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. olepi

    Trump? A fraud?

    I am shocked!

    August 25, 2013 12:23 pm at 12:23 pm |
  2. coolgc86

    Who cares! The idiots who attended his school got what they paid for. Why would anyone in their right mind think Trump was gonna make a school and teach them how to be successful in business? It's like those people who fall for the tv scams about getting rich quickly. You fell for it, you loose.

    August 25, 2013 12:24 pm at 12:24 pm |
  3. Monica

    Trump is a chump. A lot of people don't know that the way he and his father made their money were as slumlords in Staten Island, NY. This does not surprise me at all!!

    August 25, 2013 12:25 pm at 12:25 pm |
  4. ge

    trump would pick the pockets of a deadman for a buck

    August 25, 2013 12:25 pm at 12:25 pm |
  5. spynnal

    Trump was handed 30 million dollars from his dad and still managed to go bankrupt half a dozen times. Now, he'll teach you how!

    August 25, 2013 12:27 pm at 12:27 pm |
  6. Organic1

    You know what they say about 'paybacks' – about time Karma caught up with donny.

    August 25, 2013 12:28 pm at 12:28 pm |
  7. TexaSam

    Trump got involved in the predatory for profit education scam thinking it was easy money. He figured he could just slap his name on it and in rolls the cash-just like his Trump Water, Trump (made in China) clothes, etc...

    He never plays by the rules. He's a out right con artist. Just like pick pockets – – distract & steal. Or a magician – – focus on one hand while the other robs you blind.

    Hope this costs him a fortune to fight.

    August 25, 2013 12:28 pm at 12:28 pm |
  8. tuffyturf

    A fool and his money are easily parted...

    What do you learn at this Trump school? How not to run a business correctly? Then you learn to bankrupt it, and learn how not to become emotional, leaving in the lurch a bevy of investors and work personnel who all lose their life savings while Trump seeks Chapter 13 once again. Trump is far from being a Billionaire... very far from it.

    August 25, 2013 12:28 pm at 12:28 pm |
  9. Mike Diana

    I remember hearing Trumps commercials on the radio in Chicago for this scam. Trump said I think we have something here that you are going to want to be a part of. 1500 for 3 days of bull

    August 25, 2013 12:29 pm at 12:29 pm |
  10. luke,az

    Trump is an idiot. He is part of a dying breed. His life is composed of schemes and scams. He needs to go away.

    August 25, 2013 12:30 pm at 12:30 pm |
  11. Anonymous

    While they are at it....they should look into his relationship with the Labor Unions in NY too.

    August 25, 2013 12:31 pm at 12:31 pm |
  12. Tony in STL

    Just $40 million? That's nothing for the Trumpster! Bring em' on!

    August 25, 2013 12:32 pm at 12:32 pm |
  13. this makes me sick

    Do the attendees get a complimentary comb-over?

    August 25, 2013 12:33 pm at 12:33 pm |
  14. Phattee

    Which is more embarrassing on a resume: Trump University of Liberty University?

    August 25, 2013 12:34 pm at 12:34 pm |
  15. Alex

    And this is exactly what happens when the private enterprise is entrusted with providing education (and healthcare). Instead both the education and healthcare should be provided by the government free of charge as it is done in Europe. There would be enough money to fund this if billionaires would pay their share of taxes. Close tax loopholes and made them pay 35% as ordinary citizens do.

    August 25, 2013 12:37 pm at 12:37 pm |
  16. jnpa

    Trump and his ilk always resort to name calling.

    August 25, 2013 12:37 pm at 12:37 pm |
  17. penguin

    Any one dumb enough to enroll in any thing associated with Donald Trump deserves to get financially fleeced

    August 25, 2013 12:37 pm at 12:37 pm |
  18. Rolick

    I don't know how I feel about this, I am sure he needs a slap down for being a bottom feeding creep, but why just him, when there are so many out there doing the same thing?

    This guy just evangelized a segment of society that didn't know any better. He should get together with the top TV evangelists and write a book on how to trick people out of their money by playing on their hopes and fears. I think it's rare to become a billionaire without a lot of people losing, he just got caught in the act. And we are punishing him because it's fun to watch. Some universities that are established promise jobs and advancement if you get certain types of degrees. Reality is, unless you go to an elite Ivy League school, you will probably be down in the muck with the rest of us. And if you have the right pedigree you will end up in one of those schools whether you deserve it or not, which means you go to the head of the line in the job world.

    So is Donald really doing something that is new here? If we prosecute him for not delivering on riches, should we also prosecute all the other schools that promise advancement and more money if they complete their programs?

    The only thing that is comforting is that there are so many more of us that would never take advantage of people this way.

    August 25, 2013 12:38 pm at 12:38 pm |
  19. Alfred P. Bosley

    Someone should sue Trump for that hairdo...yikes

    August 25, 2013 12:39 pm at 12:39 pm |
  20. Peace

    Send Donald Trump to jail. Martha Stewart was sent there, why not Trump?

    August 25, 2013 12:40 pm at 12:40 pm |
  21. Dan

    students from schools all over are dissatisfied. Maybe they should have researched a little better where they were investing there money. Investing is s synonym for gambling I think. and there is no promise of satisfaction in gambling

    August 25, 2013 12:40 pm at 12:40 pm |
  22. Dave

    When you cross the current POTUS and question his power you will soon feel the full extent of his anger with some form of government regulated action that will cost you dearly. I think Trump is feeling that anger now from a POTUS who guards his past very carefully with smoke, mirrors, and deception. Anyone who tries to peak behind the curtain soon finds more to the look than they anticipated.

    August 25, 2013 12:41 pm at 12:41 pm |
  23. Mr Mel

    These Real Estate Course were all held the The Donald University School Of Business, Madoff Campus.

    August 25, 2013 12:42 pm at 12:42 pm |
  24. Pete in Guilford


    August 25, 2013 12:42 pm at 12:42 pm |
  25. frontgatee

    Sue this chump and sue him good.

    August 25, 2013 12:42 pm at 12:42 pm |
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