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. ozzi7

    Not shocked. Looked into when I was a business major at UMUC.

    Trump went to Wharton. Take your lumps and go there for real college credit and info.

    August 25, 2013 02:31 pm at 2:31 pm |
  2. ozzi7

    Trump went to Wharton. Take your lumps and go there for your info.

    August 25, 2013 02:32 pm at 2:32 pm |
  3. blzbubba

    Urgent call for Mr. Trump on line 4!

    Fess Parker wants his cap back.

    August 25, 2013 02:33 pm at 2:33 pm |
  4. The King

    "billionaire mogul's" B.S.
    Trump is a fraud. He's scammed creditors twice with Chapter 11, his main source of income now is his reality TV show. He keeps himself in the public eye by entertaining the obtuse and emotionally fragile (AKA the right wing). He's the male version of sarah palin.

    August 25, 2013 02:36 pm at 2:36 pm |
  5. Moogie713

    I can't believe people are dumb enough to fall for this scam. I also can't believe it has taken so long for Trump to be investigated and/or indicted for his business "ventures". The really bad thing is that he is producing little Trumps to follow in his footsteps.

    August 25, 2013 02:40 pm at 2:40 pm |
  6. jeff

    Today, you dont go to school for a education, you go there for a degree. A single sheet of paper that is used to get a job. Who cares if the teacher didnt show up.

    August 25, 2013 02:42 pm at 2:42 pm |
  7. hal

    I,ve been there, it's no tower. It's more like "Trumps Dump."

    August 25, 2013 02:46 pm at 2:46 pm |
  8. Name zee

    Was Trump born in US

    August 25, 2013 02:49 pm at 2:49 pm |
  9. Buddy

    "Success in real estate" is not to be merely by going to a school. You have to work and to make good decisions. Not everyone who goes to the same school will be a successful engineer, lawyer, doctor, nurse, or real estate agent.

    August 25, 2013 02:54 pm at 2:54 pm |
  10. Jason

    He juggles fake magnetic money. Wish I could do that

    August 25, 2013 02:55 pm at 2:55 pm |
  11. Emmy

    So the carnival barker got bit. His entire enterprise is a scam.

    August 25, 2013 02:56 pm at 2:56 pm |
  12. svann

    Trump isnt doing himself any favors by calling Schneiderman a lightweight. He can say all he wants that there is no case, but calling someone a lightweight is just code for "it doesnt matter what you say, Im Trump".

    August 25, 2013 02:59 pm at 2:59 pm |
  13. Bill, NY

    98% approval? A dubious claim at best. However unless Trump signed a contract with the students I don't see where its any different than most institutions of higher learning. Caveat emptor(let the buyer beware) whenever you buy anything. You would have no problem finding plenty of people who have degrees from ivy league schools unemployed for at least five years postgrad.

    August 25, 2013 03:00 pm at 3:00 pm |
  14. Tony A.

    HIs university can file for bankruptcy at any moment and done!, same way he has done it for decades, and his private assets never get touched.

    August 25, 2013 03:00 pm at 3:00 pm |
  15. John

    Amusing how so many here refer to Trump, certainly a blowhard of the first order, a "loser." You really see this self-made BILLIONAIRE as a "loser." Even if he lied, cheated, and stole his way to his fortune, he has "won" the game of financial success. To say otherwise, would to admit complete delusion.

    August 25, 2013 03:01 pm at 3:01 pm |
  16. Rob

    Put him in the prison, and throw the key in the Hudson.

    August 25, 2013 03:03 pm at 3:03 pm |
  17. joel

    That is not what a bait and switch technically is. That is a high end branded piece of luxury garbage for those trying to buy into an elite class. Nor is a Hermes scarf a bait and switch, or Chanel lipstick.

    August 25, 2013 03:04 pm at 3:04 pm |
  18. WillnAtlanta

    anytime a rich person opens a school or offers some type of training in their line of work for the masses, it's nothing more than an effort to grab more money for themselves. Thus, you see here, this so called mogul, Trump, defrauding poor defenseless students simply in a money grab effort to line his pockets even more than they already are. Some people have no shame whatsoever.

    August 25, 2013 03:05 pm at 3:05 pm |
  19. cbp

    Wonder what that will do to his chances to run for the Republican nomination? Evidently he believes there are folks who would vote for him.

    August 25, 2013 03:05 pm at 3:05 pm |
  20. Ivan Sanchez

    Why that doesn't surprise me; how do you think he got rich!

    August 25, 2013 03:06 pm at 3:06 pm |
  21. Belseth

    It's easy to make money when you are born with money. The real person with something to teach is the person that started out with nothing. I can sum up the Trump method but it won't help the average person. It's make friends with other rich people and con them into investing in your deals. As far as "Brand" it's called hanging your name on everything in sight.

    August 25, 2013 03:07 pm at 3:07 pm |
  22. noldaker

    Interesting – Wonder how many Ivy League colleges, or state colleges offer refunds if their students don't succeed after graduation? Trump has been politically vocal these past few years and non of it favorable toward Democrats...Their response, round up the legal cronies and attack in the press. Personally, I think this time they bit off more than they can chew...Trump is not easy prey.

    August 25, 2013 03:07 pm at 3:07 pm |
  23. Florida Atheist

    Scam has become the American way of business from Wash DC to Wall St. Trump is a scam icon.

    August 25, 2013 03:07 pm at 3:07 pm |
  24. well

    sneider wants to spend tax dollars on behalf of those individuals who wanted to learn the tricks and become the next Trump? makes all the New York Sense to me!

    August 25, 2013 03:09 pm at 3:09 pm |
  25. Fred Flintstone

    He's kind of like obama, liar, tells you something then doesn't deliver.

    August 25, 2013 03:12 pm at 3:12 pm |
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