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. Stupid people

    if your name was so golden that you could sell It for people to brand their products with. You would.
    Stop hating because you are a no body. You didn't work to get where he did.

    And oh honesty doesn't play a role in it now does it? You all use facebook right? A website stolen
    by the owner who was paid to create it for someone else. Yea keep pushing that bs. Everyone here is
    guilty of participating in stolen property and having low morals for using facebook then? No? Then leave Trump alone.

    August 25, 2013 01:04 pm at 1:04 pm |
  2. Marco

    What else is new? Ask the investors who were left high and dry when the Trump-named and endorsed real estate development in Baja California, Mexico went under.

    August 25, 2013 01:05 pm at 1:05 pm |
  3. Not Too Hard To Understand

    The bigger question is – what kind of a chump would willing hand over money to Trump? Seriously!

    August 25, 2013 01:07 pm at 1:07 pm |
  4. sammy750

    Trump is like the other Republicans a FRAUD. It about time he got caught in a scam, he has been scamming this nation for years with his birther movement, he scammed people who purchased property in his Chicago Towers, Changing his terms after the place was built. Trump is a bragger, who really is about himself only. He does not make this nation better, he is stingy. So glad he finally is getting what he deserves.

    August 25, 2013 01:08 pm at 1:08 pm |
  5. timelord7202

    He's the same guy, according to some financial news articles, telling Americans to prepare for financial ruin...

    And how much money is enough? That depends on when hyperinflation kicks in.

    August 25, 2013 01:10 pm at 1:10 pm |
  6. Name jk. Sfl. GOP conservatives,the garbage of America.

    That's how trump made all his money in bankruptcy court. By defrauding and not paying people that worked and did construction for him , he's nothing more then a common thief!!!!

    August 25, 2013 01:10 pm at 1:10 pm |
  7. Red

    You mean rich and greedy take advantage of people? That sounds like that kooky conspiracy stuff.

    August 25, 2013 01:14 pm at 1:14 pm |
  8. Mike

    i've always considered Trump to be a crook. BTW, Why on earth do people look up to him? As P.T.Barnum said, "There's a sucker born every minute." Maybe that's why. I hope this AG wins his suit and that others will folllow, until Trump slowly, but steadily ends up with nothing. Karma – bring it on.

    August 25, 2013 01:16 pm at 1:16 pm |
  9. permafrost

    the most fundamental principle in business is selling something for more than it cost you, and that is exactly what Trump is doing here. his students do get a lesson in pure capitalism, just not the one they expected.

    August 25, 2013 01:17 pm at 1:17 pm |
  10. duhh

    I hate Trump but it's the fault of the people who applied for the classes. It sounds like a get rich quick scheme at the very start. You're an idiot if you apply for these kinds of info sessions.

    August 25, 2013 01:18 pm at 1:18 pm |
  11. Seattle Sue

    I always thought Trump was somewhat crooked.

    August 25, 2013 01:19 pm at 1:19 pm |
  12. oh no!

    a new twist for the bankruptcy king! jailed for fraud!!

    August 25, 2013 01:19 pm at 1:19 pm |
  13. Michael J.

    Can you spell fraud . . . sure can, T-R-U-M-P. The "reality show" is that an entire nation gets mesmerized by this chump over and over and over again. T.V. should be held liable as well for prancing this guy in front of cameras and adding to the fraudulent claims his entire life has unwritten for so long.

    August 25, 2013 01:20 pm at 1:20 pm |
  14. dike

    you are busted!!! again!!

    August 25, 2013 01:23 pm at 1:23 pm |
  15. Jorge washinsen

    Since when is bait and switch a crime.Car dealers do it every day on tv.You get a price on a car and when you get there you find out what it really cost. Saw one on local tv the other day for 59.00 a month. could not read the extra fine pring that I feel sure was on the full ad beside it.Crooks live everywhere.

    August 25, 2013 01:25 pm at 1:25 pm |
  16. mrn494

    No matter what is said-the man is ambitious and has worked hard. he also has a life many could only dream of which is why he'll always have a bulls eye on his back.

    August 25, 2013 01:28 pm at 1:28 pm |
  17. MoMO

    THE GUY filed for bankruptcy 7 times.

    what could anyone learn from him?? aside from filing for bankruptcy.

    August 25, 2013 01:32 pm at 1:32 pm |
  18. jam8canpops

    People like Trump should keep a low profile.The higher the monkey climbs the more he exposes himself to shots from below.

    August 25, 2013 01:33 pm at 1:33 pm |
  19. az

    Adults playing kids games and calling names.

    August 25, 2013 01:37 pm at 1:37 pm |
  20. Joanie768

    He is such a jerk....just wish he would not get so much TV time, he is not worth it, he is a loser and a useless man.

    August 25, 2013 01:38 pm at 1:38 pm |
  21. Sam Adams

    Worth of real estate is estimated by what potential buyers are willing to pay for it. Same as for Trump's wealth, backed by real estate. If confidence is lost in that real estate, then his estimated wealth is lost. Same for people like Bill Gates. If MSFT stock goes down, so does a lot of Gates' wealth.

    August 25, 2013 01:47 pm at 1:47 pm |
  22. Sam Adams

    One has to ask why this article is filed under politics instead of business.

    August 25, 2013 01:48 pm at 1:48 pm |
  23. Frums

    What gives the NYS Dept of Ed the exclusive use of the word University? That seems odd to me.

    August 25, 2013 01:48 pm at 1:48 pm |
  24. Name Glen

    I have a school that teaches you how not to get ripped off. Tuition is only $99

    August 25, 2013 01:50 pm at 1:50 pm |
  25. morvin

    If the banks and other lenders called all their loans, this shyster's phantom empire would collapse and he would be living in a cardboard box under the Brooklyn Bridge – which is where he belongs.

    August 25, 2013 01:52 pm at 1:52 pm |
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