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Trump University Smacked with Lawsuit Over Illegal Business Practices

August 27, 2013

Although Donald Trump is no stranger to in-your-face media controversies, his most recent foray into the spotlight isn't for the typical Trump shenanigans we've come to expect. Instead of drawing attention by hurling insults at celebrities or perpetuating the "birther" movement, Donald Trump has recently come under fire for allegations that his for-profit real estate investment school engaged in illegal business practices. The Trump Entrepreneur Initiative, formerly known as Trump University, was recently slapped with a 40 million dollar lawsuit and allegations of fraud, racketeering, and deception. The lawsuit, which was filed by New York Attorney General Eric Schneiderman, claims that the Trump Entrepreneur Initiative defrauded at least 5,000 people who hoped that the Trump-created courses would teach them real estate investment know-how.

The lawsuit suggests that Trump University misled and deceived its students in several ways, reports the New York Times. First, advertisements reportedly led students to believe that Donald Trump had handpicked the school's instructors and played some part in designing the curriculum. According to the lawsuit, none of the instructors were handpicked, nor was any of the curriculum created by Donald Trump in any way.

As the New York Daily News noted, the sales courses themselves were also sold to unsuspecting consumers through the use of classic "bait and switch" tactics. The lawsuit alleges that Donald Trump used his power and celebrity to lure students into free 90 minute seminars which were, in turn, used to convince participants to sign up for a three-day course at the cost of $1,495. And as if that wasn't enough, students who attended the three-day course were then pushed to sign up for the Trump Elite Mentorship Program at a cost of $10,000 to $35,000 per head.

"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," Schneiderman said in the lawsuit. "No one, no matter how rich or famous they are, has a right to scam hardworking New Yorkers," he said. "Anyone who does should expect to be held accountable."

In an attempt to publicize his side of the story, Donald Trump created 98percentapproval.com, a website claiming that 98 percent of the real estate school's students left the program satisfied with their investment, reports NPR.

Trump's attorney, Michael Cohen, has also claimed that Schneiderman filed the lawsuit to fulfill his own political agenda. "The attorney general has been angry because he felt that Mr. Trump and his various companies should have done much more for him in terms of fundraising," Cohen told New York Magazine.

However, the lawsuit claims that all actions were prompted by the dozens of complaints that have poured in since the school's inception. The 40 million dollar payout, if won, will reportedly be used to repay at least 5,000 customers and cover any additional fees and fines.

Sources:

"Donald Trump Sued for Running Scam University," nymag.com, August 25, 2013, Caroline Bankoff

"New York A.G. Sues Donald Trump Over 'Unlicensed' University," npr.org, August 25, 2013, Eyder Peralta

"New York Attorney General Eric Schneiderman files Donald Trump 'University' $40 million fraud suit," nydailynews.com, August 24, 2013, Kenneth Lovett

"Trump University Made False Claims, Lawsuit Says," nytimes.com, August 24, 2013, Alan Feuer

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