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. VVVVV

    Why is this in politics? He is not a democrat or republican politician anymore. He is a businessman.

    August 26, 2013 08:22 am at 8:22 am |
  2. WesternCanuck

    I'm wonder who the accrediting body is? Such as the AACSB International – The Association to Advance Collegiate Schools of Business........again who would want accreditation when you have The Donald's Gold Star Education.........stickers included. Remember this product has not been evaluated and is not intended to prevent stupidity.

    August 26, 2013 08:23 am at 8:23 am |
  3. The Real Tom Paine

    Anyone who has ever filled out a questionaire upon completion of a course rarely gives the instructor a bad grade, or knocks the content because they want to get the hell out of the class. Trump's assertion that he has a 98% satisfaction rating from his students is irrelevant, since there is no way to gauge if the students applied the information successfully unless they surveyed the students several months or years after taking the seminars, courses, programs, etc., which he has not indicated is the case. The overreaction by Trump is indicative of one thing: the Donald's ego has been bruised, yet again, because someone dared to question him on something. Even if he is cleared of wrongdoing, its another example of his arrogance and overblown sense of importance. All the man does is buy and sell land, and build hotels and casinos: what sort of revenue does that produce for the towns and cities where those businesses reside? Does he pay his people a decent wage? What sort of benefits does he offer? Finally, how much was the course on the tactical and strategic value of declaring banckruptcy on a regular basis? All Trump does is prey on people with gambling addictions to fund a lifestyle that is nothing more than a massive ego trip. He deserves no respect, because he has not earned it.

    August 26, 2013 08:30 am at 8:30 am |
  4. JC

    Trump is just a greedy, egotistical has been and his properties are ugly. People in NY might admire him, but he's a joke. Trump University... haha funny stuff! He'll license his name to the Devil for a dollar.

    August 26, 2013 08:32 am at 8:32 am |
  5. knklhead

    Let me guess who invested ... other wingnut birthers who think this guy is a magic man. If so then you have learned how Donald Trump has made his millions. He's full of crap ... but a guy who has lots of money and full of crap.

    August 26, 2013 08:33 am at 8:33 am |
  6. LVSam

    Wow. Imagine that guy taking stupid people's money. Gasp!

    August 26, 2013 08:51 am at 8:51 am |
  7. JonathanL

    Don't underestimate Eric. At least he's educated and I wound't doubt there is merit in the suit. Trump giving him the nonsensical and far reaching celebrity bashing treatment he is known for won't get him out of the hot seat. Trump is an outspoken eccentric, who is a lousy person to go into a deal with in real estate because he is all about getting the lion's share and screwing the creditors and any other stakeholder. I can't imagine it is any different in other sectors of business. The only thing he is interested in is making money of his brand (which to me is fools gold). He's just a human being with a lot of flaws like everyone else. Big mouth, big wallet, small brain.

    August 26, 2013 08:56 am at 8:56 am |
  8. Joe from CT, not Lieberman

    Bob Guccione – the late publishing magnate of "Penthouse" fame – used to operate under the dictum that all publicity was good publicity. His belief was as long as his name was in someone else's ink, people would buy his magazines to see what the buzz was all about. Trump operates somewhat under the same principal. Unfortunately his bullying tendencies will be his downfall.
    There was an old line about Donald Trump. It seems that he and Ted Turner had a similar childhood and upbringing. Turner's father was extremely proud of how his sun turned out. Trump's father never had that satisfaction. If this guy is such a successful businessman, how come his businesses had to declare bankruptcy three times?

    August 26, 2013 08:59 am at 8:59 am |
  9. ShawnDH

    Donald Trump is such a sleaze. Gross.

    August 26, 2013 09:03 am at 9:03 am |
  10. ron

    Trump did the same thing with real estate developements. He sold his name, made a few apperances. People made large down payments on apartments / condos and then developer went bankrupt or ran off. trump said he was not to blame because he was just a spokes person. Not the developer. BUT, the sales pitch was presented as if Trump was the builder.

    He has lawyers that know the loop holes and no one will stop him. I hope he learns a lesson this time!

    August 26, 2013 09:05 am at 9:05 am |
  11. zerofill

    It amazes me how many people don't understand marketing. they don't understand that all the press in the world, good, bad, etc... doesn't matter. All that matters is your name is still out there. People are still reading about you, people are still wanting to know what you are doing. Everything Trump does, there is a reason for. He does it for publicity. The publicity makes him more money in the end. The problem is, most people don't understand marketing, so they don't know they are being gamed by Trump. That he is actually a genius at this game.

    August 26, 2013 09:11 am at 9:11 am |
  12. Jessica McGwin

    Mr Trump still has not contacted me about the presidential run. Oh well can't win them all.

    August 26, 2013 09:11 am at 9:11 am |
  13. SamonCNN

    I absolutely love this. And thank you Eric. This is very much needed. DT thought he can do whatever he wants. Don't leave him Eric.

    August 26, 2013 09:12 am at 9:12 am |
  14. ray

    this pathetic, racists man should be taken for every dollar.

    August 26, 2013 09:17 am at 9:17 am |
  15. DerpDerpDerp

    Trump University lesson 1 – pay fees to University. 2 – inherit millions to start with. 3 – cannot continue until 2 is complete. No refunds.

    August 26, 2013 09:23 am at 9:23 am |
  16. Drumb47

    Donald Trump is and always has been a con artist. He just happen to be born with a silver spoon in his mouth. He's bilked the American Tax payer out of billions by way of the bankruptcies he's filed over the years.

    To listen to him, this morning on CNN, infer that President Barack Obama and Attorney General Holder on Saturday planned this lawsuite against him to somehow get back at him, is as crazy as his hairdo.

    The Don needs to be put in check.

    August 26, 2013 09:24 am at 9:24 am |
  17. ellid

    Good. About time someone said "no" to this ludicrous fraud.

    August 26, 2013 09:27 am at 9:27 am |
  18. Phyllis Gwendoline Williams

    'Impeachment' "Pull me out of the net that they have laid privily for me: for thou art my strength"...Be of good courage, and He shall strengthen your heart, all ye that Hope in the Lord" (Psalm 31: 4, 24).
    "Whatsoever a Man soweth, that shall he also reap" (Galatians 6: 7)

    August 26, 2013 09:28 am at 9:28 am |
  19. Rosslaw

    Now it will be interesting to see if the four time bankrupt can come up with $40 million that is not tied up with the creditors who won his carcass. And yeah, making it a very personal conflict with the NY state attorney general is pure genuis-if you're an idiot.

    August 26, 2013 09:34 am at 9:34 am |
  20. John

    As always, a classy response from the Trump camp.

    August 26, 2013 09:39 am at 9:39 am |
  21. Puddin

    This guy has an ego the size of Alaska....perhaps a good "whoppin" will help.

    August 26, 2013 09:50 am at 9:50 am |
  22. Royboy361

    In his interview on CNN this morning all he could say is how 94% of the students were satisfied. He must have said it 10 times. He also kept insulting the Attorney General of NY. Anything but the truth. Could you imagine him as President. We would be the laughing stock of the planet.

    August 26, 2013 09:56 am at 9:56 am |
  23. YUCK

    Wait and he wants to become president of good old us of a????i don't think so.

    August 26, 2013 09:58 am at 9:58 am |
  24. Eric S

    Why is it that every time I hear anything about Donald Trump, I am immediately reminded of the fable about the Emperor's New Clothes?

    August 26, 2013 10:01 am at 10:01 am |
  25. PWA

    I remember getting an email for this some years ago. I remember thinking it was nonsense at the time. Still do.

    August 26, 2013 10:04 am at 10:04 am |
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