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. Chris

    I think what everyone is forgetting, is all universities are scams. I pay hundreds of dollars per credit hour for "mandatory classes" that are gen ed. I can't tell you how many classes I had to make a resumes and practice interviewing or learn how to study and pay full price for. Then all of these schools add hundreds of dollars of fees. Using facilities, using the internet on campus, remote class fees, library fees, newspaper fees, parking fees.

    You can't tell me one school scams more than another.

    August 25, 2013 03:54 pm at 3:54 pm |
  2. VEW2012

    KARMA.....treat him like Maddoff. BTW...Just how many students got scammed for the $34,995 Trump "full education"?
    Guess he can park that Presidential bid...this won't look to good on the resume....scamming students!

    August 25, 2013 03:57 pm at 3:57 pm |
  3. rickapolis

    There are many men and women in America worthy of respect.
    And then there is Donald Trump.

    August 25, 2013 03:58 pm at 3:58 pm |
  4. Marie MD

    Say it ain't so. The whatever that thing is on his head man lying?
    Another example but the rich only want your money to get richer.
    @mario, funny. I think orangutans should sue that they are being mentioned in the same sentence with this morally bankrupted fool. They are much cuter top.
    BTW, where's his latest wife? Is she too old already to parade around as a trophy wife? Who's next?

    August 25, 2013 03:58 pm at 3:58 pm |
  5. kd

    That's 40 bucks to him. It's like me paying for a dismissed ticket fee lol

    August 25, 2013 03:58 pm at 3:58 pm |
  6. Taggot

    Anyone who enrolled in Trump University deserves to lose all of their money.

    They fit into the category "One born every minute"

    August 25, 2013 03:59 pm at 3:59 pm |
  7. Savant Willis

    Anyone who takes Donald Dump's advice deserves to be

    August 25, 2013 03:59 pm at 3:59 pm |
  8. cancerman48

    "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." Kind of ironic it's it! Yet nothing about the other scam artist that runs NYC.

    August 25, 2013 03:59 pm at 3:59 pm |
  9. radeckd

    What a BS. Do those people realize that in class action lawsuits only lawyers make money. I have never participate in a class action lawsuit just because I think those lawyers are even worse than businesses they sue. Demonizing rich and successful is very typical for current administration. Poor students, innocent victims of evil trump. Those losers didn't succeed because their mentality not because of school. Those are people who tend to blame others for their misery, in this case, they blame Trump. People like this will never be successful. But hey, our own president still holding there and all he does is blaming others for everything. Just another looser.

    August 25, 2013 04:01 pm at 4:01 pm |
  10. mike

    So sad that anyone bought this Birther's B.S. !

    August 25, 2013 04:06 pm at 4:06 pm |
  11. billman

    This is a personal attack from the administration-petty and childish-Obama is a dangerous joke.

    August 25, 2013 04:06 pm at 4:06 pm |
  12. impact0900

    What does he mean rich people don't have the right to scam hard working New Yorker? The Wall Street Banksters took us for about 18 trillion dollars, and then, just to add insult to injury, made us pay to save the banks and financial institutions they had they had just finished looting. How many of them went to jail? No, they paid a few petty fines, with the companies money, and walked off laughing, just like Trump is about to do. They don't need the "right", they just need the money to buy our corrupt system.

    August 25, 2013 04:08 pm at 4:08 pm |
  13. Ahuvah

    I hope his millions will not enable him to get away with fraud and deception. Unfortunately, nowadays the power of money determines far too many outcomes.

    August 25, 2013 04:13 pm at 4:13 pm |
  14. Robert

    If you are stupid enough to give this clown your money, you deserve to lose it. He,s always been shady and history will remember him as such.

    August 25, 2013 04:18 pm at 4:18 pm |
  15. beenthere

    I can see Trump's memo to his secretary: "Miss Jones, take $40 million out of petty cash. Yes, one of those stupid lawsuits again. What a bore."

    August 25, 2013 04:19 pm at 4:19 pm |
  16. Conscience of a Conservative

    Schneiderman clearly isn't familiar with the term "puffery". Calling the three day seminar a university taught with ivy league credentials is just good salesmanship, exactly what Trump is offering to teach his students.

    August 25, 2013 04:20 pm at 4:20 pm |
  17. Don Sporns

    Everything about Trump says "con man". A wealthy one, but a trashy, cheap con man nonetheless.

    August 25, 2013 04:24 pm at 4:24 pm |
  18. Name donald dump

    the first lessons the university taught to make money was, >never invest in anything that has Donald Trump's name on it.>

    August 25, 2013 04:24 pm at 4:24 pm |
  19. Pepou27

    Here is a crook who accuses the President of lying about his birth certificate and who is actually cheating, lying and defrauding people ! Priceless !

    August 25, 2013 04:26 pm at 4:26 pm |
  20. jgp

    SCHNEIDERMAN IS THE REAL FRAUD HERE. FIRE SCNEIDERMAN for using tax dollars for self promotion of his very bad work.

    August 25, 2013 04:27 pm at 4:27 pm |
  21. WillnAtlanta

    This was probably a scenario where a group approached Trump and offered to pay him a licensing fee to use his name on the school, Trump probably had no input in the school whatsoever, he just got paid for loaning out his name.

    August 25, 2013 04:35 pm at 4:35 pm |
  22. Trump Nonsense

    Donald Trump did not become a millionaire from investing in real estate, gold courses, and casinos. When his dad died Trump inherited 300 million. Any moron can sit on 300 million for 30 years at simple interest and become a billionaire. Trump is truly over rated.

    August 25, 2013 04:37 pm at 4:37 pm |
  23. Steve Fielder

    The fact that a bigoted crackpot Birther like Trump could actually get anybody to buy into his scam-of-a-school is further proof that too many people aren't paying attention. ...

    August 25, 2013 04:39 pm at 4:39 pm |
  24. Jimbo

    This practice of using well known personalities for you to invest or buy certain products is quite prevalent on TV commercials. Former aging movie or TV actors come on all the time hawking everything from gold to insurance policies. Buyer beware.

    August 25, 2013 04:41 pm at 4:41 pm |
  25. Harry

    " seeking $40 million to repay customers who have enrolled in the school, as well as >additional penalties and fines<.."

    August 25, 2013 04:41 pm at 4:41 pm |
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