You probably won’t be surprised to learn, if you didn’t already know, that Donald Trump started a university, or at least that’s what he called it. And it may not be surprising that Trump University caused a lot of controversy — so much, in fact, that he is embroiled in two lawsuits over it. One is a civil suit filed in 2013 by New York State Attorney General Eric Schneiderman, accusing Trump’s enterprise of defrauding students into paying fees that could reach more than $35,000; the other is a class-action suit by a former student who alleges he didn’t get what he paid for.
What is this all about?
In 2005, the real estate magnate started an initiative that offered seminars in real estate, entrepreneurship and other related subjects and that charged from $1,500 to more than $35,000. It was called Trump University, even though it didn’t actually give out degrees and wasn’t accredited. Trump promised in one ad, “Just copy exactly what I’ve done and get rich.”
In 2010, he changed the name to the Trump Entrepreneur Initiative after the New York State Department of Education sent him a letter, according to the New York Daily News, accusing him of misleading the public by running an unauthorized school. The letter, signed by Deputy Commissioner for Higher Education Joseph Frey, said in part:
“Use of the word ‘university’ by your corporation is misleading and violates New York Education Law and the Rules of the Board of Regents.”
A year later, in 2011, the New York State Attorney General’s Office began investigating the program — which pretty much stopped operating at that point — and in 2013, Schneiderman filed a $40 million civil lawsuit against Trump and the institution, accusing both of charging more than 5,000 people big money to supposedly learn Trump’s successful real estate techniques but failing to deliver. The suit says Trump U — often using high-pressure sales tactics and telling students that the next, more expensive seminar would reveal important secrets — earned about $40 million from students and seeks to the money recovered.
As you might expect, Trump hasn’t taken the lawsuits well and denies the accusations. In December 2013, he filed an ethics complaint in New York against Schneiderman, accusing the attorney general of illegally soliciting campaign contributions from Trump’s daughter, Ivanka, while probing Trump University, according to the New York Post.
In this March 2015 story, the Post said New York’s Joint Commission on Public Ethics is investigating the accusation.
Why would anyone spend money for a school that wasn’t accredited and offered no degree? This National Review story published last month described what happened to a New Jersey couple named Richard and Shelly Hewson, who paid $21,490 to learn how to make money by flipping houses. The story says:
“They ponied up the high price ‘because we had faith in Donald Trump,’ Richard wrote in a January 2015 affidavit. “We thought that if this was his program, we would be learning to do real estate deals from his people who knew his techniques.”
What did the New Jersey couple get for shelling out more than $20,000 to a business bearing the famous Trump name? An instructor took them on a field trip to see dilapidated homes in rough Philadelphia neighborhoods, never bothering to explain how to reliably find properties to sell for a profit.
The National Review story did also find a few people who said they took courses from Trump University and got value out of it, but the larger story was the false promises that the New York suit alleges.
Last year, a judge found Trump personally liable for the university’s violation of New York education laws, and this past April, and a Manhattan Supreme Court judge ruled in April that the case would have to resolved at a trial.
Meanwhile, a class-action suit was filed in California by a former Trump University student named Art Cohen who said he spent more than $36,000 on courses that failed to deliver the top-notch education the university had promised. A judge in that case ordered both sides to complete “fact discovery” by Aug. 10, according to a Courthouse News story.