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. 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. I wish these hot shots would focus on our countries real stopping drug dealers, murderers, sex trafficking, child abuse, thieves and women beaters...just to name a few.

    August 25, 2013 03:13 pm at 3:13 pm |
  2. HairpiecesAgainstTrump

    Trump may have money but he'll never escape the fact that he is a loser of the highest order. Even if he was the richest man in the world, he will always be a loser. Trump's character isn't worth a bag of hockey pucks. They should revoke his american citizenship because he is the exact opposite of the american dream. He's more like the american nightmare. What a buffoon.

    August 25, 2013 03:14 pm at 3:14 pm |
  3. Ken

    It's EGO and nothing more. In fact, if he loses this law suit (impossible) it is worth the publicity in his mind!

    August 25, 2013 03:19 pm at 3:19 pm |
  4. Jim

    People rarely look beyond the facade. Donald Trump has been successful at one thing in life: convincing you he is successful. As a businessman, he is nothing special. Just another hustler. His real asset, and the only thing of any significant value in his portfolio, is his name. Which he will gladly sell you to put on anything if the price is right, and the price seems to get more and more cheap. It's a sham and a con. You don't have to dig very deep to realize his business operations are not all that successful. Back when he used to actually own and run properties many or even most of them went bankrupt. He is just another brand. A pretty successful brand, but to even consider him as one of the real giants of business is to reveal your own ignorance. He isn't a billionaire real estate developer, but he plays one on T.V.

    Of course any assault on his vanity is going to lead to a juvenile, personal attack from Trump and his minions in response. It's basically a cliche at this point. He is a spoiled child whose slumlord dad set him up in real estate. He was big n the 80s, broke by the 90s, and made a fortune back by marketing his notorious name and slapping it on anything he could get paid for. Like a high end QVC. If you actually paid to take business lessons from this fraud you kinda deserve what you get.

    Trump actually is the new American dream, and that is not a compliment.

    August 25, 2013 03:19 pm at 3:19 pm |
  5. docmagnus

    What a shame – a shame that it's not $40 BILLION for this whack job.

    August 25, 2013 03:21 pm at 3:21 pm |
  6. Timothy

    Trump is not involved anything, people pay him to use his name on their businesses. I would not be surprised if Trump was involved in fraud activity.

    August 25, 2013 03:22 pm at 3:22 pm |
  7. PuzzledInPeoria

    He'll blame it on Pepe, the trained chinchilla who lives on his head.

    August 25, 2013 03:22 pm at 3:22 pm |
  8. James

    "Unlike other for-profit schools, Trump's outfit relies heavily on the brand of its namesake."

    Not that I agree with what Trump is doing but come on, this is exactly what for-profit schools are doing. Outside of Harvard, MIT another handful of universities Americans are being charged exorbitant amounts of money for skills they can't use in the labor market. If the issue with Trump's program in particular that it's not giving graduates jobs or providing strong enough services then maybe other 'universities' should look in the mirror.

    August 25, 2013 03:26 pm at 3:26 pm |
  9. VoteForPedro

    The guy keeps picking the wrong winner of Celebrity Aprentice every year. Why would you trust him for a college education? C'mon, Arsenio Hall over Clay? And the big cowboy dude. Gimme a break.

    August 25, 2013 03:30 pm at 3:30 pm |
  10. Roscoe Chait

    Say it ain't so.

    August 25, 2013 03:34 pm at 3:34 pm |
  11. dw

    What id¡ot would ever hand money over to go to any faux school that has the name Trump on it? No matter what it is, if it says Trump you can be guaranteed dishonesty is behind it!

    August 25, 2013 03:35 pm at 3:35 pm |
  12. BigSir

    CHUMP University is more like it. Born with a silver spoon in his mouth.

    August 25, 2013 03:36 pm at 3:36 pm |
  13. BigSir

    Todd: listen can't make a silk purse out of a sow's ear. What did you bring to your education?

    August 25, 2013 03:38 pm at 3:38 pm |
  14. Bob

    Don't think the super rich are have too much well to him that is like 4 dollars to you.

    August 25, 2013 03:39 pm at 3:39 pm |
  15. josh rogen

    I'm no fan of trump, but I don't believe in politically selective prosecutions either.

    August 25, 2013 03:41 pm at 3:41 pm |
  16. AmyinOaktown

    This guy has little or no credibility left....what is left from the '80's is long gone. Once he started to go on, and on about Obama's birth certificate, I knew he had gone over the edge. I'm thinking it's the orange self tanner that's affecting his brain.

    August 25, 2013 03:41 pm at 3:41 pm |
  17. billleesbrain

    He'll just declare bankruptcy again and tell us how great capitalism is.

    August 25, 2013 03:42 pm at 3:42 pm |
  18. Karen

    What do they teach you, how to file bankruptcy?

    August 25, 2013 03:44 pm at 3:44 pm |
  19. Chander

    This guy wasted the nations time on challenging Obama birth certificate and he is asking the attorney gen to so his job.

    August 25, 2013 03:46 pm at 3:46 pm |
  20. Chander

    How many companies has this guy bankrupted? Trump university next?

    August 25, 2013 03:49 pm at 3:49 pm |
  21. simplyput

    The bigger question is what kind of maroon thinks he can waltz in and learn investment without a four year degree from an accredited school? The two-year degree will replace the four year with more bad lawyers that we have more than enough of already. As for people wanting to learn investment from a guy who runs motels and casinos, well, where did you get your GED? Bigger question, where were you going for start up capital?

    August 25, 2013 03:49 pm at 3:49 pm |
  22. Person

    Such pettiness.

    August 25, 2013 03:50 pm at 3:50 pm |
  23. vdanker

    Why is this news? Trump does business like this all the time.

    August 25, 2013 03:53 pm at 3:53 pm |
  24. Vincent

    He'd be working at TGIF if it wasn't for his father.

    August 25, 2013 03:53 pm at 3:53 pm |
  25. Frank

    Trump your education business lacks what is needed in order for your students to have a lifetime of learning and profitable success. Trump "You're sued!"

    August 25, 2013 03:54 pm at 3:54 pm |
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