Trump University controversy … in 2 minutes
Donald Trump has been catching heat for lawsuits against him and Trump University, a real estate seminar business he created in 2005.
The company, which promised to teach students the mogul’s investing techniques to get rich on real estate, is now defunct.
But civil lawsuits against it and against the GOP frontrunner himself are very much alive.
1. There are three separate lawsuits.
Two federal class-action suits in California were filed by former students. The first, Tarla Makaeff v. Trump University, was filed in 2010. The second, Art Cohen v. Donald J. Trump, was filed in 2013. A state-based suit — People v. Trump Entrepreneur Initiative LLC — was filed in New York by State Attorney General Eric Schneiderman in 2013.
Together the cases are represent the interests of thousands of former Trump University students from California, Florida and New York.
2. The lawsuits claim students were hoodwinked.
Those named in the California cases say Trump University teachers were not hand-picked by Trump as advertised, but rather independent contractors paid commissions for sales of the seminars and products.
Schneiderman’s $40 million civil suit, which accuses the program of deceptive business practices, alleged that its advertisements made false claims, including that Trump handpicked the instructors and that consumers who took the seminars would receive access to private sources of financing — i.e., “hard money lenders.”
“It was a classic bait-and-switch,” he told CNN.
3. Some paid tens of thousands of dollars.
Trump University would “upsell” students in its initial free seminar to buy a $1,495 “one year apprenticeship” — which was effectively a three-day seminar, the Cohen suit asserts. And if they bought that, teachers would upsell them again to buy “mentorships” at a cost of $10,000 and up. The most expensive, the Gold Elite program, cost $35,000.
4. Trump U wasn’t an accredited “school.”
In 2010, the New York Department of Education demanded that the name Trump University be changed since it was misleading and in violation of the state’s education laws, according to the New York Daily News.
Trump University was subsequently renamed the Trump Entrepreneur Initiative.
Schneiderman’s suit alleges that the business was warned by the state’s education department as early as 2005 that it was violating state law by calling itself a university, but nevertheless continued to do business under that name for five years.
5. Trump says he’s innocent.
Trump’s camp rejects the class action suits’ claims as “baseless.” And Trump has charged that Schneiderman was politically motivated in his decision to bring the case.
Trump himself has said repeatedly that he “easily” could have settled the cases — which he characterizes as “minor.” But he has chosen not to.
6. He suggested he wasn’t too involved in hiring.
In a deposition in the Cohen case last December, Trump suggested under oath that he was not very involved in hiring instructors, despite the program’s promotional materials suggesting otherwise and his lawyers asserting he was “very involved.”
Rather, Trump said, “I would see résumés. … I told [Trump University’s president] I want very good people.” He also said he did not personally select instructors for 2009 live seminars.
He also said he didn’t contest the plaintiffs’ assertion that the training program gave refunds to 25% of students. He claimed not to know the specific percentage but asserted that he paid “millions and millions of dollars in refunds.”
7. Trump has already lost a few battles
In 2014, a New York trial court found Trump University and Trump himself liable for running an unlicensed school. It also authorized Trump’s attorneys to take the depositions of the more than 5,000 consumers for whom the attorney general is seeking restitution.
Then early this month, a New York court declined to throw out the fraud case brought by Schneiderman, rejecting arguments from Donald Trump’s lawyers that it should be dismissed under the statute of limitations.
9. Resolving the three cases could take a while.
Given Trump’s refusal to settle so far, the suits will likely continue, possibly pulling Trump off the campaign trail this spring or summer for a scheduled appearance as a witness in the Makaeff case. Trump even suggested in a recent GOP debate that the cases could go on for a “couple of years.”