump is a FRAUD!!!

    August 26, 2013 03:43 am at 3:43 am |
  11. SeniorMoment

    I am surprised that state is not seeking more, since what Donald Trumps is alleged to have done is clear cut fraud and may be enough to justify permanent closure of the school.

    It isn't even convincing if most alumni were satisfied simply because the school can limit who become an alumni just be kicking out or failing to renew financial aid for students who are not successful while being instructed. Besides, fraud is not about outcome but false representation.

    August 26, 2013 03:50 am at 3:50 am |
  12. walrus Dali

    trump [intentional lower case t] is a bloated, narcissistic, gasbag who's declared bankruptcy three times yet still thinks he's god almighty. He needs to go away – for good! You're fired, LOSER.

    August 26, 2013 05:03 am at 5:03 am |
  13. Kenny

    Trumps wins at the and. I'll take Ivanka!

    August 26, 2013 05:22 am at 5:22 am |
  14. aCriticalEye

    Tramp is the epitome of scum, and all that is bad with the GOP/TP. There is no one that has filed for bankrupsy more than he, and they still give this clown money.

    August 26, 2013 06:08 am at 6:08 am |
  15. KungpaoBeef

    The stupid and desperate.....

    August 26, 2013 06:10 am at 6:10 am |
  16. zanny

    Surprise!!!! The first thing Trump does when someone says anything negative about him is start name calling. I cannot believe anyone would invest anything in him after all that birther nonsense. He just made a fool out of himself. That Fox entertainment sucks up to him does not surprise me because he fits into their thinking but I thought NBC was smarter. Do people still actually watch that program?? Of course they do, probably the same ones that actually watch the Batchelor That it is a for profit "university" should have been a clue.

    August 26, 2013 06:12 am at 6:12 am |
  17. MaryM

    Joke of the day: What is that thing living on trumps head and does it have a birth certificate

    August 26, 2013 06:37 am at 6:37 am |
  18. Clarke

    He is really something! At least he thinks he is.

    August 26, 2013 07:04 am at 7:04 am |
  19. amettler

    I too am a victim of this Donald Trump University scam. In fact, I am still paying the loan of nearly $8,000. I would like to know how can I be a part of the Lawsuit?.

    August 26, 2013 07:30 am at 7:30 am |
  20. humtake

    The true intent behind this is so transparent, just like every other person who complains about college. All that happened is these people signed up for this school, paid the money, took the classes, and then when they were done they realized they would still have to work hard to become millionaires. These people just expected to take the class and upon graduation live on easy street the rest of their lives. Once reality set in and they realized that education is a foundation and that it takes hard work and dedication to actually use your education for something, they think they can now sue the school. This happens to education institutes around the country. Way too many people think an education guarantees success in life.

    August 26, 2013 07:48 am at 7:48 am |
  21. t

    .......Sure,......a POTUS candidate all right,.........for the NSB Party........the Not So Bright Party........

    August 26, 2013 07:51 am at 7:51 am |
  22. Dave

    And the rich just get richer. Maybe they should investigate that

    August 26, 2013 08:07 am at 8:07 am |
  23. Rudy NYC

    Most everything that Donald Trump does would meet his own definition of a scam. No one with any sense and experience wants to do actual business with him anymore. He has filed for bankruptcy at the end of one of his construction projects just once too often, which leave sub-contractors unpaid and often times facing financial ruin.

    The only business opportunities that Trump has left is selling his name, which is all that this "Trump Universerty" really is. Why would anyone pay thousands of dollars for a piece of paper, or a building, with Trump's name on it is beyond my understanding, and I'm hope I stay this way.

    August 26, 2013 08:12 am at 8:12 am |
  24. Go GOP go

    More of his father's money down the drain.

    August 26, 2013 08:19 am at 8:19 am |
  25. Ribidit

    Couldn't happen to a nicer guy.....ugh, "The Donald"...shivers run up my spine at the very thought of this creep...

    August 26, 2013 08:20 am at 8:20 am |
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