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Sunday, July 21, 2024 | Back issues
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Trump Must Answer Students in Fed Court

(CN) - A federal judge certified a RICO class action accusing Donald Trump of misrepresenting Trump University "to make tens of millions of dollars" but delivering "neither Donald Trump nor a university."

Lead plaintiff Art Cohen sued Donald J. Trump in October 2013, claiming Trump "devised and executed a scheme to make tens of millions of dollars" by misrepresenting that Trump University was an actual university taught by a faculty of professors at least partly selected by Trump himself.

Trump claimed that Trump University would teach some of his real estate investing secrets.

To entice students, Trump spent up to $6 million annually on a national advertising campaign, which included YouTube, email, website and postal mail solicitations, according to the complaint.

Cohen says he attended a free seminar after receiving a "special invitation" in the mail, then paid Trump University $1,495 to attend a three-day real estate retreat, where he purchased a "Gold Elite" program for nearly $35,000 more.

But Cohen claims Trump did not teach students his real estate investing secrets, did not contribute in any meaningful way to the curriculum for the live events, and did not handpick the instructors who taught at the three-day events or in the elite mentorship programs.

Trump this month lost a court battle against New York Attorney General Eric Schneiderman when a judge ruled that Trump was personally liable for running the university without a license.

Schneiderman accused Trump of fraud, claiming he had cheated students out of $40 million. New York Supreme Court Justice Cynthia Kern found that Trump and Michael Saxton, who served as the school's president, knew that the university was being run without a license.

A determination of damages in that case is pending.

On Monday in San Diego, U.S. District Judge Gonzalo Curiel ruled that Cohen's complaint can continue as a class action.

"Plaintiff has introduced evidence that the alleged misrepresentations of a 'university' and of Donald Trump's participation in the Trump University Live Events were prominently featured in all Trump University marketing materials; and that a 'Playbook,' Powerpoint presentations, and scripts encouraged if not required Trump University representatives to continue these representations," Curiel wrote.

"The court finds this evidence provides a method for plaintiff to establish proximate causation on a classwide basis without resorting to individualized inquiries, by relying on a common sense inference that consumers are likely to rely on prominently marketed features of a product which they purchase."

Trump unsuccessfully argued that individualized determinations will need to be met to determine whether the statute of limitations bars class members' claims.

He claimed that Cohen could have known as early as July 2009 that Trump University was not an actual university, based on the facts that Cohen was not looking for a diploma, the seminars were in a hotel, and Cohen had not made any inquiries into the accreditation status of the university.

Judge Curiel was not persuaded: "The court has found a nucleus of common issues and is not convinced at this point that the inquiry into whether the individual class members in this case knew or should have known about the fraudulent scheme as alleged in the present action will require individualized determinations or may depend on facts peculiar to each case," Curiel wrote.

"Although defendant may yet show that plaintiff and the putative class members knew or should have known that defendant had devised a scheme to falsely market Trump University via mail or wire prior to October 2009, the court is satisfied that determination of defendant's statute of limitations defense in this case will not defeat the predominance of common issues in this case."

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