NY's AG Says Trump University Is a Fraud
(CN) - New York's attorney general sued Donald Trump, claiming his Trump University real-estate seminars are bogus bait-and-switch operations that bilked thousands of students out of $40 million.
Attorney General Eric Schneiderman filed a lawsuit in New York County Supreme Court accusing Trump, The Trump Entrepreneur Institute (formerly Trump University) and former Trump University President Michael Sexton of fraud, and illegal and deceptive conduct.
Schneiderman says Trump University's real-estate investment seminars from 2005 to 2011 were a sham, as they failed to deliver on "The Donald's" marketing campaign claim to "just copy exactly what I've done and get rich."
Advertisements for Trump University allegedly promised that the real-estate mogul's "handpicked experts" would share his real-estate investing secrets and techniques.
But Trump "did not handpick even a single instructor at these seminars and had little or no role in developing any of the Trump University curricula, or seminar content," according to a statement by the attorney general's office.
Consumers attended free seminars where they were pressured to sign up for a $1,495 three-day seminar that would purportedly teach them everything they needed to know to become successful real-estate investors, Schneiderman claims.
They were told the longer seminar would include a year-long "apprenticeship program" and may feature an appearance by The Donald himself. Instead, participants "did not receive substantive instruction" on real-estate investing and were not plugged in to an extensive support program as promised, Schneiderman says. They did, however, get pitched on Trump Elite mentorship programs that cost $10,000 to $35,000 and provided little to no follow-up assistance, according to the 38-page lawsuit.
Schneiderman says speakers at the three-day seminars urged students to call their credit card companies to request an increase in their credit limits, ostensibly so they'd have more capital to flip houses.
"[B]ut in reality the purpose was so that students could use additional credit to purchase the expensive Trump Elite programs," the lawsuit states.
The special appearance by Trump also turned out to be false, Schneiderman says.
"Rather than being photographed with Donald Trump, they were offered the chance to have photos taken with a life-size photo of Donald Trump," the lawsuit states.
"More than 5,000 people across the country who paid Donald Trump $40 million to teach them his hard-sell tactics got a hard lesson in bait-and-switch," the attorney general said in a statement. "No matter how rich or popular you are, no one has the right to scam hard-working New Yorkers. Anyone who does will be held accountable."
He claims the seminar's name itself - Trump University - led some students to believe they were attending an actual university when they were not.
Trump University did not change its name until May 2010, Schneiderman claims, and never received a license to operate in New York.
Trump vigorously defended himself in the press, calling the lawsuit "thug politics" by a "lightweight" "political hack." He also accused Schneiderman, a Democrat, of trying to "extort" him.
Through his attorney, Trump indicated that the attorney general was mad at him for not doing more for his campaign.
"This entire investigation is politically motivated and it is a tremendous waste of taxpayers' money," attorney Michael D. Cohen told reporters.